How To Start a Nonprofit in Colorado

You will need to choose a name for your nonprofit. Colorado requires that every business operating in the state have a unique name. You can ensure your name is available by conducting a business search on the Colorado Secretary of State website.

You can reserve your business name if you're not ready to file your articles of incorporation and legally begin the organization. To reserve a business name, you must file a Statement of Reservation of Name with the Colorado Secretary of State. The filing fee is $25.

After filing the Statement of Reservation of Name, your potential name will be reserved for 120 days. Your name won't be officially yours until you file your articles of incorporation.

Your nonprofit will only be eligible for federal tax exemptions (501(c)(3) status) if you state your nonprofit's purpose in the articles of incorporation. The IRS only grants 501(c)(3) status to organizations falling into one of the following categories:

• Charitable
• Religious
• Educational
• Scientific
• Literary

If you're unsure, reach out to a nonprofit attorney to help walk you through the process.

Every nonprofit organization must have a registered agent. A registered agent is a person or a service responsible for accepting legal documents on behalf of an organization. Your registered agent must be at least 18 years old and have a physical street address in Colorado.

The nonprofit's bylaws are a set of rules that are in place to regulate the organization. Colorado law requires that every nonprofit have bylaws.

Your bylaws and your articles of incorporation should be consistent with each other. They should also address the roles of each director or officer.

You should also draft and adopt your nonprofit's conflict of interest policy. A conflict of interest policy is a plan about how your organization will act if one or more directors' interests conflict with the nonprofit's purpose.

In addition to your bylaws, Colorado requires that every nonprofit organization file articles of incorporation with the Colorado Secretary of State. Filing the articles of incorporation legally starts your business.

Your nonprofit will have to name at least one incorporator. An incorporator is a person responsible for signing and filing the articles of incorporation with the secretary of state. Incorporators don't have to be members of the nonprofit. The filing fee is $50.

Your articles of incorporation must include:

• Name and address of the nonprofit organization
• Name and address of the registered agent or the name and address of the registered agent service
• Statement affirming the registered agent has agreed to serve as the nonprofit's agent for service of process
• Name and address of each incorporator
• Comment about whether the corporation will have voting members
• Statement of the purpose of the nonprofit
• Date when the articles of incorporation will become effective if they become effective after filing
• Statement showing the nonprofit agrees that it won't operate in a way contrary to its stated purpose

Your nonprofit organization must have an initial organizational meeting of the board of directors. Your board of directors will include specific officers like:

• President
• Vice president
• Treasurer
• Secretary

You must have at least three board members who aren't related to each other. You will want to create a record for the nonprofit by taking minutes for the initial meeting.

Your first board meeting must accomplish certain administrative objectives, including:

• Adopting a conflict of interest policy
• Approving the nonprofit's bylaws
• Electing the board of directors
• Appointing the nonprofit's officers
• Approving resolutions (like opening a bank account)

The board of directors ensures the nonprofit's actions always align with the purpose stated in the articles of incorporation. The board of directors has legal responsibilities, including the duties of care, loyalty, and obedience.

Duty of Care

The duty of care refers to the board of directors' responsibility to act in their own best interests. Because of the board of directors' legal obligation to the nonprofit, the board of directors must work with the utmost care when making decisions for the nonprofit.

Duty of Loyalty

The duty of loyalty includes each director's responsibility to not act in their self-interest if acting in that way will harm the nonprofit.

Duty of Obedience

The duty of obedience refers to the board of directors' responsibility to ensure the organization follows federal and state law and focuses on its purpose.

Colorado may require that your nonprofit have additional business licenses. The need for a business license depends on your nonprofit's work.

You may also need a permit for the property you use. Local municipalities manage commercial zoning permits, so you will need to apply through the appropriate city or county.

Learn more about municipal and county zoning regulations on the Colorado Department of Local Affairs website.

You can also contact your city hall or county clerk to see what special licenses or permits you may need for your nonprofit.

A business in the United States must have an EIN assigned by the Internal Revenue Service (IRS). This number is for identification and tax purposes.

Applying for an EIN is easy and free. The most convenient option is to apply online on the IRS website. Be sure to use the official IRS website—some commercial sites may ask you to pay a fee for an EIN.

File Form SS-4 if you choose to by mail.

The IRS grants nonprofit organizations and donors 501(c)(3) federal tax-exempt status. You can apply for 501(c)(3) status on the IRS website. You will typically use the IRS Form 1023-EZ application series unless you're filing three years after you form or expect more than $50,000 your first year.

Eligible types of organizations include:

• Religious
• Educational
• Scientific
• Literary
• Testing for public safety
• Fostering national or international amateur sports competition
• Preventing cruelty to children or animals

Approved nonprofit organizations receive 501(c)(3) status from the IRS.

Your nonprofit will be automatically exempt from state income tax once you apply and are approved for 501(c)(3) federal tax-exempt status. The IRS will notify you with a determination letter.

But your nonprofit must still send a state tax registration application to receive state sales tax exemption. You can apply online on the Colorado Department of Revenue website.

Colorado Revised Statutes 39-26-718 governs what charitable organizations are eligible for sales tax exemption.

Every nonprofit operating in Colorado must file a periodic report every year. You will update your nonprofit's status in this periodic report, also called an annual report.

For your organization to stay in good standing with the Secretary of State, your periodic report must state the name and address of:

• Your registered agent
• Your incorporators
• Your nonprofit

You must state these facts even if they haven't changed since you filed the articles of incorporation.

Every Colorado nonprofit must register with the Colorado Secretary of State before engaging in charitable solicitations. You must officially register your organization before you can do any fundraising.

Along with registering in Colorado, you will need to register with each state where the nonprofit has an office and is incorporated.

Learn more about completing registration as a charitable organization here.