How To Start a Nonprofit in New Jersey

There are several steps to forming your own New Jersey nonprofit corporation. In addition to the business planning required of any startup, you also must consider the state and federal laws governing nonprofits. New Jersey has agencies, forms, and processes for several aspects of the nonprofit formation process.

Some small business owners can tackle the business formation process on their own. Others choose to get help from a legal professional.

This page outlines the steps for launching your nonprofit startup in New Jersey.

See FindLaw's Nonprofit Organizations section for additional articles, resources, and FAQ.

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1. Name Your Nonprofit Organization

You'll need to pick a name for your nonprofit corporation. There are legal and marketing considerations to keep in mind when deciding on a name for your NJ nonprofit.

Choose a name that resonates with your target audience. It should be easy to remember and reflect the nature of your organization. Avoid trends. Timeless names perform better over time. The same is true for business names that are simple and easy to pronounce.

Under New Jersey law, the name you choose for your nonprofit:

• Must be distinguishable from all other corporate names on record with the New Jersey Secretary of State
• Must include one of the following terms or phrases: "a New Jersey nonprofit corporation," "incorporated," "corporation," "inc." or "corp."
• Can't contain any restricted words unless you have obtained the proper approval or licensing

Your business name must differ from others already registered or reserved. You can see if the name you'd like to use is available with a business name search through the New Jersey database.

2. Select Directors and Officers for Your Nonprofit

You'll likely seek 501(c)(3) tax-exempt status for your New Jersey nonprofit organization. Before pursuing this, you should know the IRS (Internal Revenue Service) requirements.

You need to fill specific offices for your nonprofit board. Choose board members to serve as the following officers:

• President
• Secretary
• Treasurer

You must select at least three directors for your organization. These individuals make up your board of directors, the governing body for your organization.

3. Appoint a Registered Agent

New Jersey law requires all corporations to appoint a registered agent. Your registered agent is responsible for accepting legal papers on behalf of your corporation. For example, if a party sues your nonprofit, your registered agent will receive the service of process.

You can select an individual or company as your registered agent. They must have a physical street address (no P.O. boxes). Your registered agent must also be available during regular business hours to accept legal documents. Your registered agent must also consent to the appointment.

4. Get a Federal EIN From the IRS

A federal Employer Identification Number (EIN) is like a social security number for your business. The IRS assigns these numbers to business entities for tax and identification purposes.

You'll need an EIN to:

• Open a business bank account
• Apply for 501(c)(3) tax-exempt status
• Hire employees

Applying for your EIN through the IRS website is free. Watch out for commercial sites that charge a fee for an EIN. Many of them look similar to the official IRS website.

5. File a Certificate of Incorporation

Next, file a Certificate of Incorporation with the New Jersey Department of the Treasury, Division of Revenue. This is the official formation of your nonprofit in New Jersey. This comes with a filing fee of $75.

Provide the following information when you file the New Jersey Public Records Filing for New Business Entity:

• Business name
• Business entity type
• Your organization's purpose
• Duration of your business
• Registered agent name and address

Remember the IRS requirements for 501(c)(3) status when drafting your purpose. This is crucial because you'll need to be meticulous with the information you provide regarding your nonprofit's purpose. You must organize your nonprofit for one of the following purposes to be eligible for 501(c)(3) tax-exempt status:

• Charitable
• Religious
• Educational
• Scientific
• Literary
• Testing for public safety
• Fostering amateur sports competitions
• Preventing cruelty to children or animals

Be careful about the language you use concerning dissolution or the process you'll follow if you shut down your nonprofit. To comply with the requirements for tax-exempt status under Section 501(c)(3) of the Internal Revenue Code, you must state in your organizing documents that your organization's assets will only be used for exempt purposes in the event of dissolution.

6. Create Bylaws and Conflict of Interest Policy

You'll need to prepare two critical internal documents after you file your New Jersey Articles of Incorporation:

• Corporate bylaws
• Conflict of interest policy

Bylaws are the rules of your organization. New Jersey bylaws often cover topics like:

• The decision-making process in board meetings
• How officers are selected
• Procedures for board meetings, quorum, and voting procedures
• Amending bylaws
• Financial management and auditing requirements

You may need to refer to your bylaws as your nonprofit grows and evolves.

A conflict of interest policy outlines an agreed-upon process if a board member's personal interests conflict with the organization's best interests.

You do not file these documents with the state of New Jersey. Store them with the rest of your business documents.

7. Hold Your First Organizational Meeting

There are several tasks to accomplish at the first organizational meeting of your board of directors:

• Adopt bylaws and your conflict of interest policy
• Appoint your officers
• Get approval for a business bank account to keep your business funds separate from any personal funds

Be sure to take thorough minutes (notes) for this meeting.

8. Apply for Federal Income Tax Exemption Through the IRS

If you're going to run a nonprofit in New Jersey, you'll want to take advantage of the many benefits of tax-exempt status:

• Exemption from federal income tax
• Donors can deduct charitable contributions to your organization from their federal income tax returns

Apply for federal tax-exempt status with IRS Form 1023 or IRS Form 1023-EZ. You can only use IRS Form 1023-EZ if you are a qualifying organization (less than $50,000 in expected gross receipts and less than $250,000 in assets).

The filing cost depends on the form template you use. IRS Form 1023 costs $600 to file, and IRS Form 1023-EZ costs $275 to file.

The IRS will notify you of its eligibility decision with a determination letter. Under normal circumstances, this process takes about eight weeks.

9. Apply for New Jersey State Tax Exemptions

As long as you've properly incorporated your nonprofit, you're exempt from state corporation business tax. File Form REG-1E: Application for Exempt Organization Certificate with the New Jersey Department of the Treasury - Division of Taxation.

You can also use this form to apply for an exemption from sales tax on qualifying purchases.

Some organizations are eligible for a local property tax exemption. Contact your county Tax Assessor to see if your organization qualifies.

Use the New Jersey Tax Guide: Starting a Business in New Jersey for more information.

10. Register as a Charity With the NJ Division of Consumer Affairs

You may need to register your nonprofit with the New Jersey Division of Consumer Affairs. Registration is a must before fundraising or soliciting donations for your organization.

Charitable solicitation includes:

• Events and fundraisers
• Gift campaigns
• Online fundraising through direct email, text-to-give, social media, and other digital channels

You'll need to renew this registration each year.

Next Steps After Starting an NJ Nonprofit Corporation

You still have some work to do after completing your nonprofit formation. Consider the following:

• Getting business insurance
• Creating a website and social media channels for your organization
• Obtaining any required business licenses and permits through your city or county

You'll also need to keep up with ongoing obligations to maintain your tax-exempt status and remain in good standing with the state:

• File Form 990 with the IRS each year
• Submit your annual report to the New Jersey Department of the Treasury
• File state tax returns as required
• Renew charitable organization registration each year

This is why choosing a working board of directors is helpful. To remain compliant, you can delegate tasks and jobs to others throughout the year.

Differences Between a 501(c)(3) and a 501(c)(4)

501(c)(4) status is for nonprofit organizations that promote social welfare. Some common examples of 501(c)(4) organizations include volunteer fire companies and community groups promoting tenants' rights.

While both 501(c)(3) and 501(c)(4) nonprofit organizations are exempt from federal income tax, there are some key differences.

For example, 501(c)(3) organizations have strict limitations for political activities. They cannot officially endorse or oppose political candidates. 501(c)(4) organizations can engage in political activities as long as these activities further their social welfare purposes.

Donors also cannot deduct donations to 501(c)(4) organizations on their federal tax return. However, financial contributions to 501(c)(3) organizations are tax-deductible.

Can an LLC Be a Nonprofit in NJ?

There is no law in New Jersey restricting business owners from structuring their nonprofit as a limited liability company (LLC). Still, most New Jersey business owners choose to create a nonprofit corporation. This is because getting tax-exempt status as a limited liability company (LLC) is more difficult than it is for a corporation.

A nonprofit LLC can qualify for tax-exempt status only in three specific, narrow situations. Nonprofit corporations also have an easier time securing government and subsidized grants.

Both LLCs and corporations protect business owners' personal assets. If your goal is to get tax-exempt status, organizing as a corporation may be the preferred choice for your nonprofit.

Unsure About Your New Jersey Nonprofit Formation? Get Legal Help

Even after researching the nonprofit formation process, you still may find yourself with questions. A professional's guidance on your unique circumstances and business goals can help. Running a tax-exempt organization carries numerous legal implications, and you'll want to be sure you get things right the first time.

Talk to a New Jersey business organization attorney to learn more. An experienced local attorney can help you apply for state and federal tax exemptions, obtain local licenses and permits, and more. They can also advise on hiring employees and employment laws.