How To Start a Nonprofit in NYC

You must select a unique name for your NYC nonprofit. Your name should be distinct, but simple and easy to remember. It should also clearly reflect your nonprofit's mission. Choose a name that resonates with your target market.

There are also legal considerations for choosing your nonprofit's name. You must follow state guidelines, which specify the name must:

• Include an organizational designation, like “Incorporated" or “Inc."
• Be distinguishable from other business names used in the state. You can search for registered names on the New York Department of State website
• Not be deceptive
• Not imply the organization was formed for any purpose other than those included in its certificate of incorporation
• Not have any words that suggest that the organization is acting as an agent of the United States or New York governments
• Not include obscene words, ridicule any person or group, or imply it engages in unlawful activities

New York statute includes a list of words you cannot use to name your nonprofit without approval. Those terms include:

• Board of Trade
• State police
• Urban development
• Chamber of commerce
• State trooper
• Urban relocation
• Community renewal
• Tenant relocation

Your name must not already be in use by another business entity. New York does not have an online searchable database of registered business names. To see if your selected name is already registered, submit a written request to:

The Department of State

Division of Corporations

One Commerce Plaza

99 Washington Avenue

Albany, NY 12231

Your written request should state that you wish to find an available name. Provide any names you would like searched. Keep a copy of this request. It helps to include it when you later submit your business name for filing.

You can reserve your business name for up to 60 days if you are not ready to formally incorporate your business. To do this, file the Application of Reservation of Name with the NYS Department of State, Division of Corporations. This requires a $20 filing fee.

If your nonprofit will do business in other states, you should also search for your business name on the United States Patent and Trademark Office (USPTO) website. If your name is already federally trademarked, it is best to choose a different name.

New York is one of the few states that does not require corporations to appoint a registered agent. A registered agent is a corporation's legal point of contact responsible for service of process, or receiving legal documents.

The New York Secretary of State serves as your default registered agent. The Secretary of State forwards any legal documents it receives to your organization.

You can name a registered agent. You have the option to name yourself or anyone involved with your organization. You can also use a registered agent service.

Your registered agent must live in New York. If you use a registered agent service, it must be authorized to transact business in the state. Your registered agent must also be available during regular business hours to sign for legal documents.

To register your nonprofit corporation, you must file a certificate of incorporation with the New York Department of State, Division of Corporations.

This certificate serves as your organization's articles of incorporation. This step is key if you file for tax-exempt status under Section 501(c)(3) of the Internal Revenue Code.

To be eligible for a federal tax exemption, your certificate of incorporation must include language stating your organization's purpose is solely one or more of the following:

• Charitable
• Educational
• Religious
• Scientific
• Fostering amateur sports competition
• Prevention of cruelty to children or animals
• Testing for public safety

The Internal Revenue Service (IRS) requires your certificate to state a clear plan for your organization's assets in the event of dissolution, or closing your business.

Although not an IRS requirement, New York City also requires your certificate to include:

• Your corporation's name
• The county where your corporate office operates
• The names and addresses of the initial directors
• If you have not named a registered agent, the address where the secretary of state should mail a copy of any service of process
• Provisions regarding how your corporation will govern its internal affairs

The Department of State website has a fillable form to file your certificate of incorporation.

You can then register for a New York City business account for taxation purposes.

After forming your New York nonprofit as a corporation, you can organize as either a religious corporation or a non-religious corporation.

All non-religious corporations must organize as one of the four following types:

• Type A: Non-business purposes. Includes corporations that fall into the following categories: civic, political, social, athletic, fraternal, agricultural, horticultural, and patriotic. Also includes associations organized for the following purposes: professional, industrial, commercial, trade, and service.
• Type B: Non-business purposes: charitable, educational, cultural, religious, literary, scientific, prevention of cruelty to children or animals
• Type C: Public or partial-public purposes, often those that a for-profit corporation usually performs. This includes Type A and Type B activities conducted by an organization that would otherwise classify as Type C.
• Type D: Organized for any other purpose.

Your nonprofit might be classified under more than one type. For example:

• If your nonprofit's activities could be classified as both Type A and Type B, it should be incorporated as a Type B nonprofit.
• If your nonprofit's activities could be classified as Type C along with any of the other types, you will be classified as Type C only.

Religious corporations organized under the Religious Corporations Law enable members to meet for worship or other religious observances.

Every corporation needs a board of directors. The board of directors serves as a corporation's governing body.

New York law requires you to name at least three directors to your nonprofit corporation. Each director must be at least 18 years old, with younger directors allowed for organizations involved in youth activities. The director is not required to be a state resident or a member of the organization.

Choose your board members with care. Consider their experience, background, and how they can support your organization. Qualifications to look for include fundraising experience, networking connections, leadership abilities, and enthusiasm for your nonprofit's mission.

Terms for directors must be between one and five years. Positions that New York City requires that you name include:

• President
• At least one vice-president
• Secretary
• Treasurer

These specific offices require a one-year term.

Depending on the services your nonprofit provides, you may need approval from a state agency to incorporate legally. Some types of nonprofit corporations that must secure agency approval (and the agency providing approval) include:

• Educational or organizations founded to promote knowledge (Department of Education Office of Counsel)
• Facilities that offer adult daycare (Department of Health Division of Legal Affairs)
• Hospitals or health services (Department of Health Division of Legal Affairs)
• Organizations for the care of children, victims of domestic violence, or destitute mothers (Office of Children and Family Services)
• Programs for substance abuse (Office of Alcoholism and Substance Abuse Services Bureau of Certification)

Trade or business associations (Office of the Attorney General's Antitrust Bureau) need approval too.

Corporate bylaws are the framework for how your business will operate. They should be consistent with the information on your certificate of incorporation and comply with New York law.

What you include in your bylaws can vary based on your nonprofit's scope, mission, and activities. Most nonprofit bylaws contain the following:

• Your organization's name and purpose
• Board of Directors meeting procedures like quorum and frequency
• Directors and officers' names and offices
• Financial management details
• Process for amending bylaws
• Dissolution process and how your nonprofit will distribute its assets if it closes down

You will reference some elements of your bylaws in the next step when you incorporate your nonprofit.

Your board of directors' first organizational meeting will accomplish several key points of business:

• Approve your corporate bylaws
• Establish a conflict of interest policy
• Elect directors
• Appoint officers
• Adopt a conflict of interest policy
• Approve financial matters, like opening a corporate bank account

Take detailed notes at this meeting. You'll need to reference the decisions made as you operate your nonprofit.

There's a strong chance the IRS will reject your request for a federal income tax exemption if your board has not adopted corporate bylaws and a conflict of interest policy when you file your application.

A conflict of interest policy details a process your nonprofit will follow if the personal interests of a board member conflict with the best interests of the organization.

You will need a federal Employee Identification Number (EIN) from the IRS. The IRS uses these numbers for identification and tax purposes. Think of it as a social security number for your business. Your organization will need an EIN before you can:

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

You can get your EIN for free on the IRS website. Beware of commercial websites that charge a fee for an EIN. Many of them look similar to the official IRS website.

You can also apply for an EIN by filing IRS Form SS-4 via telephone, fax, or mail.

You can then file for your New York State Employer Registration Number with the Department of Taxation and Finance, Form NYS-100.

Applying for a 501(c)(3) federal income tax exemption can be the most intimidating and time-consuming aspect of starting a nonprofit. It's worth the hassle, as 501(c)(3) designation grants many benefits to your organization, including:

• An exemption from paying federal income tax
• Donors can deduct contributions made to your organization from their federal income tax returns

To apply for exempt status, your organization must file Form 1023 or Form 1023-EZ with the IRS. Form 1023-EZ is for smaller organizations. You can file this streamlined form if your nonprofit:

• Has projected annual gross receipts of less than $50,000 for the next three years
• Not earned $50,000 in the prior three years
• Does not have assets valued at more than $250,000
• Meets certain other qualifications

All other nonprofits must file the standard Form 1023.

The filing fee for Form 1023 is $600.00. The filing fee for Form 1023-EZ is $275.

This process is detail-intensive. You must provide information on your nonprofit's organization, history, policies, finances, and more. Give yourself enough time to answer everything thoroughly.

If the IRS approves your 501(c)(3) status, you will receive a determination letter within about a month, under normal circumstances.

After you receive your IRS determination letter, you can apply for city and state tax exemptions.

Apply to the state for your New York exemption from state corporate franchise tax by completing Form CT-247. File this with the New York City State Department of Taxation and Finance.

Your corporation can also obtain a state sales tax exemption by filing Form ST-119.2. If approved, you can make exempt purchases on behalf of your organization.

There is no filing fee for these forms.

Some New York City nonprofits are eligible for a property tax exemption.

You must register with the New York Attorney General's Charities Bureau before fundraising in the state. This registration is necessary if your organization plans on soliciting donations from individuals, corporations, foundations, or government agencies in New York. The filing fee for this is $25.

Once registered, you must renew each year. New York uses a sliding scale to determine renewal fees.

Once registered, your organization will appear on the Charities Public Registry searchable database.

Some organizations qualify for an exemption from this registration requirement.

While the state of New York does require a general business license, New York City has local licensing, permit, and zoning requirements. For example, you will need a Place of Assembly Permit if your nonprofit will host events of 75 or more people.

If you plan to operate from a physical location, research NYC zoning requirements first. The ZoLa (Zoning and Land use) Map from the Department of City Planning is a great tool to find zoning information for specific neighborhoods.

Use this tool for a customized list of NYC requirements for your organization.

You have responsibilities if you plan on hiring staff. NYC has labor laws that include a higher minimum wage than the state and paid sick time requirements. The Office of Labor Policy and Standards for Workers enforces these regulations.

Under New York law, all employers must provide all workers, including part-time, annual training on sexual harassment prevention. New York State requirements are stricter than New York City's. However, NYC employers must keep a record of the employees who attend each training.

You will also need insurance:

• New York employers must pay taxes for unemployment insurance. Reference this guide from the New York State Department of Labor (NYSDOL) to learn more. Employers can register for unemployment insurance online with the NYSDOL.
• New York employers must carry workers' compensation insurance. You can get your policy from a private insurance carrier or the New York State Insurance Fund. You also have the option to use self-insurance, but this is rare.

NYC imposes additional taxes and fees on businesses operating within its jurisdiction. This includes local business taxes such as the Commercial Rent Tax for certain commercial properties located in specific parts of Manhattan.