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How To Start a Nonprofit in Pennsylvania

Starting a nonprofit in Pennsylvania involves several layers of business planning and legal requirements. You will interact with different government agencies and complete a lot of paperwork as you start and operate your business.

Whether you're interested in helping children or animals, providing access to educational services, or another cause, your nonprofit organization could be exempt from federal income tax. Federal income tax exemption is a benefit available to nonprofit organizations that qualify for 501(c)(3) status with the Internal Revenue Service (IRS).

This article guides you through the steps of starting a Pennsylvania nonprofit. It will also help you understand the requirements for becoming (and staying) a tax-exempt organization.

We make business formation EASY. Click here to start your DBA or non-profit.

Step 1: Name Your Nonprofit

Naming your nonprofit organization is an essential first step for branding and legal reasons. Your business name should resonate with your target audience and align with your mission and goals. If your organization's name is misleading or confusing, you may have problems connecting with those you want to receive your message.

From a legal standpoint, you need a name that doesn't violate any state or federal laws.

Start your naming process with a brainstorm. Make a list of names you like for your organization. Next, review the list and ensure you haven't used any words or phrases prohibited under Pennsylvania law. For example, you can't use:

  • Words or phrases that imply your organization is a governmental agency or educational institution
  • Profane or blasphemous words or phrases
  • Words or phrases such as "bank," "banking," "banker," or "trust" unless your organization is a financial institution
  • Words or phrases such as "casualty," "fidelity," "insurance," or "assurance," unless your organization is licensed as an insurance company

Next, check state business records to ensure your name isn't already taken. Pennsylvania requires that your business name is unique and distinguishable from all other names in the business entity database. Use the database on the Pennsylvania Department of State website to check each potential name. If you find that a name on your list is already in use, you must choose a different name that is available.

You should also check for federal trademarks if you plan to operate nationally or across multiple states. Use the trademark database search tool on the United States Patent and Trademark Office (USPTO) website to look up potential business names.

You will also want to register the domain name for your business.

Step 2: Choose Directors and Officers

Pennsylvania law requires all corporations to have a board of directors. Your nonprofit's board of directors is responsible for the organization's overall governance and strategic direction.

To comply with IRS requirements, your board needs at least three directors (or members) who aren't related to each other. You must assign the following offices as well:

  • President
  • Secretary
  • Treasurer

When choosing board members, consider the skills and value they could add to your organization. Networking connections, fundraising and grant writing experience, and expertise in your nonprofit's field are all positive qualities to look for in a potential board member.

Carefully consider the qualifications of the board members in specific offices (president, secretary, and treasurer). They will have significant duties and responsibilities in daily operations.

Step 3: Appoint a Registered Agent

You'll need to appoint a registered agent for your Pennsylvania nonprofit corporation. A registered agent is your organization's official legal point of contact. They're responsible for service of process or receiving legal paperwork on behalf of your business.

For example, if a party sues your corporation, your registered agent will receive your legal documents. Your registered agent must have a physical address in Pennsylvania, not a P.O. Box.

If you can't find a qualified individual to serve as your registered agent, you can hire a registered agent service.

Step 4: Prepare Bylaws and Conflict of Interest Policy

You'll need to prepare corporate bylaws and a conflict of interest policy for your nonprofit corporation. This is a requirement for tax-exempt status.

Bylaws are the rules and procedures governing the operation of your organization. Your bylaws should also clearly specify your organization's purpose. You'll need to reference your bylaws for guidance on handling officer elections and other business matters.

conflict of interest policy outlines the process for situations when someone's personal interests may conflict with the organization's best interests.

Step 5: File Articles of Incorporation

Filing the Articles of Incorporation for your organization officially forms your corporation. You'll need to use care with the language you use in your Articles of Incorporation if you plan to apply for 501(c)(3) tax-exempt status.

For example, your organization's stated purpose is important. Your purpose must be one of the following to qualify for tax-exempt status as a 501(c)(3):

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

When you're ready to file, complete Form DSCB: 15-5306/7102. You can submit your Articles of Incorporation online using Pennsylvania's Business One-Stop Shop Hub. You'll need to include the PA docketing statement and your filing. The docketing statement is similar to a cover sheet. The filing fee for Articles of Incorporation for a Pennsylvania nonprofit is $125.

You also must publish notice of your filing or intent to file in two newspapers, one of which is a legal publication. The notice should include the name of the corporation and a statement that you have incorporated or will incorporate the organization in compliance with the Nonprofit Corporation Law of 1988. You won't need to submit proof of publication to the state. But file your proof with your nonprofit's business documents.

Step 6: Get an EIN

A federal Employer Identification Number (EIN) is like a social security number for your organization. It identifies your business for tax purposes. The Internal Revenue Service (IRS) assigns these numbers for free. All you must do is apply online.

Watch out for commercial sites charging a fee for an EIN. Some of them mimic the appearance of the official IRS website.

Your organization must have an EIN if you plan to apply for tax exemption as a 501(c)(3) organization. You'll also need an EIN or Tax ID number to open a business bank account and hire employees for your organization.

Step 7: Hold Your First Organizational Meeting

At the initial meeting of your board of directors, you'll need to accomplish several business matters:

  • Formally adopt the bylaws and conflict of interest policy (if you're planning on applying for tax-exempt status)
  • Install the officers and directors
  • Set the board's meeting schedule
  • Discuss opening a business bank account and other financial oversight

Maintain a thorough record of business that occurs at the initial meeting.

Step 8: Apply for Tax-Exempt Status as a 501(c)(3) Organization

Before you apply for recognition of exemption as a 501(c)(3) organization, review the checklist of IRS requirements. You risk rejection if you apply before you have:

  • An EIN
  • Articles of Incorporation
  • Adopted bylaws and conflict of interest policy
  • Three elected directors

Once you're ready to apply, you can find the appropriate form on the IRS website. IRS Form 1023 is commonly used for federal tax exemption, but you might be able to use the shorter version of this form. The shorter version, IRS Form 1023-EZ, is for smaller organizations. If you think you're eligible for the condensed version, complete the Form 1023-EZ eligibility worksheet.

The cost of your application for recognition of exemption depends on the form you use. IRS Form 1023 has a filing fee of $600. IRS Form 1023-EZ has a filing fee of $275.

You will receive a determination letter from the IRS if approved for federal tax-exempt status. The IRS also posts determination letters for approved organizations on their Tax Exempt Organization Search (TEOS) tool.

Step 9: Apply for State Tax Exemptions

If the IRS approves your nonprofit for federal tax-exempt status, your organization is also exempt from state corporate income tax.

But you'll need to apply for sales tax exemption through the Pennsylvania Department of Revenue. Use Form REV-72: Application for Sales Tax Exemption.

Your nonprofit may also be exempt from real estate or property taxes. Cities and counties oversee these taxes. Contact your county tax assessor's office to learn more.

Step 10: Register as a Charity in Pennsylvania

Most nonprofits rely on donations from companies and individuals to fund their programs. If you plan on holding fundraising events or other activities involving the solicitation of funds, you'll need to register as a charity in the state of Pennsylvania.

To register, complete the Charitable Organization Registration Statement (Form BCO-10) and include the required documentation. Find instructions for this form here. You can submit your charitable organization registration statement either online or by mail.

Filing fees for charitable registration are on a sliding scale, between $15 and $250.

Some organizations are exempt from the Pennsylvania registration requirement.

Do I Need a Business License for My Nonprofit?

As a nonprofit, you don't need a general business license from the state. But you may need local licenses or permits, depending on your business's scope and where you operate.

If your nonprofit has a physical location, you will also need to look into zoning requirements for your area. Use this tool on the Business One-Stop Shop to find contact information for the agencies that handle your area's registration, permits, and zoning.

Can My Nonprofit Be an LLC in Pennsylvania?

There is no law in Pennsylvania prohibiting business owners from organizing their nonprofit as a limited liability company (LLC). While you can form an LLC with a charitable purpose, most nonprofit owners choose to organize their nonprofit as a corporation.

This is because getting tax-exempt status as an LLC is more complicated than it is for a corporation. A nonprofit LLC can qualify for tax-exempt status, but only in three specific, narrow situations. Nonprofit corporations also have access to a broader range of funding, like government grants.

Both corporations and LLC structures offer personal liability protection to the organization's owner and members. While LLCs offer more flexibility in how you manage your business, structuring your Pennsylvania non-profit as an LLC instead of a corporation will make it more difficult to obtain federal tax-exempt status.

In general, if your goal is to operate for a charitable or educational purpose and get tax-exempt status, organizing as a corporation may be the preferred choice for your nonprofit.

State laws regulate LLCs. The Pennsylvania Nonprofit Corporation Law governs the legal structure for nonprofits.

Need More Help With Your New Nonprofit? Talk to an Attorney

Starting a nonprofit involves many steps. Business owners often still need help after their nonprofit corporation is up and running. There are several ongoing requirements for tax-exempt organizations, as well as the usual demands of running a small business.

If you need support with your Pennsylvania nonprofit, consider contacting a Pennsylvania attorney. A skilled business organization attorney in your area can answer your questions and help you feel more confident as you move forward with your business venture.

Another option is our trusted, simple-to-use online business formation tool. This tool takes the guesswork out of your nonprofit formation. We'll guide you through launching your startup and help you meet the necessary legal requirements.

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