How to Start a Nonprofit in VA
A nonprofit is a business with a purpose. A nonprofit corporation is a legal entity formed for a social or public benefit, and its focus is not on making money. Many different types of nonprofit organizations exist, and they each have a specific purpose. Whether you want to start a charity or sponsor a little league team, you need to know how nonprofits work. In the sections that follow, you will learn how to create a nonprofit in Virginia.
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Step One: Describe Your Nonprofit's Purpose
It is a requirement of the Internal Revenue Service (IRS) for nonprofit organizations to have a purpose statement. Having a nonprofit purpose will help you apply for grants and determine if you are eligible for federal and state tax exemptions.
A nonprofit organization can receive tax-exempt status if the nonprofit organization's purpose is one of the following:
- Testing for public safety
- Fostering national or international amateur sports competitions
- Preventing cruelty to children or animals
Step Two: Register Your Organization's Name
A business must have a unique name. Virginia requires that your business or organization's name does not conflict with any other registered or reserved business name in the state.
Virginia law states that a business name may not contain misleading information. For example, suppose your company is not a registered limited liability company (LLC) with the Commonwealth of Virginia. In that case, you cannot use "LLC" or "limited liability company" as part of your organization's name.
Virginia requires you to register your nonprofit's name. Visit the website of the Virginia Commonwealth Corporation Commission to make sure your name has not already been claimed. This website will include the names of all Virginia businesses that are appropriately registered or reserved.
Step Three: Incorporate Your Organization
A nonprofit organization must be incorporated with the commonwealth. In Virginia, a nonprofit, or any other company, is formally incorporated by filing articles of incorporation with the Virginia State Corporation Commission. The application fee is $75, and applications are generally processed within 3-7 business days.
Step Four: Have Your First Organizational Meeting for the Board of Directors
You will need to have an initial meeting with the board of directors. There is a lot of business to conduct this meeting. The board of directors will approve the nonprofit's bylaws, adopt a conflict of interest policy, and decide whether to open a bank account.
Step Five: Obtain an EIN
An EIN is an Employer Identification Number. Every business must have an EIN under federal law. To obtain an EIN, you go to the IRS website. Please note that there will never be a cost associated with getting an EIN directly from the IRS.
You can apply for an EIN for your nonprofit online, by phone, via fax, or through the mail. Response time differs depending on the medium through which you apply.
- Apply by phone or online and get a response immediately
- Apply by fax and get a response in 3-4 business days
- Apply by mail and get a response in 4-5 weeks
Step Six: Appoint a Registered Agent
Every business entity in Virginia must have a registered agent. A registered agent is a person or company designated to receive service of process for a business. Every state has its own rules about acting as a registered agent. In Virginia, a registered agent must be physically located in the commonwealth. Your registered agent must also maintain an office that is open during regular business hours.
Step Seven: Apply for a Federal Tax Exemption
Nonprofits are eligible for 501(c)(3) status. 501(c)(3) status is a legal designation that allows eligible organizations and their donors to claim federal tax exemptions. You will receive an IRS determination letter after being approved.
Step Eight: Apply for Commonwealth Tax Exemption
Getting state tax exemptions for a nonprofit is easy in Virginia. After receiving your IRS determination letter, you will automatically receive the state tax exemption. There is no need to apply or put any agency on notice of the existence of your nonprofit.
Step Nine: Charitable Solicitation Registration
Every charitable organization that solicits charitable donations must register with the Virginia Office of Charitable and Regulatory Programs. Your organization must meet the office's filing requirements before it begins any fundraising.
Step Ten: File Periodic Reports
Every Virginia nonprofit must file an annual report each year. The filing fee for the report is $25.00.
Have Additional Questions?
You can find legal resources on FindLaw to learn about nonprofit organization formation. If you are looking for legal advice on nonprofit formation, check out FindLaw's directory of attorneys.
Then, use our DIY nonprofit formation tool that will walk you through the business formation process so that your nonprofit corporation is set up correctly.
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