Starting your own non-profit in Virginia
Steps to create a non-profit organization in Virginia: A general guide
Selecting a name
The name should not contain phrases or words that imply that your organization was formed for any other purposes other than what they’ve been authorized to conduct
The Virginia nonprofit name should not contain the word “redevelopment.” The only exception is if it complies with Chapter 190 of the 1946 Acts of Assembly
The name should not include an organizational designation like Ltd, Inc, Company, or Incorporated
Nominate a Virginia Registered Agent
All businesses in Virginia, be it for-profit or nonprofit organizations, are required to have a registered agent. A registered agent is often referred to as a service of process or statutory agent.
Their primary role is to accept legal papers on the nonprofit’s behalf in the event that it is sued. Therefore, registered agents are responsible for receiving official mail and service of process documents on behalf of the nonprofit organization.
Recruit board members
Before you can register your nonprofit, it is required by law that you recruit a board of directors.
Your Board of Directors will be made up of incorporators, initial directors as well as officers. Start by recruiting an incorporator who will be responsible for signing the Articles of Incorporation on the nonprofit’s behalf.
When it comes to recruiting officers, you need to nominate three individuals to fulfill the roles of president, secretary, and treasurer.
Consent to bylaws and conflict of interest policy
You need to have important government documents complying with Virginia law prior to filing your nonprofit’s Articles of Incorporation.
The bylaws contain the procedures and rules your corporation will follow when holding board meetings, electing officers and directors, and taking care of certain company formalities required in the state of Virginia.
Additionally, the nonprofit in Virginia will also need to compile a Conflict of interest policy. This policy ensures that all decisions taken by the board of directors and members are always in the nonprofit’s best interest or made to further its cause as opposed to furthering the personal agendas of board directors and members.
Select a Virginia nonprofit startup corporation structure
The state of Virginia has different types of organizational structures. So this step in the process depends on you determining a legal form for your nonprofit corporation.
Usually, charities take the legal form of a nonprofit public benefit corporation. However, other nonprofits are set up as trusts or associations.
Other types of organizations or types of nonprofits include mutual benefit and religious corporations. Mutual benefit corporations are normally created to benefit their members. This includes business leagues and social clubs.
Prepare and file nonprofit Articles of Incorporation
Your nonprofit’s Articles of incorporation with the state of Virginia are required to register your nonprofit. It’s also an essential step to obtain tax exemption in its ability or apply for 501(c)(3) tax-exempt status.
Essentially, the Articles of Incorporation officially mark the formation of the nonprofit organization. They also document important details such as when and where the organization was formed and verify’s its existence.
Additionally, the Articles of Incorporation must be accompanied with specific information, including:
Your Virginia nonprofit organizations name
The name of the registered agent and their office location
The names of the nonprofit’s initial directors and incorporators
The articles must also explicitly state the nonprofit organization‘s purpose or the organization’s mission. Think of it as your nonprofit’s mission statement.
It must also include a dissolution statement or clause which must state exactly what the nonprofit organization‘s assets are being used for and what will be the outcome of the assets if the organization is dissolved.
Secure an EIN (Employer Identification Number)
Your Virginia nonprofit will need an Employer Identification Number. The Employer Identification Number is also referred to as a Federal Tax Identification Number.
It is a unique nine-digit code that the Internal Revenue Service assigns and uses to identify business entities in the state. Think of it as a Social Security number for a nonprofit organization.
In order to receive an EIN, you need to complete IRS Form SS-4 and apply online with the Internal Revenue Service. The application is free of charge.
With your EIN in hand, you’ll be able to open up a business bank account for your nonprofit, hire employees and submit this number for federal and state tax purposes.
Apply for federal tax exemption
Every Virginia nonprofit should apply for federal tax exemption, under the Internal Revenue Code. You need to complete Form 1023 and submit it to the Internal Revenue Service. Alternatively, if the nonprofit is a small business organization, then complete Form 1023-EZ.
However, prior to submitting the application for 501(c)3 tax-exempt status, you’ll need to have eligibility. You’ll need to have elected a minimum of three directors, not each other, obtained your Employer Identification Number, adopted governing policies and filed the Articles of Incorporation.
Apply for Virginia state tax exemption
If you received a federal tax exemption and have your determination letter in hand, there is no need to file to obtain state income tax exemption. This is because existing organizations are automatically exempt once they’ve received their IRS determination letter.
However, you will need to file to obtain sales and use tax exemption. File Form NP-1 with the Virginia Department of Taxation.
After 12 months, don’t forget to submit an annual report! Annual reports need to be submitted by all Virginia nonprofit corporations. The annual report must be submitted to the office of the clerk by the last day of the 12th month after your nonprofit was incorporated. And you need to stick to this date each year thereafter. File the annual report online through SCC eFile.
Information obtained from www.ChamberofCommerce.org/nonprofit/virginia
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