Starting a nonprofit in Virginia requires significant preparation. Here’s how to start a nonprofit in Virginia from our lawyers specializing in nonprofit organizations in Virginia.
Most nonprofits organizations incorporate (file Articles of Incorporation) as non-stock corporations to provide limited liability protection to the organization’s Directors, officers, managers and the like. Only the corporation’s assets are at risk. Due to this status, planning and maintaining a nonprofit takes extensive time and effort.
In addition, the language, terms and conditions of the Articles and By-Laws must be carefully crafted to be acceptable to the IRS when filing for tax exempt status (see below). Most “form” article an bylaws fall far short.
After the entity is incorporated, the Board will adopt By-Laws and necessary resolutions designed to properly position the entity so it will eventually qualify as a tax-exempt entity under Internal Revenue Service rules.
When creating the non-stock corporation, the organizers may fold into the Articles of Incorporation and By-Laws, the corporation’s tax-exempt mission. To do this, the founder(s) may consider writing down everything they want to accomplish, and then narrow it down to the most important parts.
When organizing a non-stock corporation, the entity must adhere to certain criteria, such as:
Once the entity is incorporated, the Incorporator elects the initial Board of Directors. The Board is often folks with knowledge related to the organization’s purpose and those who display good leadership skills. The Board will then adopt By-Laws which set forth the operation of the organization.
The By-Laws eventually be dissolved. Bylaws should also include guidance for other issues like holding meetings, electing directors and officers, and record keeping. You should also include a process for adding or amending the bylaws document as well as any specific requirements relevant to your organization’s purpose.
Next, the Board will conduct its initial meeting of the board of directors. Remember to record meeting minutes and have them signed by all directors in attendance.
During this meeting, the Board will be setting a tax year, applying for tax-exempt status, acquiring all required licenses and permits for the organization and financial planning. The Board will then direct the Treasurer to open a bank account for your nonprofit.
After the nonstock corporation is “up and running,” it will have annual filing obligations with the State Corporation Commission, including annual registration fees.
Once the process of incorporation is completed, you have just begun. Why? The next step is applying for, and securing tax-exempt status from the IRS. Under IRS law, there are numerous tax-exempt entities. The most popular are:
The process of applying, however, is very technical, very specific and not “user-friendly. Indeed, it can be frustrating, complicated and overwhelming. Having an experienced attorney on your side can make a big difference. If you need help with starting a nonprofit, contact Cook Craig and Francuzenko today!
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