How to Start a Nonprofit in Vermont

Introduction

A nonprofit is a type of organization that has 501(c)(3) tax-exempt status. This means it qualifies for certain federal, state and local laws that allow it to operate as an organization without being taxed. Once you register your nonprofit with the IRS, you’ll need to apply for a certificate of exemption from the Vermont Secretary of State office. If you’re starting a small non-governmental entity like a library or community centre, this process might seem intimidating, but don’t worry! We’ve got all the details right here on how to start a nonprofit in Vermont:

Develop your mission statement.

Before you can begin the process of starting your nonprofit, it is important to have an idea of what problem your organization will be attempting to solve. You can think of this as developing a mission statement, which states the purpose and goals of your project.

This helps solidify everything from your target audience to the type of services or programs that you will offer. Here’s how we’d go about developing a mission statement:

Complete the articles of incorporation.

The articles of incorporation, also known as the “articles,” is a document that must be filed with and approved by the Secretary of State. The article specifies the basic information about your nonprofit organization and outlines how you want it to run. These documents are often included as part of a nonprofit’s bylaws, but they serve different purposes and contain different information depending on what type of legal entity your nonprofit is registered as (e.g., corporation vs. limited liability company).

Specifically, articles provide details about:

• the name of your organization;
• its purpose;
• who controls its management;
• where it conducts business; and
• its physical address (if based out-of-state).

File the articles of incorporation with the Vermont Secretary of State.

One of the first steps to start a nonprofit in Vermont is to file the articles of incorporation with the Vermont Secretary of State. The articles of incorporation are essentially a document stating your intention for creating a nonprofit organization and what you hope to achieve as an organization.

The purpose of filing with the Vermont Secretary of State is that once it’s filed, it creates legal standing for your organization so that you can legally conduct business within state boundaries. This also allows you to open up bank accounts, hire employees or solicit donations from donors in Vermont and other states (depending on where they live).

Apply for tax exemption by filing IRS Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code.

The form is fairly straightforward, with a few exceptions:

• You must attach a completed Schedule A (Form 1024) to your application if you intend to make any political expenditures in the current tax year or the next two years. In addition, Schedule B (Form 1024) must be completed and attached if you are requesting tax-exempt status under Section 501(c)(3) of the Internal Revenue Code as an organization described in section 501(c)(2).
• If your organization has created its own financial statements, they must be attached to form 1024 along with copies of all 990s filed by any predecessor organizations (this includes international organizations).

Maintain your tax-exempt status by renewing your state registration every year and filing IRS Form 990, Return of Organization Exempt From Income Tax if you expect to raise more than $25,000 a year.

You’ll need to file Form 990 with the IRS on a yearly basis. The form is due by the 15th day of the fifth month after the end of your organization’s tax year (so, if your tax year ends on Dec. 31, 2018, you would have until May 15, 2019, to submit your Form 990). If you expect to raise more than $25,000 in a single year and are not incorporated as a nonprofit corporation or trust, then you must file Form 990 instead of Form 1023-EZ.

Keeping up with IRS rules can be confusing and intimidating for first-time nonprofits. Fortunately, there are many resources available to help guide your organization through the process!

Takeaway:

The benefits of starting a nonprofit are numerous and can include:

• Doing good for your community. You’ll be able to help others by doing what you love.
• Getting recognition for your work. If people see the impact of your nonprofit, they may want to donate or volunteer with you!
• Making connections that will last a lifetime. People who work in nonprofits often develop meaningful relationships with their team members, who could be lifelong friends or even family members one day.

   

   

  Summary

  The steps to start a nonprofit are as follows:

  1) Find out if there’s an existing organization doing what you want to do (or similar). If so, join it! If not—or if this is something new—continue on.

  2) Get informed about Vermont’s laws regarding nonprofits so that when someone asks about how long it will take them before they can get 501(c)(3) status from their state government office (which means donations become tax-deductible), they answer appropriately.

  3) Decide on an organizational structure and name before filing paperwork with any agencies within Vermont’s Office of Consumer Affairs & Business Regulation; membership dues aren’t required until after these steps have been completed successfully

Conclusion

As you can see, starting a nonprofit in Vermont is a complex process. It’s important to take your time and get all the details right so that when you finally file with the state and federal government, everything goes smoothly. The best way to do this is by consulting an attorney who specializes in nonprofit law.