Process Of Starting A Non-Profit Business in Alabama

Introduction

Starting a non-profit is not as difficult or complicated as you may think. You can get started by filing Articles of Incorporation with the Secretary of State and registering for tax-exempt status from the IRS. There are many steps involved in starting your organization, but don’t worry: we’ve got them all covered.

File the Articles of Incorporation

Next, you will need to file the Alabama nonprofit Articles of Incorporation with the Secretary of State. The articles must include:

• The name of your corporation.
• A statement that it’s a nonprofit corporation and its purpose.
• Its duration (must be perpetual unless otherwise stated).
• The names and addresses of at least three incorporators, who must be Alabama residents or citizens.

Consult the IRS Website for Tax Exemption Information

Before you can submit your application to the state, you will need to conduct some research. The first step is consulting with the IRS website to determine if you will benefit from applying for tax-exempt status. If so, go ahead and fill out Form 1023 or 1024 and send it in with your organization’s documentation (such as articles of incorporation). Other steps that may be required include filling out Form 990 or 990-EZ (if applicable), paying an application fee via check or credit card (usually between $400-$900), and sending in any other supporting materials needed by your state’s Nonprofit Division (for example: financial records).

In most cases, submitting a completed application should not take longer than six months; however there are instances where this process can take much longer than expected due to backlogs at both federal and state levels.

Obtain a Domain Name

You can obtain a domain name by signing up with a third-party provider such as Trademark Avenue. When selecting your domain name, keep the following in mind:

• The domain name should be short and easy to remember. For example, short words like “donate” work well for organizations that depend heavily on donations from the public.
• It should be available. If you want to choose a more specific word than “donate” (such as “DonateAlabama”) there is a greater chance that someone else has already registered that domain name—and there’s no way around it. You’ll have to think of something else if this happens!
• It should be memorable so people will know how to find you when they need help from one of your programs/services. It should also reflect what type of business/organization you are since different types have different requirements regarding their websites. For example: if you’re starting up a non-profit organization in Alabama then having the words “Alabama” somewhere within the URL makes sense because otherwise no one would know where it was located; whereas if an organization is started outside Alabama then maybe having those words wouldn’t make sense anymore since everyone knows where Alabama is located anyways.

Select an Experienced Board of Directors

When you start a non-profit organization, it’s important to select a board of directors that can provide guidance and oversight. Good board of directors are diverse in skills, experience, and perspective. They have a vision for the organization and they have good reputations in their communities.

If you’re just starting out with your business, it may be difficult at first to find people with all those qualities—but don’t give up! As your organization grows and becomes more established, you’ll build up your network that could benefit your non-profit business.

Be Sure to Get an Employer Identification Number (EIN)

If you plan on having employees, be sure to get an Employer Identification Number (EIN) from the Internal Revenue System (IRS). You can apply for an EIN online, by phone or by fax. The IRS will assign your organization a nine-digit number that is used as a tax ID.

If you already have a tax ID number and need to apply for an EIN, call 1-800-829-4933 or visit irs.gov/businesses/small/index.html#ein.

Obtain a Federal Tax Exempt Number From the IRS

You will need to obtain a Federal tax exempt number from the IRS using their online application process. The benefits of obtaining a Federal tax exempt number include:

• Ability to accept donations and distributions without paying taxes on them. This is helpful for your non-profit organization because it allows you to keep more money in the bank, which can be used for operations such as rent, advertising, or other necessary costs.
• Protection from lawsuits arising from actions taken by board members (for example: debts incurred while serving on your board). It’s important to note that even if you don’t have this protection right now, there are ways around it. For example, Alabama law states that any nonprofit corporation may sue or be sued in its own name; however, some states require additional filing fees and/or paperwork before they grant permission to do so. If your nonprofit has multiple directors with equal voting rights who have not authorized one another individually then no single director would necessarily be considered liable for debts incurred by another director during their term of office.

Create Bylaws for Your Corporation

By-laws are one of the most important documents you need to have in order to start a non-profit business. They provide rules for how your organization will be run, and they protect you from legal problems down the road.

For example, if there is no bylaw requiring the board of directors or officers to review financial statements at each meeting, then someone could claim that they weren’t given enough information about how much money was being spent on fundraising efforts or other costs. Without a clear policy in place, it would be difficult for them to prove their case against you.

By-laws also help establish what types of activities are acceptable within your organization (and which ones aren’t) so that employees know how much time they should spend working on behalf of your mission rather than doing personal tasks like surfing Facebook instead.

Draft an Operating Agreement

An operating agreement is a document that outlines the rules of your organization and how you want to run it. It should include:

• The names of all members, including officers, directors and managers
• A mission statement for the nonprofit
• A list of assets that are owned by the nonprofit
• How decisions will be made within the group (i.e., voting rights)

Time constraints make it difficult for many people to attend every meeting or event related to their non-profit work. That’s why an operating agreement is so important—it keeps everyone on task while ensuring they’re following your mission statement and goals.

What is ABN?

The ABN is your nonprofit organization’s record-keeping system that reflects donations and expenses under various categories based on accounting standards set by government regulatory agencies. It is also known as the “accounting basis number” or “unique entity identifier.” The IRS requires every nonprofit to have an ABN before receiving tax-exempt charitable status.

The purpose of this section will be to explain how to obtain an ABN in Alabama, as well as provide you with a few guidelines for using it effectively within your business.

Conclusion

And that’s all! You now have the information you need to start your nonprofit corporation. We hope this article has helped you understand how to start a non-profit and make it as easy as possible for you to get started today.