What steps would I take to form a nonprofit corporation?

On Behalf of | Dec 23, 2020 | Business Law

If you plan to form a nonprofit corporation in Indiana, or if you plan to incorporate a nonprofit you already own, the law requires you to take certain steps. These steps are similar to those for any other business entity, but there are specific requirements for nonprofits.

Understanding state law will help you anticipate the process.

Name your nonprofit

The Indiana Secretary of State explains that nonprofits, like any other business, must have a lawful and distinguishable name. The name you choose will need to be distinct from other businesses of the same type, but except in certain cases, the Secretary of State will not check it against names of other business types. For example, if there is an Indiana corporation with the name, “Trout Contract Services,” you cannot give your nonprofit corporation the same name or a name so similar that it is difficult to distinguish.

File articles of incorporation

If you wish to incorporate your nonprofit, you will need to file articles of incorporation. You will need to include at least the name you have registered with the Secretary of State, the location and personal information for you and any other partners incorporating with you, a statement regarding your nonprofits’ public benefit, religious or mutual benefit and whether you will have members. And you will need to include a statement addressing what will happen to the corporation’s assets upon dissolution.

If you plan to apply for tax exemption, you may also need to include a clause concerning your nonprofit’s purpose in your articles of incorporation.

Prepare for taxation and employees

Your next step, in most cases, will be to contact the Indiana Department of Revenue and the Internal Revenue Service to register your corporation for tax purposes. You will also need to contact the Department of Workforce Development if you plan to have employees. They will walk you through your legal requirements.

Depending on your specific affiliations and needs, you may need to take additional steps, and you will very likely need to maintain ongoing legal obligations such as registration updates and regular business reports. But some nonprofits are exempt from typical ongoing obligations. For example, the State of Indiana does not require nongovernmental organizations to retain records.

Be sure to check for all federal, state and local requirements for your incorporated nonprofit. Just because your corporation is exempt from an obligation under Indiana law does not mean that other jurisdictions will offer the same exemptions. For example, other states where you plan to operate may have a different set of requirements.