- [Narrator] How to form a 501(c)(3) nonprofit corporation.
A nonprofit corporation is purpose-driven,
a company whose goal is not to make profit for themselves.
Typically, they are an organization that wants to make money
in order to help further a social cause
or provide a public benefit.
Let's get you started on the right path
to forming a nonprofit corporation in Wisconsin.
(upbeat music)
If you're not sure what a non-profit is,
check out our other video,
"What is a nonprofit?" Linked below.
How do you form a nonprofit corporation?
There are two ways, you can do it yourself
or you can hire a service to do it for you.
Let's take a look at both options and help you decide
how to go about forming your own nonprofit corporation.
Option one, do it yourself.
If you want to save money,
you can form a nonprofit corporation on your own.
Let's take a look at the six steps
to forming a nonprofit corporation on your own.
One, choose and secure your nonprofits name.
The name you select for your nonprofit
will establish its brand.
It's the first thing
most people will learn about your organization.
It's important to pick a name
that both aligns with your mission
and follows the rules of naming guidelines in Wisconsin.
You'll need to check Wisconsin specific naming requirements,
but in general, follow these rules when choosing a name.
The name you pick for your organization
should not include any words or terms
that could be considered grossly offensive or misleading,
the name must be distinct
from that of any other corporation in Wisconsin.
For more information on what makes the name distinct,
check out our other video,
"How to name your business in Wisconsin" linked below.
Once you have a name selected, do a name search
to make sure it's available in Wisconsin.
After doing a Wisconsin name search,
you'll want to do a domain search
to see if your name is available as a URL.
Even if you don't plan on making a website today,
you may want to secure the URL
so someone else doesn't take it.
Two, appoint a registered agent.
The registered agent
can be an individual in the company including yourself
or you can hire a professional service
authorized to do business in Wisconsin.
They will send and receive legal papers on your behalf.
These documents include official correspondence
like legal summons and document filings
which your registered agent will receive and forward to you.
Your registered agent will also help remind you
to file the necessary reports.
Failure to properly maintain your nonprofit
can result in fines and disillusion.
So this assistance is valuable.
Three, select directors and officers.
Your nonprofit corporation
will be made up of some number of directors and officers.
The directors of a nonprofit
are responsible for overseeing
the operations of the organization.
Together, they form the board of directors.
The power and influence of the directors
over the organization comes from them as a board.
The directors themselves
do not have any authority as individuals.
The board typically creates the policies
that govern the nonprofit.
They also oversee management level hiring
such as the company officers.
The officers of a nonprofit
such as the president or secretary
are individuals with responsibilities
and the authority to execute based on their job description.
Together, the officers on the will come together
to make up the organizational structure of your nonprofit.
An officer may also be on the board of directors
and SelfWealth roles
if allowed to do so by the organizational bylaws
which we will discuss later.
If your organization plans to apply for 501(c)(3) status
for federal tax exemptions,
it must elect at least three directors
not related to each other,
a president, a secretary and a treasurer.
Four, file the articles of incorporation.
To form a nonprofit corporation,
you will need to file official papers with Wisconsin.
In Wisconsin, this is called the articles of incorporation.
Some possible information
in the articles of incorporation you may have to include is:
corporation name, Wisconsin statutes,
registered agent and registered office,
principal office, membership, authorized distributions
and other provisions.
For more money information on the sections
of Wisconsin's articles of incorporation,
check out our page linked below.
Five, operating procedures and housekeeping.
Once your nonprofit corporation has been formed,
you'll want start getting the structure of it together
and determine how your non-profit will be run,
starting with the bylaws and conflict of interest policy.
Your bylaws are the rules that determine
how your organization will be governed and run.
You can think about it as a constitution for your nonprofit.
It makes the rules and priorities clear
for everyone involved.
In your bylaws be sure to include:
how the non-profit will be governed,
the roles of directors and officers,
how meetings are held, voting procedures,
electing officers or directors,
how records will be kept and managed,
how disputes will be handled
and how bylaws will be added and amended in future.
When you're ready to get started,
check out some bylaws templates
linked in the description below.
The conflict of interest policy are the rules set
to ensure that decisions being made for the nonprofit
are based on what is best for the organization
and not being motivated by what been for individuals.
You'll want to make sure you have a draft
of both the bylaws and conflict of interest policy
before your organizational meeting.
We have templates both bylaws
and conflict of interest policy
linked in the description below.
An organizational meeting
is the first official meeting of your nonprofit.
Some of the things that are discussed
in a typical organizational meeting are:
taking attendance to show you have a quorum,
appointing temporary officers and chairman,
adoption of bylaws
and adoption of conflict of interest policy.
It's important to record minutes of the meeting
and have it signed by all attendees and directors.
We have some corporate minutes templates linked to below
to help you get the ball rolling.
After your nonprofit has been formed,
you'll need to apply for an EIN
or employment identification number.
An EIN is like a social security number for your nonprofit
and it's used for things like filing for 501(c)(3) status,
opening a bank account,
applying for tax exempt status and submitting tax returns.
For more information on EINs,
check out our other video linked below.
The State of Wisconsin also requires non-stock corporations
to register for state taxes
using Form BTR-101 linked below.
Six, apply for 501(c)(3) status, federal tax exemption.
What is federal tax exempt status?
And why do you want it?
When a corporation generates income,
that corporation has to pay a federal income tax.
As a nonprofit, your goal is to generate income
that is used to help further a cause
rather than fill the pockets of the company employees.
Because of this, the federal government
allows that nonprofits income not be taxed
so that more of the money can go towards the cause
that the nonprofit is supporting.
Before your nonprofit can apply for 501(c)(3) status,
it must file the articles of formation
with the required provisions,
adopt the bylaws and conflict of interest policy
and have an EIN number.
In order to file for tax exempt status,
most organizations will need to file Form 1023
online or by mail and pay a fee of $600.
If your organization's annual gross receipts
are below $50,000,
then you may be able to file Form 1023-EZ
with a fee of $275.
You can check your eligibility
with the link in the description below.
Once you've received your 501(c)(3) determination letter
from the IRS, you will automatically be exempt
from state franchise and income taxes.
You do not have to fill anything out
to become exempt from the state taxes.
Option two, the second one it's a form a nonprofit
is to hire a professional service
to create your nonprofit for you.
Hiring a professional service to file your forms
and act as your registered agent for the nonprofit
will cost you an additional 50 to $150.
This fee only covers formation of a nonprofit corporation.
If you wish for the professional service
to file for 501(c)(3) status,
the cost may go up to as much as $1,700 plus filing fees.
However, there are several benefits to working with a pro.
A hired registered agent
helps with getting your reports filed on time,
helps you stay organized
by keeping your business mail separate
and is available at all regular business hours
to accept official mail and legal papers
on your non-profits behalf.
If you want to form an organization or company in Wisconsin
with the purpose being to help a cause
rather than make a personal profit,
a nonprofit corporation is the best way to do that.
Now you know all the steps to form a nonprofit in Wisconsin.
For a more detailed guide,
visit our site at StartupSavant.com.
Give the video a like if you found it useful
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If you have questions
or encounter any roadblocks, leave a comment below.
Good luck in starting your nonprofit.