Business Law Checklists Legal Topics

15 Steps to Forming a Nonprofit

steps_78288477Clients come to you seeking to form a nonprofit corporation. As there are so many steps involved, use the following checklist to help you avoid costly mistakes.

__   1.  Clear and reserve, if desired, the name of the corporation with the California Secretary of State.

__   2.  Draft the articles of incorporation and file them with the Secretary of State.

__   3.  Order minute book, seal (if desired), and membership certificates (if necessary).

__   4.  Draft corporate bylaws.

__   5.  Draft the following:

__   a.  Appointment of initial directors, if directors aren’t named in the articles of incorporation;

__   b.  Directors’ waiver of notice and consent to hold organizational meetings of the board of directors or, if desired, documentation permitting directors’ action without a meeting;

__   c.  Minutes of organizational meetings of the board of directors; or

__   d.  Action by unanimous written consent of the directors in lieu of first meeting.

__   6.  Apply for federal employer identification number (EIN).

__   7.  Apply for federal tax exemption.

__   8.  To obtain California franchise tax exemption, notify California Franchise Tax Board of IRS determination of tax exemption.

__   9.  File a Statement by Domestic Nonprofit Corporation with the Secretary of State.

__   10.  Register the corporation with the Attorney General’s Registry of Charitable Trusts.

__   11.  Register the corporation with the Secretary of State’s Political Reform Division if lobbying or employing a lobbyist is intended or if the corporation meets the definition of “Committee” in Govt C §82013.

__   12.  Ascertain whether issuance of memberships is exempt under state and federal securities laws and, if not, apply for state qualification with the Commissioner of Business Oversight and federal registration with the Securities and Exchange Commission.

__   13.  Register as a charity in any jurisdiction other than California where the nonprofit will solicit charitable contributions either by mail, electronic mail, on a website, or by telephone, as required by the jurisdiction.

__   14.  Obtain other licenses and permits as necessary from state and local authorities to perform specific acts of businesses or professions or solicitation of funds.

__   15.  Obtain nonprofit mailing permit, if desired.

Not sure what’s involved in each of these steps? No problem—it’s all explained with practical guidance in CEB’s Advising California Nonprofit Corporations, chap 5, on forming the corporation. Also check out CEB’s program Organizing & Advising Nonprofits, available On Demand.

Other CEBblog™ posts you may find useful:

© The Regents of the University of California, 2016. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited.

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