There are certain steps to follow when you want to form a Connecticut nonprofit corporation. The same steps apply whether you’re forming a nonprofit for charitable, educational, religious, humanitarian, or other purposes.
If you’re ready to start a business for the greater good, we’ll show you how to form a nonprofit and apply for tax-exempt status.
Steps to Form a Connecticut Nonprofit Corporation
Select initial directors
Your nonprofit must have three or more directors or officers at its conception. You can change this number later by amending the Certificate of Incorporation or bylaws, but you must retain at least three officers to start.
Choose a name
There are some restrictions to remember when choosing a name. For example, your corporation must have the term “corporation,” “incorporated,”or “company” in the name. “Corp.,” “inc.,” “co.,” and abbreviations with a similar meaning are also acceptable. The name must be unique and distinguishable from other entities registered with the Secretary of the State. A few examples of restricted names are:
- Names that are indistinguishable from another business that operates in the state
- Names that the same as or similar to another registered or reserved name
- Names used by an LLC in the state
To ensure that your name isn’t taken, it’s a good idea to search the state database of business names. Our business domain service can help you determine whether there are any available domain names that correspond with your desired nonprofit name.
Reserving a name ensures no other corporation can come and claim it while you’re still undecided. Our name reservation service reserves a name for up to 120 days. In Connecticut, you can also reserve a business name through the Secretary of State for 120 days for $60.
Choose a Connecticut registered agent
Next, you’ll need to choose a registered agent for your nonprofit. A registered agent is a person who is designated to receive legal documents for the business, such as lawsuit notices. There are some laws governing who can serve as your legal agent. They need to be either:
- A resident of the state who’s at least 18 years old
- A Connecticut business
- A corporation that’s permitted to conduct business in Connecticut
Since the registered agent must have an office and be available on-site during normal business hours, you may want to consider our registered agent service. Our qualified partners allow you to meet the registered agent requirement while you focus on getting your nonprofit off the ground. You can then access all of your legal documents in one convenient place through your ZenBusiness dashboard.
File the Certificate of Incorporation
This form will include important details about your new venture, including:
- A corporate name
- An official statement that says the corporation is a nonprofit and will not engage in activities that defy that status
- The names and addresses of the officers
- The address and name of the registered agent
- The purpose of the nonprofit
In your statement of purpose, it’s important to show that your organization meets requirements to operate as a tax-exempt entity according to IRS regulations. It costs $50 to file a Certificate of Incorporation for a Nonstock Corporation in Connecticut. Applications can be submitted online, in person, or by mail. Religious charities also pay a $50 fee, but they must file a Certificate of Formation for a New Religious Corporation or Religious Society. Existing nonprofits formed in another state can file an Application for Certificate of Authority, which costs $40.
File the initial report
An initial report will essentially confirm what information you include on the Certificate of Incorporation, including contact information for your officers. This form should be filed within 30 days of forming your nonprofit.
Create corporate bylaws
Corporate bylaws will regulate the daily dealings of your nonprofit corporation, the rules that bind your employees, and the behavior of your directors. You should have completed and voted on your bylaws by your first meeting with the board of directors.
Hold an organizational meeting
Your first organizational meeting will officially appoint directors and officers to their positions and allow them to adopt the bylaws. Keeping a record of what occurred in this and all subsequent meetings will help you track resolutions or decisions from the board, and it’s required by uniform corporate codes that apply to nonprofits and other businesses.
Set up a means of keeping records
When you’re keeping track of numerous financial reports, tax documents, and minutes from board member meetings, organization is crucial. A corporate records binder is a simple and classic solution, but using the cloud or a similar medium might be more streamlined. It will also save you the hassle of misplacing documents that could be important, like IRS tax forms.
Get tax ID numbers
The IRS requires corporations to have an Employer Identification Number, or EIN, to file taxes and hire employees. If you choose, you can skip the process of requesting a number from the IRS and use our EIN service to get a number easily.
Register for a state tax ID number
If your nonprofit is going to be making sales, you may need to register for a Connecticut tax registration number. Consult with the Department of Revenue Services to determine whether your business needs a state registration number after you form your nonprofit.
Apply for licenses and/or permits
You may need specific licenses and/or permits in Connecticut to conduct certain types of business, like selling items. You will need to consult with your local licensing boards, and you may even have to request information at the state or federal level.
Our business license report service will help you determine which licenses and permits you need. Certain licenses and permits are mandatory for your business to operate legally, so don’t skip this step.
Apply for tax-exempt status
The IRS provides easy instructions and a directory of necessary forms for businesses looking to apply for tax-exempt status. Once the Internal Revenue Service sends you a confirmation letter, submit it along with a tax exemption certificate to Connecticut’s Department of Revenue Services (DRS). Most nonprofits will use the CERT-112 form. The DRS also answers some frequently asked questions and notes that out-of-state businesses don’t qualify for exemptions from use or sales taxes.
Register as a charity with the state
All corporations that solicit money for charitable purposes must register as a charity with the state of Connecticut. The Department of Consumer Protection provides the forms necessary to register. It also has a guide to claiming an exemption if your organization receives less than $50,000 annually or meets another one of the requirements.
Acquire insurance for your nonprofit
You’ll need to have different insurance policies for your nonprofit depending on what you do. To get a comprehensive plan, you should talk to a qualified insurance agent with experience providing coverage to Connecticut nonprofit corporations.
Open a bank account
Opening a bank account will allow you to write checks and receive donations. The bank may ask for the nonprofit’s EIN as well as your information as the founder and the information of the officers. This step can be discussed at the first organizational meeting.
Looking/Ready to Kick Start Your Business?
At ZenBusiness, we are proud to support small businesses through a variety of different tools and services. Whether you need a registered agent service, want to reserve a business name, or looking to register a domain, our goal is to help you stay on the road to success. Check out our services, and contact us today to see how we can help you grow your company.
Connecticut Nonprofit Corporation FAQs
- Can the founder of a Connecticut nonprofit receive a salary?
Yes, the founder of a nonprofit can receive a salary if they work as an employee of the nonprofit.
- How much does it cost to start a nonprofit corporation in Connecticut?
Filing the Certificate of Incorporation to start your nonprofit only costs $50. The cost of filing necessary IRS and other state forms may vary.
- What happens if a Connecticut nonprofit makes money?
Nonprofits are required to file annual tax returns or financial reports regardless of their profits or losses. If a nonprofit makes money, they are typically eligible for income tax exemptions. Organizations can use this money to reinvest in the business, to provide the community with better services, and to offer employees good benefits and pay.
- What kinds of Connecticut businesses can be a nonprofit?
Nonprofits are typically formed to fill various needs in a community, from food banks to youth outreaches. They operate in many fields ranging from spiritual services to scientific research. This IRS has specific requirements about which types of organizations can qualify for tax-exempt status. Qualifying businesses can become nonprofit at a later date by modifying their Certificate of Incorporation. However, this is relatively uncommon.
- Can Connecticut nonprofits sell products?
Yes, but they must obtain a sales and use tax permit to collect sales tax on items sold. However, among other exemptions, a nonprofit with less than five fundraising events in a year does not need to collect sales tax.