Running a nonprofit organization can be extremely challenging yet rewarding. Even though you’re running a nonprofit for a charitable, humanitarian, religious, or other reason, the compliance requirements in the District of Columbia are as demanding as with for-profit businesses. To start your nonprofit corporation smoothly and keep it running, you need to file all of the necessary documents as required by the District of Columbia.
Nonprofit corporations exist for an altruistic purpose that benefits the community. Although not all nonprofits are charitable organizations, those that qualify as a 501(c)(3) organization can enjoy certain tax benefits. Duly-formed 501(c)(3) organizations are exempt from paying federal income taxes. However, you must correctly form your nonprofit corporation before applying to the Internal Revenue Service for 501(c)(3) tax-exempt status.
In the District of Columbia, a nonprofit corporation must have at least three members on the board of directors. You can change the number of directors, but you can’t have fewer than three. In D.C., directors serve one-year terms.
Any additional members of the board of directors must be elected according to the Articles of Incorporation and bylaws of your corporation. Otherwise, elections may be held at each annual meeting.
Selecting a name for your nonprofit corporation is an important step in the formation process. Consider a name that reflects your nonprofit’s mission. You want people to recognize what your organization does just by seeing the name.
To reserve your name in D.C., your nonprofit must file a name reservation form with the Corporate Division of the D.C. Department of Consumer and Regulatory Affairs. Although not required, reserving the name of your nonprofit corporation before filing prevents other organizations from taking it in the interim. Name reservations are valid for 120 days.
ZenBusiness can help you reserve the name you want with our name reservation service while you’re working on filing your Articles of Incorporation.
ZenBuisness can also help you resolve another naming issue. Your nonprofit organization will benefit from a website and domain name that incorporates the organization’s name. The domain name for your organization might not be a priority for you while you concentrate on forming your nonprofit. However, with ZenBusiness’s domain name registration service, you can reserve a domain name that best suits your organization. That way you’ll have the domain you want when you’re ready to launch your organization’s website.
D.C. law requires that all corporate entities designate a registered agent to receive official correspondence and service of legal process on behalf of the corporation. Your nonprofit corporation must maintain a registered agent at all times. Otherwise, you fall out of compliance with D.C. laws.
The District of Columbia allows you to designate yourself as the registered agent for your nonprofit. However, designating yourself or another person in your organization to act as the registered agent has its drawbacks. You must have a physical address within D.C., and you have to always be present at that location during normal business hours so that you can receive service of process in person.
ZenBusiness has the answer for you. With our registered agent service, we can assist you in locating a registered agent who can conduct business in D.C. and help you remain in compliance with the District’s registered agent requirement.
Your Articles of Incorporation is the foundational document of your nonprofit corporation. Under D.C. law, you must follow the prescribed procedures for filing Articles of Incorporation so that the Corporations Division will accept them. You can’t operate as a nonprofit corporation otherwise.
You must include the following information in your nonprofit’s Articles of Incorporation:
You can elect to include additional information in your Articles of Incorporation, but are under no such legal obligation to do so. This additional information includes:
You might need to file a Doing Business As (DBA) certificate if you choose to run your nonprofit under a different name than the name appearing in the Articles of Incorporation.
D.C. law affords nonprofit corporations wide latitude in establishing their bylaws. The incorporators or the board of directors, once elected, can draft your nonprofit bylaws. Bylaws set forth how the board of directors will run the corporation and regulate the affairs of the business. You have wide latitude in crafting your bylaws as long as they don’t contain any provision inconsistent with D.C. law.
Organizational meetings are an important part of getting your business running. D.C. law provides that organizational meetings must occur after filing the Articles of Incorporation. The initial meeting allows attendees to elect directors if necessary and otherwise complete the task of organizing the nonprofit corporation. Note that a board of directors must be elected at the initial organizational meeting if omitted from the Articles of Incorporation.
Maintaining corporate records is an essential function of a nonprofit corporation. You’re free to choose how you want to keep your corporate records. You could set up corporate binders or deposit your documents on a cloud-based server. Notwithstanding the corporate library you establish, make sure that you protect the documents and can access them if necessary. The IRS may require you to produce copies of your corporate records to confirm your nonprofit status.
FIling mandatory reports is an integral part of corporate governance. D.C. requires biennial reporting after filing the initial report. The initial report must be filed during the first year after forming your nonprofit by April 1. You don’t want to forget to file your biennial report. ZenBusiness can guide you through the process of filing your biennial report in D.C. and set up compliance reminders with our Worry-Free Compliance service so that you never miss a filing deadline.
Even nonprofit organizations need tax identification numbers. Corporate entities need a federal employee identification number (EIN). The IRS will use your EIN for things like payroll taxes and federal tax collection. You will also need to register your D.C. nonprofit corporation with the D.C. tax office.
Getting your EIN is simple with ZenBusiness. We will help you secure an EIN from the IRS quickly and efficiently with our EIN service. Once you get your EIN, you’ll be able to hire employees and start your D.C. nonprofit corporation on the mission you envisioned.
D.C. requires every business, including nonprofits, to obtain a basic business license, or BBL.
Your nonprofit organization can obtain its BBL after filing the Articles of Incorporation, establishing an EIN with the IRS, and registering your business with the D.C. Zoning Administrator. You will need either a Certificate of Occupancy or a Certificate of Home Occupation depending on where you establish your principal office. Registering your D.C. nonprofit corporation with the D.C. Office of Tax and Revenue is mandatory as well. You can apply for your BBL after you complete all the required steps.
Nonprofit corporations turn to fundraising events to raise revenue. If your organization holds charity events that feature lotteries or games of chance, then you must register with the D.C. Lottery and Charitable Games Control Board.
Nonprofit corporations bear the responsibility to obtain all the licenses and permits necessary to run the business. The permitting and licensing requirements change depending on the industry. Unfortunately, there is no repository for every licensing or permitting requirement. You could try to look up every requirement yourself, or you could partner with ZenBusiness and use our business license report service. With ZenBusiness, all your permitting and licensing requirements will be in one place for easy reference. Think of all of the time you’ll save and the aggravation you’ll avoid with ZenBusiness in your corner.
Nonprofit corporations enjoy tax-exempt status with IRS approval. To obtain IRS approval, you must apply for recognition of section 501(c)(3) status. You must take this step within 27 months of organization to qualify. If the IRS grants your company 501(c)(3) status, then it will designate your organization as a private foundation unless it qualifies as a public charity. It’s a good idea to inquire with D.C. to see whether you need to register with the city government as well.
Nonprofit corporations in D.C. with employees will need unemployment and workers’ compensation insurance. You might need premises insurance as well and perhaps a general liability policy. The best thing you can do for your D.C. nonprofit corporation is to talk with a qualified insurance professional about your nonprofit’s insurance needs.
One of the last steps you need to take is opening a corporate bank account. Consult with your banker about your nonprofit’s banking needs.
Every out-of-state corporate entity doing business in D.C. must file a Foreign Registration Statement with the Corporations Division. You must include the same information in your Foreign Registration Statement as a domestic corporation must. Once you file your Foreign Registration Statement, then you will follow the same process as domestic nonprofit corporations to open your nonprofit in D.C.
At ZenBusiness, we want you to focus all your attention and resources on your D.C. nonprofit corporation. We can help you with the details to make running your nonprofit corporation in D.C. less stressful. Contact us today to learn more about how we can work with you to reach your goals.
Under D.C. law, nonprofit organizations can pay members, directors, and officers a salary, but these individuals can’t earn a profit from the business.
Fees vary depending on the number of documents you file. Check out D.C.’s fee schedule for more information.
If your nonprofit corporation happens to turn a profit, that’s okay as long as that money is reinvested in the nonprofit and its mission, like hiring employees or expanding facilities. Seek the advice of a legal professional or an accountant to check that you’re in compliance with D.C. nonprofit laws.
Nonprofit organizations are usually philanthropic organizations that benefit education, health initiatives, religious, or scientific organizations.
Nonprofit corporations can sell goods or services to raise money consistent with the corporation’s charitable purpose. Talk with a lawyer about the limitations of a nonprofit’s ability to sell goods or services.
Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
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