Steps to Form an Idaho Nonprofit Corporation
Select initial directors
At the time of filing, Idaho requires a nonprofit business to have a minimum of three, unrelated directors, however, religious nonprofit businesses are required to only have one director. Directors may serve terms ranging between one and five years.
Choose a name
Your nonprofit’s name will be unique. That means no other business entity in Idaho will be able to use it. To check if your desired name is available, use the Idaho Secretary of State’s business search tool.
Idaho law requires businesses to include the word “Company,” “Corporation,” or “Incorporated,” or their abbreviation as part of their business name. For any business name which includes the word “Company” or its abbreviation, the word “and” or “&” must not be used before the word “Company.” Check the Idaho statutes to ensure your name will be accepted.
If you won’t be creating your nonprofit right away, the good news is that you can reserve your business name for 120 days. Or, if you’d rather save time, let ZenBusiness reserve it for you so you can focus on getting everything else together to set up your nonprofit.
While you’re at it, now’s a good time to pick a name for your nonprofit’s website. Register your domain name so you can start promoting your nonprofit’s cause online.
Choose an Idaho registered agent
A registered agent accepts delivery of important legal notices and documents from the Secretary of State on behalf of your nonprofit. They must be available during regular business hours and have a physical street address in Idaho.
Although you can act as your nonprofit’s registered agent, many find it inconvenient. Rather than risk missing an important communication, consider using a commercial registered agent service. Use ZenBusiness’s partners as your registered agent service and enjoy the convenience of being able to access your important legal notices through your online dashboard 24/7.
File Articles of Incorporation with Idaho
To formally create your nonprofit corporation in Idaho, you need to file Articles of Incorporation with the Secretary of State and have them be approved. You can find the Articles of Incorporation form on the Idaho Secretary of State’s website and must include:
- Your nonprofit’s name and purpose
- The names and addresses of the initial directors
- Information regarding the appointment of a registered agent
- The name and address of each incorporator
- Whether the corporation will have members
- Provisions consistent with the law regarding the distribution of assets on dissolution
Idaho’s Articles of Incorporation forms don’t include the information required to obtain 501(c)(3) federal tax-exempt status. Accordingly, in order to receive tax-exempt status from the IRS, you’ll need to add specific language in your articles, including:
- Statement of purpose that meets IRS requirements
- Statement that your non-profit will not engage in prohibited political or legislative activity, and
- Distribution of assets provision dedicating your assets to another 501(c)(3) organization upon dissolution
Foreign Nonprofit Corporations
If you have a foreign (out-of-state) nonprofit corporation that you want to operate in Idaho, you’ll need to file in Idaho as a foreign nonprofit. To do this, fill out a Foreign Registration Statement (Nonprofit Corporation) form, available on the Idaho Secretary of State Office’s website. With your completed form, submit a copy of your nonprofit’s Certificate of Existence or Certificate of Good Standing that’s less than 90 days old.
Create corporate bylaws
Bylaws help everyone get on the same page regarding how the corporation will be run. They must comply with Idaho law. The bylaws contain the rules and procedures your corporation will follow for holding meetings, electing officers and directors, and taking care of other corporate formalities required in Idaho. You’ll want to draft a conflict of interest policy as well. Your bylaws don’t need to be filed with the state. They’re your internal operating manual.
Hold an organizational meeting for board of directors
In this step, you’ll lay the groundwork for your nonprofit and its future meetings, as state requires nonprofit corporations to hold an official meeting at least once a year. As part of the first meeting, the board should approve the company’s bylaws, appoint officers, set the company’s accounting period and tax year, and approve the opening of corporate bank accounts.
Minutes detailing the actions taken by the board during each meeting should be maintained in the company’s corporate record binder.
Set up a corporate record-keeping system
Detailed records must be kept on your nonprofit, either on paper or through electronic means. Choose whichever system you prefer. Some important records you’ll need to keep copies of include your Articles of Incorporation, bylaws, IRS determination letter, and meeting minutes.
Get a tax ID number
Before you can apply for licenses, permits, or tax-exempt status for your nonprofit, you’ll need a tax ID number. At the federal level, this is called an Employer Identification Number (EIN).
You’ll need to obtain an EIN for your nonprofit from the IRS. To apply, you can apply for one with the IRS or avoid the inconvenience and let ZenBusiness apply for you through our EIN service.
After you have an EIN, it’s time to get your nonprofit’s Idaho state Tax Identification Number (TIN). To do so, register with the Idaho Department of Labor and the Idaho State Tax Commission in Boise.
Apply for all Idaho licenses and permits
Within the state of Idaho, licensing requirements vary by your nonprofit’s industry, type of activity, and location. For example, if your nonprofit raises money with raffles or other charitable games, you must register with the Idaho State Lottery.
Unfortunately, there’s no one location where you can find all your licensing needs. Rather than figuring it out alone, let us do the legwork for you. Our business license report service will list all of the licenses and permits your nonprofit will require.
Apply for tax-exempt status
Next, you’ll file Form 1023 with the IRS to apply for tax-exempt status. There’s a long form and a short one. See the detailed instructions on the IRS’s website to determine which form suits your corporation.
After your application is processed, the IRS will send you a determination letter. Once the IRS approves your nonprofit’s tax-exempt status, you’ll be exempt from Idaho’s state corporate income tax.
Nonprofits who receive 501(c)(3) tax-exempt status from the IRS are automatically exempt from Idaho’s income tax. Information and requirements to obtain exemption from other state taxes, including sales tax, are available from Idaho’s State Tax Commission.
Acquire insurance for your nonprofit
If you’re going to have employees you need unemployment insurance as well as worker’s compensation. Other types of insurance for nonprofits in Idaho are general liability and property insurance. However, insurance needs vary by industry and other factors. We encourage you to discuss your nonprofit’s particular needs with a qualified insurance agent.
Open a bank account
Like any business entity, your nonprofit corporation will have assets, including donations, and expenses to manage. You’ll need a bank account to keep track of all this. To open an account, you’ll need your Articles of Incorporation and EIN.
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.
Idaho Nonprofit Corporation FAQs
Can the founder of an Idaho nonprofit receive a salary?
If the founder works for the nonprofit as an employee, then they are entitled to a reasonable salary.
What happens if a nonprofit makes money in Idaho?
If a nonprofit has net earnings, the money must be used to fulfill the nonprofit’s purpose.
What kinds of businesses can be a nonprofit in Idaho?
Businesses that serve charitable, religious, scientific, or educational functions and forbid distributing profits to owners can be 501(c)(3) nonprofit corporations.
Can an Idaho nonprofit sell products?
Yes. Nonprofits in Idaho can sell products. To have fundraising sales in Idaho, your nonprofit needs a permit from the state.