Your first step in creating a nonprofit corporation is to select your directors. The state of Iowa requires that you have at least one director. If you plan to apply for an IRS tax exemption, they prefer that nonprofits have at least three directors. There are no membership or residency requirements.
You’ll want to choose a name that gives people a clear idea of what your Iowa nonprofit will do. You can check to see if your chosen name is available by searching on the Secretary of State’s business entries name database. You’ll want to check Iowa Code 504.401 that gives you suggestions about acceptable names for your Iowa nonprofit corporation.
If you find that your name is available, you’ll want to ensure that no one takes it. Finally, you’ll need an appropriate domain name for your nonprofit corporation’s website. ZenBusiness can help you find the appropriate name with our domain name service.
Your Iowa nonprofit will need a registered agent. A registered agent is an individual or an entity that accepts official government documents or legal papers on your behalf. Your registered agent must have a physical street address in Iowa and be available at the address during regular business hours.
You could be your own registered agent or spend hours looking for one. However, your time would better be spent on other important aspects of your Iowa nonprofit corporation. ZenBusiness offers a registered agent service. Our registered agent providers will accept documents and post them to your ZenBusiness dashboard so you can download them at your convenience.
Next, file your nonprofit Articles of Incorporation with the Iowa Secretary of State. The state doesn’t provide a sample form to use when creating your Iowa nonprofit’s Articles of Incorporation. You’ll need to look at the Iowa Nonprofit Corporation Act and Iowa code 504.202. These detail what you’ll need to include, such as:
If you plan to apply for IRS tax-exempt status, you’ll need to include additional information in your Articles of Incorporation. Specifically, you’ll need to include language which meets IRS requirements for 501(c)(3) tax-exempt status such as (i) a statement of purpose; (ii) statements that your nonprofit will not engage in certain prohibited activities; and (iii) a dissolution of assets provision which details the dedication of your assets to another 501(c)(3) organization upon dissolution.
For more information on IRS requirements for Articles of Incorporation, see IRS Publication 557, Tax-Exempt Status for Your Organization.
Your bylaws will dictate how you’ll govern your Iowa nonprofit corporation. Your bylaws, which must comply with Iowa law, will contain
You don’t need to file a copy of your bylaws with the State.
Iowa law requires that your nonprofit’s bylaws be approved by your board of directors. You can do this at your initial meeting. Your initial meeting will also offer you the opportunity to appoint officers, create accounts, set an accounting period and tax year, and approve the opening of a bank account.
You should keep a record of the minutes of the meetings of the board of directors. In addition, you’ll need to store copies of important documents in a corporate records binder so they can be easily accessed when needed. You can also store them on the cloud.
The next step is to apply for your Employer Identification Number (EIN) with the IRS. It’s required if you want to hire employees, open a bank account, or file taxes. ZenBusiness offers an EIN service that will help you get your EIN as quickly as possible.
There’s no statewide business license in Iowa. However, you may need to obtain local licenses or permits based on the location of your nonprofit. You also need specific licenses or permits if you wish to hold certain types of events to raise funds. It’s difficult to keep track of all these different licenses and permits, so ZenBusiness has a business license report service that checks what you need and will keep your nonprofit in compliance.
To raise funds or accept donations for your nonprofit, you’ll need to apply for 501(c)(3) tax-exempt status with the IRS. You’ll need to file Form 1023. There’s a long version and a short one, fill out the one that best meets the needs of your nonprofit. The language you use when you apply for your tax-exempt status is extremely important so check the IRS site for guidance.
When your nonprofit is approved for 501(c)(3) tax-exempt status, you’ll receive a letter of determination. Then your nonprofit is automatically exempt from income tax in Iowa. Your nonprofit, however, may still be subject to Iowa State sales or property taxes. Check with the Iowa Department of Revenue to determine whether your nonprofit qualifies for exemption from these taxes.
Your nonprofit corporation will need unemployment insurance and worker’s compensation insurance if you have any employees. The insurance you’ll need depends upon the kind of nonprofit you operate. Your best bet is to check with a qualified insurance agent who can guide you on this issue.
When you open a bank account for your nonprofit corporation, you’ll need copies of your Articles of Incorporation, your bylaws, and your EIN.
At ZenBusiness, we are proud to support small businesses through a variety of different tools and services. Whether you need a registered agent service or are 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.
Yes. Iowa state law and the IRS both say that the founder of a nonprofit can receive a reasonable salary for the work they do.
Once a nonprofit covers its operating expenses, any excess funds are tax-exempt if they’re raised in pursuit of the nonprofit’s purpose. These funds can be used to improve the nonprofit’s operations.
Most Iowa nonprofit corporations are founded for religious, educational, literary, scientific, or charitable purposes. There may be other purposes that are of benefit to the community that qualify, so be sure to check with the IRS.
A nonprofit can sell services or products if they’re done to raise funds that support its mission. Check with the Iowa Department of Revenue to see if your nonprofit is exempt from paying any sales tax on these items.
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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