How to Form a Massachusetts Nonprofit Corporation

In Massachusetts, nonprofit organizations are corporations that exist for charitable, educational, religious, humanitarian, or some purpose other than profit. To establish a Massachusetts nonprofit corporation, there are some specific steps to follow. We’ll show you how to do this and apply for tax-exempt status.

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Steps to Form a Massachusetts Nonprofit Corporation

Select initial directors

Before forming a nonprofit corporation in Massachusetts, you need to appoint at least one person to the board of directors. You’ll have to assign people to specific positions, including treasurer, president, and clerk.

Choose a name

There are specific rules that you need to follow to make sure your name is legally sound. For example, Massachusetts law states that no two corporations can have names that are so similar you might take one for the other. The name of your new nonprofit can’t be one that’s trademarked by someone else. Massachusetts General Law, Chapter 180, Section 3, states that a nonprofit corporation may not assume a name that is misleading as to its corporate purposes.

You can check whether the name you’re going to choose is available through the Massachusetts Secretary of State’s database. This is a convenient option if you want to complete this step on your own. Maybe you’re not sure where to start. If so, you can use our name reservation service to hold a prospective name. In the Commonwealth, you can pay $30 to reserve an available name for 60 days. You can extend the reservation for another 60 days for an additional $30.

We also have a domain name service that helps you reserve a web address once you have a unique name that doesn’t copy an existing business.

Choose a Massachusetts resident agent

The next step is choosing a resident agent. This person or entity is chosen by your board of directors to receive legal notices and documents on behalf of the corporation. Many states use the term “registered agent.” In Massachusetts, this person must be either a:

  • Resident of the commonwealth with an address within the territory
  • Corporation that operates in the commonwealth
  • Corporation that has at least one office within Massachusetts

To establish an individual or corporation as your resident agent, you need to file a certificate with the secretary of state that includes:

  • The resident agent’s name
  • The resident agent’s business address
  • A copy of the board’s vote to this person as a resident agent

Should you be your own resident agent?

Being your own resident agent is a lot to handle. For one, resident agents need to keep regular business hours. This is difficult for a busy founder. It might be best to hire somebody to fill this important role so you have the freedom to leave the office occasionally..

Our partners operate as your personal registered agent and receive documents from the secretary of state and other legal notices. These documents are available through your ZenBusiness dashboard.

Hold an organizational meeting for the board of directors

You’ll need to get all your new directors and members on the same page before you begin operating. The directors can help establish some information included on the Articles of Organization form. This includes the beginning of the company’s fiscal year, the officers, and the bylaws.

File Articles of Organization

Once you have the preliminary details ironed out, it’s time to file your Articles of Organization. The filing fee is $35, and documents can be submitted online, in person, or by mail. This form includes information like:

  • The address of the principal office
  • The purpose of the nonprofit
  • Designated classes of members
  • Other lawful provisions regarding the dissolution of the corporation, its business affairs, and the powers of the members and officers.

Some information on this form is permanent and can only be changed by filling out the Articles of Amendment.

The IRS requires nonprofit companies to:

  • Ensure none of its earnings may privately benefit a shareholder or individual
  • Not be formed for the benefit of private interests
  • Not attempt to influence legislation or campaign for or against political figures

Be sure that your Articles of Organization state that the corporation does not do these things. This will help you prepare to apply for tax-exempt status.

Create corporate bylaws

Now that you have a corporation, you need to establish day-to-day rules that govern different procedures and employees. These are called corporate bylaws. Corporate bylaws should include information on internal operating procedures, officers, members of the board, and voting.

Set up a means of keeping records

Nonprofits need to keep good records of their business dealings and minutes of their board meetings. The IRS will require several documents when filing your annual returns, such as the 990/990-EZ/990-PF forms that detail donor information Documents like this should be kept in a secure central location, such as a corporate records binder or a cloud-based storage system.

Get a tax ID number

Your business needs a federal ID number for tax purposes. This is referred to as an employer identification number, or EIN. You can get this yourself via the IRS website. You may also use our EIN service to secure your number, which is needed for other crucial processes, such as setting up a bank account and hiring employees.

Apply for permits and/or licenses

Massachusetts nonprofit corporations may need different licenses and permits depending on how they operate and what services they provide. There are specific licenses for specific activities, such as operating charitable games of chance as a nonprofit in Massachusetts.

As the founder, you are responsible for ensuring that your organization meets all licensing requirements to operate as a nonprofit corporation. This step will require careful research and inquiries at the local, state, and federal levels to ensure your business is operating legally. Our business license report tool can help determine what state, local, or federal licenses and permits you’ll need based on your corporation’s activities and location.

Apply for tax-exempt status

To become tax-exempt, you’ll have to go to the IRS and apply. IRS Form 1023 and 1023-EZ are both applications for recognition of exemption under section 501(c)(3) of the Internal Revenue Code. The latter is a streamlined application for smaller organizations. If your nonprofit is a social welfare organization or other nonprofit, you will file the 1024A and 1024, respectively. Filing these applications will determine whether the IRS grants your nonprofit tax-exemption status.

In Massachusetts, you have to register your business under MassTaxConnect, the Department of Revenue’s online tax filing portal. Once you’re registered, you can fill out an ST-2 form to request exemption from Massachusetts state taxes. You may have to provide proof that you were given recognition as a tax-exempt organization from the IRS.

Local property taxes are covered by the town or city government where your organization is located. Contact your assessor’s office for more information on how to provide proof of exemption.

Register as a charity with the state

According to Massachusetts guidelines, all charitable organizations in the territory must register with the Non-Profit Organizations/Public Charities Division of the Attorney General’s Office. You’ll also have to file annual reports with this office every year after you register. The Commonwealth provides specific information regarding registering as an in-state or out-of-state organization.

Acquire insurance for your nonprofit

Your insurance needs depend on the type of nonprofit you operate. Liability insurance policies for you, the corporation, and the directors are often useful, and Massachusetts recommends that nonprofits have unemployment insurance. The Department of Unemployment Assistance has information on funding unemployment insurance for nonprofits.

Open a bank account

You’ll need a corporate account to write checks and receive donations. After reviewing different banking options, be sure to have all the necessary paperwork at hand. This will likely include your corporation’s bylaws, the Articles of Organization, and its EIN. The bank might request personal documents from you and other members of the board of directors.

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.

Massachusetts Nonprofit Corporation FAQs

  1. 1. Can the founder of a Massachusetts nonprofit receive a salary?

    Yes. Founders can receive a salary for the work that they do running the corporation. The IRS keeps founders, board members, and others from receiving benefits from the nonprofit. However, people in these positions can be compensated for work done. However, the IRS regulates the amount that founders can be paid. Nonprofits that try to pay the founder an exorbitant salary may be punished.

  2. 2. How much does it cost to start a nonprofit corporation in Massachusetts?

    You only need to pay $35 to file the Articles of Organization and start a Massachusetts nonprofit corporation. If you file online, there is a $5 fee.

  3. 3. What kinds of businesses can be a nonprofit in Massachusetts?

    According to the IRS, nonprofits include charities, private foundations, religious institutions, political groups, civic organizations, and other entities that focus on social, educational, or public welfare initiatives. For-profit businesses can become nonprofit by amending their Articles of Incorporation, but it’s typically easier to start a new organization and then transfer existing assets.

  4. 4. Can Massachusetts nonprofits sell products?

    Yes. Nonprofits can sell goods to raise money, but in Massachusetts, they must register as vendors if they’re selling tangible personal property for fundraising purposes. They might be subject to sales tax, depending on their fundraising activities in the commonwealth. Establishing a Massachusetts nonprofit corporation is a rewarding process, but it requires some work to establish it. You’ll need to create a team, bylaws, Articles of Organization and so on and ensure everything is properly filed. With our help, you can apply for an EIN, reserve your business name, and complete other important steps so that your organization can start making a difference in the community.

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