In this guide, we’ll show you how to form a nonprofit corporation in Tennessee. Read on for advice, tips, and resources.
Steps to Form a Tennessee Nonprofit Corporation
- Select initial directors
- Choose a name
- Choose a Tennessee registered agent
- File Articles of Organization with Tennessee
- Create corporate bylaws
- Hold an organizational meeting for the board of directors
- Set up a corporate records binder
- Get tax ID numbers
- Apply for all necessary Tennessee nonprofit corporation licenses and permits
- Apply for tax-exempt status
- Register as a charity with the state
- Acquire insurance for your nonprofit
- Open a bank account
Step 1: Select initial directors
One of the first things you need to do is select your initial board of directors. Tennessee requires a minimum of three directors, all of whom must be individuals. They don’t need to be residents of the state unless specified in your nonprofit’s formation documents or bylaws.
Step 2: Choose a name
The name you choose for your nonprofit should be original and not misleading about your purpose or affiliations. Nor should it suggest that your nonprofit can carry out activities that require regulatory approval unless it’s permitted to do so. In addition, Tennessee has specific naming guidelines when it comes to designators. You can find them in the Tennessee Code, chapter 1156.
Once you’ve got a name in mind for the nonprofit, check the Secretary of State’s database to see if it’s available. Or, you can use your time to work on other matters related to starting your nonprofit and let ZenBusiness take care of it with our name reservation service. This way you won’t have to worry about another company claiming the name.
While you’re thinking of names, use ZenBusiness to register a domain name that aligns with your nonprofit so you can start building your online presence.
Step 3: Choose a Tennessee registered agent
A registered agent is your point of contact for government and legal correspondence. Tennessee requires that all corporations have a registered agent with a street address in the state. They must also be available during normal business hours. This role can be fulfilled by an individual or a corporation.
While you can act as the registered agent for your corporation, you should be aware that you’ll need to be available and present at the address during the workweek (9 to 5, Monday to Friday). Alternatively, you can maintain your independence by partnering with ZenBusiness’s registered agent service and allowing one of our partners to take care of this requirement for you.
Step 4: File Articles of Organization with Tennessee
In Tennessee, a domestic (in-state) nonprofit corporation is formed by completing and filing a Charter with the Secretary of State’s office. It should be signed by a member of the board, an authorized officer, or an incorporator if the board doesn’t yet exist. The fee to file is $100 and it can be filed online, by mail, or delivered by hand.
If you’re registering a foreign (out-of-state) nonprofit corporation in Tennessee, there are additional documents that need to be filed. You’ll also need to apply with the Secretary of State for a Certificate of Authority and submit a completed Certificate of Existence.
Step 5: Create corporate bylaws
Corporations in Tennessee, whether for-profit or nonprofit, need bylaws. These are the rules for how your corporation will be managed on a daily basis. Bylaws cover:
- Purpose of your nonprofit
- Duties and responsibilities of directors
- How often meetings occur
- Document retention guidelines
The bylaws should be consistent with the Charter, and cannot violate state law.
Step 6: Hold organizational meeting for board of directors
Once the Articles of Organization are accepted, you should hold the first meeting. If you’ve identified and selected directors, they should complete the formation of the corporation by adopting bylaws and selecting officers. At the first meeting, directors should also decide which officer will take board meeting minutes.
Step 7: Set up a corporate records binder or other means of keeping records
A Tennessee nonprofit corporation is required to keep detailed records for compliance and auditing purposes. These should include:
- Minutes for all board meetings
- Required accounting records
- Charter and all active amendments
- Bylaws and all amendments
You can do this either through a physical record like a binder, or digitally using specific designated software or a cloud-based program.
Step 8: Get tax ID numbers
All corporations need an Employer Identification Number (EIN). This is a federal business entity identifier issued by the IRS for free. You’ll need this number if you’re planning to file for tax-exempt status or open a business bank account. ZenBusiness can help you secure an EIN.
As a new corporation, you should register with the state’s Department of Revenue. Check with the department’s taxes page to learn more about which taxes, including local ones, may apply to your nonprofit.
Step 9: Apply for all necessary Tennessee nonprofit corporation licenses and permits
Tennessee doesn’t have a state-wide general business license; instead, licenses are issued according to business activity and/or by region.
Your nonprofit corporation will require a combination of licenses and permits that’s unique to its operations, service, and location. Unfortunately, there isn’t a central site that lists everything, so be sure to check with local, state, federal, and industry-specific resources. You can also use ZenBusiness’s business license report service to obtain a report detailing what your corporation needs.
Step 10: Apply for tax-exempt status
At the federal level, you’ll need to apply for 501(c)(3) tax-exempt status. Do this by filling out form 1023. There’s a long version and a short one, fill out the one that best meets the needs of your nonprofit. Check the IRS’s charities and nonprofits page to learn more about the different categories and applications.
Your nonprofit corporation may be eligible for exemption from certain types of state tax such as the sales and use tax. Contact the Department of Revenue or take a look at its business tax manual for additional information.
Step 11: Register as a charity with the state
If your nonprofit corporation will ask for donations and/or contributions, you may need to register with the Division of Charitable Solicitations and Gaming. This is an annual registration requirement.
Contact the division to find out more about the registration process as well as which nonprofit corporations are exempt from registration.
Step 12: Acquire insurance for your nonprofit
If your Tennessee nonprofit corporation will have employees, you need to obtain workers’ compensation and unemployment insurance. Contact the Department of Labor and Workforce Development to understand which employers must carry these types of insurance and which may be exempt.
Some nonprofit corporations also acquire liability insurance. We recommend you speak with a qualified insurance representative to ensure you have the coverage that meets your needs.
Step 13: Open a bank account
Banks have different requirements for opening business accounts. Check with your preferred bank to understand what information and documents you’ll need to have on hand.
Ready to kickstart 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.
Tennessee Nonprofit Corporation FAQ
- Can the founder of a Tennessee nonprofit receive a salary?
If the founder is an employee of the nonprofit, he/she can receive a reasonable salary.
- What happens if a nonprofit makes money in Tennessee?
If a nonprofit makes money, the surplus should be reinvested into the corporation for future operational needs.
- What kinds of Tennessee businesses can be a nonprofit?
Nonprofit corporations in Tennessee can be any kind of business as long as it’s legal and consistent with the purpose documented in the Charter.
- Can nonprofits sell products in Tennessee?
Yes, nonprofits can sell products but the proceeds must go back to the corporation to support operational needs.