In this article, we’ll show you the steps to form a Virginia nonprofit corporation and how to apply for tax-exempt status.
The first step is to choose the directors for the corporation. These directors will help with the formation of the nonprofit and make decisions about it along the way. They don’t need to live in Virginia, but you should select three unrelated individuals as suggested by the IRS.
The name you choose should be something that relates to the issues that your nonprofit will focus its efforts on. Search the Virginia State Corporation Commission to make sure there are no other nonprofits that have the name you want or something too similar.
When you find a name you want that’s available, you can reserve it with the state for 120 days.
A registered agent is a person who receives documents from the Secretary of State and any sort of legal service, such as subpoenas. They must have a physical address in the state of Virginia and be available during standard business hours.
If you choose to be your own registered agent, you’ll need to abide by the rules stated above. However, this isn’t always feasible, especially when you’re in the beginning stages of forming your nonprofit. To solve this, you can hire a registered agent service to fill this role for you.
ZenBusiness helps make this easier by offering a registered agent service through our state partners. They’ll accept documents on behalf of your nonprofit and then upload them to your dashboard.
The Articles of Incorporation, once approved, are official documents that prove your nonprofit exists. It shows where and when the corporation was formed.
An Articles of Incorporation template can be obtained from the Virginia State Corporation Commission website. You should customize the articles for your type of nonprofit to ensure they meet the requirements of the IRS and the state of Virginia. You can file online or via mail.
Your corporation will need bylaws that dictate how your nonprofit will operate and what steps to take in the event of issues or conflicts. Common information includes:
The bylaws are usually agreed upon by the board of directors, and you’ll vote on them at your organizational meeting. The state will request a copy once completed.
At the first meeting, you’ll vote to approve the bylaws and create a conflict of interest policy. You’ll set up your accounting and tax year and approve the opening of a corporate bank account. It’s a good idea to designate someone to record the minutes of the meetings.
Your nonprofit will have a lot of important documents that need to be kept on hand. They’ll serve as proof of the existence of the nonprofit. You’ll need a way to keep these records organized, safe, and easy to access. Consider getting a records binder. You can also use a software program that allows you to organize documents online in the cloud, so they can be accessed from anywhere.
You’ll need an employer identification number (EIN) to open a bank account, file your taxes, or hire employees. They’re issued by the IRS, and If you want to avoid the hassle of more paperwork, you can use our EIN service.
There may be other licenses and permits you need to obtain from the state to operate legally. These depend on the type of Virginia nonprofit corporation you have and your location. You can do a search on the U.S. Small Business Administration website to find which licenses and permits are required for your corporation.
To remove the stress, use ZenBusiness’s business license report to get a full list of all licenses and permits that your nonprofit needs to run legally.
To apply for tax-exempt status, known as 501(c)(3), you’ll need to fill out form 1023. There’s a long version and a short one. Read about both to see which one is best for your nonprofit. Once your application has been approved, you’ll be sent a letter of determination.
Once you’re approved by the IRS, you’re automatically exempt from Virginia income tax. You need to apply for an exemption from the Virginia sales and use tax by accessing their website.
Once the IRS approves your tax-exempt status, you should register as a charity with the state, using the form that applies to your nonprofit type. If you plan on doing any fund-raising, you will need to fill out extra applications. To find out what forms you need, head to the Nonprofit Organizations page of Virginia’s Tax website.
If you employ more than two full or part-time employees, you’re required to have worker’s compensation insurance. You’ll also need unemployment insurance, and depending on the type of nonprofit you run, there may be other insurances you need. You should find a professional insurance agent who can help you choose the best policies.
Once your corporation has been created, you’ll want to open a bank account. If you’ve chosen a treasurer, they can handle this part. You’ll need your EIN and Articles of Incorporation on hand and any other information required by the bank you choose.
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. If the founder is working as an employee, they can be paid a reasonable salary.
Nonprofits can make money; they simply must reinvest it into the nonprofit.
There are many kinds of businesses that qualify as nonprofit, specifically those that’s purpose is to help animal welfare, education, literary, scientific, or religious needs.
Yes, nonprofits can sell products to help raise money for operating costs and programs.
Virginia Business Resources