How to Form a Nonprofit 501(c)(3) Corporation in Washington State

Setting up your nonprofit organization as a 501(c)(3) corporation offers some significant advantages. These include exemption from taxes at both the federal and state levels. By forming a 501(c)(3) corporation, you may be eligible to receive public and private grants. And donations made by individuals to your nonprofit corporation are tax-deductible. Also, by setting up your organization as a 501(c)(3) corporation, the directors and officers are normally not personally liable for the debts and liabilities of the nonprofit entity.

To set up a nonprofit 501(c)(3) corporation in the State of Washington, you need to complete certain procedures with the Washington Secretary of State, Corporations Division. To obtain federal tax exemption you need to complete the procedures required by the IRS. And to obtain exemptions from state taxes in Washington you need to file the applications required by the Washington State Department of Revenue.

To set up a nonprofit 501(c)(3) corporation in Washington, you have to file articles of incorporation. Before you do that, you should decide on a name for your nonprofit corporation. You can do a corporations search on the Washington Secretary of State Corporations Division website to be sure you don't choose a name already used. You should also decide on who will be the directors of your nonprofit corporation. According to the Citizen Media Law Project website, nonprofit corporations in Washington must have at least one director.

The articles of incorporation for your nonprofit corporation should include the name of the organization, the name and address of the registered agent, the legal address of the nonprofit corporation, the duration of the corporation, the name of the person preparing and filing the formation documents, the name and address of the director(s), a statement of purpose, and a section regarding your nonprofit status. The IRS provides suggested language for this purpose.

Once you have your articles of incorporation, you need to register your corporation with the Washington Secretary of State Corporations Division. You can do an expedited registration of your nonprofit corporation online. The normal fee is $30 and there is an additional fee of $20 for filing online, for a total fee of $50.

If you plan to raise funds from the public for your nonprofit activity, you also need to register with the Charities Program of the Secretary of State, using the Charities Registration Forms. The initial registration fee is $60 in Washington.

Once you have registered your nonprofit corporation, you need to apply for federal and state tax exemptions. You will need a federal employer identification number, whether or not you have employees. To apply for this number, file Form SS-4 or apply online. To apply for federal tax exemption, you must file Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code. This is a lengthy form but many of the questions have Yes or No answers. You can download the form and save the data you enter. The completed form must be mailed in. According to the IRS, you can operate as a tax-exempt organization while your Form 1023 is awaiting approval by the IRS.

As a nonprofit 501(c)(3) corporation, you must file Form 990 with the IRS. This is an annual information return. But if your gross annual receipts are normally $25,000 or less, you are not required to file this return. Instead, you have to file an annual electronic notice using Form 990-N, which you can file online.

According to the Washington State Department of Revenue, nonprofit organizations may be subject to state taxes even though they are exempt from federal taxes. But nonprofits may be eligible for exemption from property taxes. You may also be exempt from the business and occupation tax and the requirement to collect and pay sales tax.

Sources:

Annual Electronic Filing Requirement for Small Exempt Organizations '" Form 990-N (e-postcard), IRS

Apply for an Employer Identification Number (EIN) Online, IRS

Charities Registration Forms, Washington Secretary of State

Corporations Search, Washington Secretary of State

Exemption Requirements '" Section 501(c)(3) Organizations, IRS

Form 990, Return of Organization Exempt from Income Tax

Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code

Form SS-4, Application for Employer Identification Number

Forming a Nonprofit Corporation in Washington, Citizen Media Law Project

How to Form a 501(c)(3) Nonprofit Corporation, Nolo

Instructions for Form 1023, IRS

Nonprofit Organizations, Washington State Department of Revenue

Publication 557, Tax-Exempt Status for Your Organization, IRS

Publication 4420, Applying for 501(c)(3) Tax-Exempt Status, IRS

Starting a New Charitable Organization, Washington Secretary of State

Suggested Language for Corporations and Associations (per Publication 557), IRS