Georgia business owners who would like to start a nonprofit organization may be able to do so without using their own money.
Nonprofit organizations can apply for a grant from a local organization or state agency willing to provide them with the funds necessary to get their organization up and to run.
How to Start a Nonprofit in Georgia
Step 1: Name Your Georgia Nonprofit Corporation
The first step in starting a Georgia nonprofit organization is naming your corporation. Your nonprofit’s name should be unique and memorable so that when people hear it, they will think of your nonprofit specifically.
It would help if you also tried to choose a name that reflects your organization’s purpose or mission statement. For example, if you plan on building homes for the homeless, you might want to use words such as “home,” “hope,” or “help” in your organization’s name.
Step 2: Choose a Registered Agent in Georgia
Your nonprofit’s Registered Agent will be the person who receives any legal documents on behalf of your corporation. Registering a new agent or changing an existing agent takes several weeks, so you should choose an agent as soon as possible.
You can find information about choosing and registering a Registered Agent in Georgia here: https://sos.ga.gov/index.php/business-filings/corporations/choose_registered_agent
The registered agent must:
- Be a resident of Georgia
- Be at least 18 years old or a corporation, LLC or LLP
- Not be acting as a registered agent for another corporation in the state of Georgia
- Not have been convicted of a felony, or any crime involving theft, dishonesty, or moral turpitude
- Not have any tax liens on unpaid state taxes
- Not be on the list of excluded persons maintained by the Secretary of State
Step 3: Select your Directors & Officers
Before you can submit your Articles of Incorporation to the Secretary of State, you must choose your nonprofit’s directors and officers. A Director is someone who manages the affairs of the corporation on a day-to-day basis. If an officer is unavailable for any reason, a director may also act in that capacity.
An Officer is someone who has been delegated authority to make decisions or perform tasks on behalf of your Georgia Nonprofit Corporation. You do not have to choose all of your potential Directors and Officers at once. However, you must be able to disclose their names after submitting your articles of incorporation.
Step 4: Adopt Bylaws & Conflict of Interest Policy
Georgia Nonprofit Corporations must adopt bylaws and a conflict of interest policy. All nonprofits must have written guidelines for conducting their meetings and voting and what types of decisions can be made outside of meetings.
Boards should ensure that their bylaws include the following:
- Purpose/mission statement
- The authorized number of Directors and Officers
- Meeting location (physical address)
- Meeting time (including the process for calling special Board meetings)
- Requirements for sending a notice to members before each meeting (unless all members waive this requirement in writing)
- What constitutes a quorum (this is usually defined as 1/3 or ½ of authorized Directors and Officers depending on your Articles of Incorporation). If you do not know who your Directors and Officers will be (or how many there will be), you should set a quorum of at least 5.
The easiest way to draft these policies is by using an online resource like BizFilings http://www.bizfilings.com/business-form-small-nonprofit.
Step 5: File the Georgia Articles of Incorporation & Transmittal Form
After your nonprofit’s leaders have been elected and you have decided on a name, address, and registered agent, the next step is to file your Articles of Incorporation along with a Transmittal Form. The Secretary of State will send back your completed articles within 1-2 weeks.
Articles of Incorporation must include:
- Name of the nonprofit
- Purpose/Mission Statement
- Registered agent’s information (name, address, phone number)
- Signature of at least one Director or Officer
- Date filed with Secretary of State (must be within 60 days after the corporation is organized)
Step 6: Get an EIN
Nonprofits in Georgia must apply for and use a Federal Employer Identification Number (EIN), and any employees your nonprofit hires will need one to file their taxes.
EIN is a nine-digit number that the IRS assigns to your nonprofit. Your EIN will be similar to this: XX-XXXXXXX
Here’s how you can apply for an EIN from the IRS:
- Complete Form SS-4
- Mail or fax it to Internal Revenue Service Center in Austin, TX
- When applying by mail, send original Form SS – 4 along with a check or money order payable to “United States Treasury” for $50 (you can find this line on page 1 of the form). No fee is charged if you are establishing an entity and it does not have employees.
Step 7: Apply for 501(c)(3) Status.
The final step to completing your nonprofit incorporation in Georgia is applying for 501(c)(3) status. There are several IRS forms that you will have to complete, including the ez990. The process can take up to 12-15 months, depending on how fast you submit all necessary information and documents.
Organizations that are recognized as tax-exempt under section 501(c)(3) of the Internal Revenue Code (“the Code”) are described in Section 501(c)(3) Organizations.”
To apply for your New Nonprofit’s 501(c)(3) Tax Exemption with the I RS, you must complete the following forms:
- Form 1023 – http://www.irs.gov/pub/irs-pdf/f1023.pdf
- Form 1024 – http://www.irs.gov/pub/irs-pdf/f1024.pdf
- Schedule A – http://www.irs.gov/pub/irs-pdf/f1023a.pdf (if you are filing as a church, don’t fill out this page)
- Form 8718 – http://www.irs.gov/pub/irs-pdf/p8718.pdf (if your corporation is a 509(a)(3))
Step 8: Apply for State Tax Exemption (optional)
If you want to apply for State tax exemption in Georgia after your 501(c)(3) has been approved, you must complete form ES – 5 Exemption Application.
Please note that this is only applicable to organizations with 501(c)(3) status, which are tax-exempt under Section 501(a) of the Georgia Nonprofit Corporation Code.
Forms you will need include:
- Form ES – 5 http://www.georgia.gov/00/channel_title_display/0,2094,87670329_8768771035,00.html
- Articles of Incorporation http://sos.ga.gov/cs/Satellite?blobcol=urldata&blobheader=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251656726261&filename=00AX10000004k5AANANoQ.pdf&Submit=Get+Blob
- Georgia Exemption Application http://sos.ga.gov/index.php?Link=E5StepOne
If your nonprofit is a church, 501(c)(3) will automatically be recognized as tax-exempt under state and federal law (no need for an additional application). If you aren’t a church and want to apply for Georgia State tax exemption in GA, you’ll need to complete form ES – 5 Exemption Application after your 501(c)(3) has been approved.
Advantages and disadvantages of a Nonprofit in Georgia
- Federal tax-exempt status
- Can apply for government, foundation, and private grants
- Allows board members to come from a broader range of backgrounds than traditional organizations because there is no profit motive involved.
- You can meet and network with other like-minded individuals and organizations (both nonprofit and for-profit)
- Lack of control – you don’t have complete control over the legal decisions, such as approving the bylaws or entering into contracts.
- Not allowed to sell anything to anyone, including board members, staff, etc.
- Must apply for 501(c)(3) status if you want your organization to be tax-exempt under state law
How much does it cost to incorporate a Nonprofit in GA?
The filing fee for incorporating a nonprofit with the Secretary of State is $50.00 if your corporation does not have any employees or is filing as a church with no employees. If you have employees, there will be an additional $50.00 fee per employee.
Additionally, 501(c)(3) tax-exempt organizations must also pay a state franchise fee of 0.575% of their income with a minimum franchise fee of $100 and maximum due of $7,500 depending on the size of the organization’s average annual gross receipts during its fiscal year ending immediately before the application was submitted to the Secretary of State (SOS).
Opening a business bank account for your Nonprofit in GA
When applying for the 501(c)(3) federal tax exemption with the IRS, you must provide them with a bank account number. This will be the only way they can send you any funds via check or electronic transfer.
There are a couple of different accounts you can choose from, and it is best to do your research and speak with the bank’s representative about the pros and cons of each one. Some examples include:
- Nonprofit Revocable Trust
- Georgia Nonprofit Corporation
- Business Checking Account (regular business checking account)
The only time that it would be necessary to have a separate account for your nonprofit is if you plan on running multiple programs under its umbrella. In this case, you may want to consider opening up an additional bank account for each program to track their finances better.
Get Insurance for your Nonprofit in GA
Forming a corporation and creating a 501(c)(3) will not protect you from any lawsuits if someone is injured by an employee while acting within the scope of their employment. Therefore, you must obtain liability insurance to cover this scenario.
You can purchase insurance through the Georgia Secretary of State; however, it may be more beneficial for you to see if other companies offer better rates since there are many insurance providers out there. Once again, make sure to compare different types of policies and speak with at least three other agents before deciding.
How long does it take to form a Nonprofit in GA?
It takes approximately 1-4 weeks (6-8 weeks max) for the Secretary of State to complete the incorporation process, but it can take longer for them to issue your tax-exempt status from the IRS. In most cases, you should receive approval from both in a similar timeframe.
Create a Mission Statement for your Nonprofit in GA
Prioritize what is important to you and list these items in order of importance. For example, if environmental issues are critical to you and animal cruelty isn’t as much concern, make sure that protecting animals receives less attention than protecting the environment when creating your mission statement.
Remember that your values may change over time based on new information collected through research or networking with other organizations; however, this doesn’t mean that you have to remove anything from your mission statement.
It just means that you may need to change the order in which it appears or add or remove specific points altogether. This is not an exact science and should reflect your personal beliefs about particular issues.
Can Nonprofits own property?
Yes. Nonprofit organizations can own property; however, there may be restrictions depending on its type and how it will be used. Generally speaking, the more like a for-profit business that your organization is, the more likely you are to own and manage your real estate.
How many people does a nonprofit need?
Any number of people can form a 501(c)(3) as long as they all contribute their time towards its creation and operation. It does not matter if there are only two or twenty-five board members because this designation has nothing to do with how many directors comprise your organization’s leadership team.
Build a Business Website for your Nonprofit in GA
Although you can provide information about your organization on your website or blog, it is more beneficial for you to invest the time and money into creating a professional website that focuses on distributing this type of valuable content.
This not only helps to legitimize your organization; but, people are more likely to share the site on social networking sites like Facebook, Twitter, etc., which will lead to greater exposure. Also, consider creating an Amazon Store (affiliate marketing) where you can link purchasing products directly from Amazon (this is regarded as one of the most successful affiliate programs online).
Create meaningful fundraising events for your nonprofit in GA
Many nonprofits rely solely on sending out monthly newsletters and accepting donations through their website; however, this does not engage the general public or raise awareness about your cause.
Instead, it would help if you focused on hosting special events where people can come together to celebrate your organization’s mission while enjoying face-to-face contact with their peers. If possible, hire a DJ and catering company so that everyone has an unforgettable time.
Properly Sign Legal Documents for your Nonprofit in GA
Make sure that you have a board member who is legally recognized as an officer of the corporation. In other words, only certain people can sign official documents on behalf of the organization–just as how a CEO would sign essential papers related to their company.
Although this may seem like common sense, you must adhere to these types of rules so that your nonprofit remains protected from those who might try to take advantage of what appears to be a loophole in this process.
How to file taxes for a nonprofit in GA?
Even if you are not required to pay taxes after filing your 501(c)(3), it does not mean that you should stop maintaining proper records and accounts for tax purposes each year. In fact, as a nonprofit organization, you must report any changes to the IRS as soon as they occur so that your status is up-to-date at all times.
Initial Report for a Nonprofit in GA
After filing your application and organizing your board, you will need to create an initial report that outlines how you came up with the money to start this nonprofit. This is especially important if you seek out investors who expect to receive something of monetary value in exchange for their support.
If they give you more than $5000 for this endeavor, they may need to be recognized as a director on your leadership team, which could affect your tax status depending on what type of business model you follow.
Annual Report for a Nonprofit in GA
You must file an annual report each year with the IRS (for any 501(c)(3)) to ensure that your nonprofit remains eligible for tax-exempt status. If you fail to do so, then it is likely someone will eventually submit their application and attempt to steal all of the work you have done so far.
Fortunately, filing this report using specific software and online accounts can help expedite the process while ensuring accuracy. This way, you won’t miss important details or leave something blank that might cause your application to be rejected later on down the line.
501(c)(3) vs. 501(c)(4) vs. 501(c)(6): What’s The Difference?
The IRS has different classifications of nonprofit organizations; but, they also have several designation categories that give them a unique tax status depending on what their mission and objectives entail.
Depending on whether you operate as 501(c)(3), (c)(4), or (c)(6); there will be certain limitations and exemptions regarding the types of activities you can engage in while remaining eligible for federal grants and other types of financial support.
IRS Form 990-N for nonprofits in GA
If you must file Form 990 with your state, then do not submit this information to the IRS. Your nonprofit will automatically be listed in this database when you file your application and annual report. In other words, if you have a 501(c)(6) status, then any contribution over $5000 must be reported at the end of each year.
You can also use these forms to register as a tax-exempt organization with certain states that require registration before accepting contributions from their residents (even though they might still accept donations from out-of-state donors).
Legal Structures of Nonprofits in GA
Nonprofits may fall under several different categories depending on which type of structure they choose to take on. While some types of nonprofits are required to operate as a corporation, other types must follow the rules and regulations for an unincorporated entity (if you are unsure which structure your nonprofit should adopt, then it is best to contact an attorney who specializes in these matters).
FAQ: Starting Your Nonprofit
Q. Who Can Start a Nonprofit?
Nonprofit corporations must be established by either natural persons (or groups thereof) who operate under their names; or any group that uses an official legal name for its activities.
For example, a group of people who come together to create a support system for victims of a particular disease can operate as a tax-exempt organization provided they file Form 1023 and follow the necessary procedures outlined by the IRS.
Q. Where Should You Incorporate?
In some states, nonprofits must register as an “unincorporated association” if they do not incorporate at the federal level first (and then seek recognition as a state nonprofit).
In some cases, these organizations might be able to separate their legal entity from the actual business operations within each state with different laws regarding how you go about doing so vary depending on where this is done.
Q: What Is Sole Proprietorship?
A sole proprietorship is an unincorporated business owned and managed by a single individual who operates this type of organization. The earnings made through these enterprises are included as part of their income taxes rather than being filed separately under the entity’s name.
Q: What Is S Corp?
An S corporation is a specific type of corporation that can be used to claim certain tax benefits. This type of business structure can choose how it wants its earnings taxed (which could result in additional savings depending on your financial situation). It also allows you to avoid double taxation through post-filing claims not included with other types of corporations.
As you can see, there are plenty of ways to go about starting a nonprofit in GA. This guide should give you all the information you need to get started with your business idea and promote it to potential donors who will assist you in making this dream a reality.