Starting out

You are doing two separate jobs here, and almost everyone conflates them. First you create a corporation under the law of a state. Then, separately, you ask the federal government to recognise that corporation as exempt from income tax. The first makes your organization exist. The second is what people mean when they say 501(c)(3).

You can do the first without ever doing the second, and plenty of small groups do. What you cannot do is skip the first and go straight to the IRS.

The order things happen in

1. Check the name is free in your state's business registry, and run a federal trademark search while you are at it. Registries only check their own state.
2. File articles of incorporation with the state. This is the step that creates the organization.
3. Recruit your initial board and adopt bylaws.
4. Get an EIN from the IRS. Free, online, issued immediately. You need it before a bank will open an account.
5. Apply for exemption on Form 1023 or 1023-EZ.
6. Register to solicit donations in your state, if it requires it. Most do, and it is a separate filing from everything above.

Steps one to four can be done in a fortnight. Step five is where the waiting is.

What it costs

Two bills, and only one of them is predictable.

The federal fee is fixed nationally. Form 1023-EZ costs $275. The full Form 1023 costs $600. Everyone pays the same regardless of where they are.

The state fee is not. Incorporation runs from about $8 in Kentucky to roughly $226 in Maryland, with most states landing between $20 and $100. Several, including Indiana, Iowa, Kansas, Michigan and Montana, sit near $20.

So the honest range for forming a nonprofit yourself is roughly $283 to $830 in filing fees. Anything beyond that is optional: registered agent services, an attorney to review your bylaws, charitable solicitation registration in additional states.

Form 1023-EZ or the full Form 1023

This is the decision that shapes your timeline.

Form 1023-EZ is three pages, filed online. You qualify only if your gross receipts have been at or under $50,000 in each of the past three years and are projected to stay at or under $50,000 for the next three, plus a list of other disqualifiers. The IRS issues 80% of 1023-EZ determinations within 22 days.

Form 1023 runs to dozens of pages with narrative attachments, a projected budget, and your governing documents. Processing takes months. Published estimates range from around six months to closer to a year depending on who you ask and how complete your filing is, so plan for the longer end and treat any single confident figure with suspicion.

The temptation is obvious. Two things should temper it.

Some institutional funders look more favourably on a full 1023, because it involved real scrutiny rather than self-attestation. And if you file the EZ while genuinely expecting to exceed $50,000, you have attested to something untrue on a federal form. The EZ is a shortcut for small organizations, not a shortcut for organizations in a hurry.

How many board members you need

This varies more than people expect. Most states require three directors. Roughly a third allow as few as one, including Arizona and Delaware. New Hampshire requires five.

The IRS sets no minimum at all, but it does expect a board that can exercise independent judgement. A three person board where all three are related to each other technically satisfies most state statutes and will still raise questions on a full Form 1023, and with funders later.

Check your own state's minimum before you recruit, and then recruit past it. A board sitting exactly on the statutory floor loses quorum the moment one person resigns.

What varies by state, and what does not

The federal layer is uniform: same forms, same fees, same IRS.

Everything else moves. Incorporation fees, minimum directors, whether directors may be related, whether you must register before soliciting donations, what you file annually with the state, and how long any of it takes. That state layer is the part most national guides gloss over, and the part most likely to catch you out.

The mistakes that cost most

• Assuming incorporation made you tax exempt. It did not. Until the IRS says otherwise, your corporation is taxable.
• Accepting donations before exemption is granted. Legal in most cases, but donors cannot deduct with certainty until determination arrives, and retroactivity has conditions.
• Copying bylaws from another organization without reading them. You will discover what they say during your first disagreement.
• Skipping state charitable registration. It is separate, most states require it before you ask anyone for money, and penalties are real.

What we are writing next

Articles of incorporation with a template and a per-state fee table, the EIN application step by step, choosing a name that survives both the registry and a trademark search, and an honest account of how long each stage takes.

Start here

The pages below cover this subject in full. If you are at the beginning, read them in this order.

• What is a nonprofit organization? The definition, and the three terms people use interchangeably that are not the same thing.
• How to start a nonprofit The six steps, with what each costs and how long it takes.
• How much does it cost? $283 to $830 in filing fees, itemised, plus the recurring costs nobody budgets for.
• What is fiscal sponsorship? The alternative to forming your own, and when it is the better answer.
• Nonprofit vs not-for-profit Why there is no legal difference in the US, and what you should be asking instead.

Before you file anything, ask whether you should

There are already well over a million nonprofits in the United States, and the honest question is whether the work you want to do needs another one.

Joining an existing organization doing the same thing is faster and frequently more effective. Fiscal sponsorship lets you run a project under someone else's exemption, taking deductible donations from day one with no filing fees. For a small, informal, time-limited effort, an unincorporated association may be all you need.

Form your own when the work should outlast your involvement, when you need to hold assets or employ people in the organization's own name, or when funders require it.

Reference information, not legal advice. Formation rules vary by state and change. Check your state registry and consider talking to a nonprofit attorney before filing.