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Harbor Compliance makes starting your nonprofit easy.Your specialist manages all of the paperwork, letting you focus on your mission.
Get your 501(c)(3) approved from $99 - $2,495 plus filing
fees.
Welcome to our Alabama Nonprofit Startup Guide! If you’re passionate
about helping others and have an idea to serve your community, starting a nonprofit is a
great way to turn your vision into a reality. There are many different types of nonprofits -
religious, educational, human service oriented, animal welfare, and more. What all
nonprofits have in common is a focus on helping others and benefiting their community. You
are genuinely committed to these goals so you are already well on your way!
According to the National Center for Charitable Statistics, there were over 24,000 nonprofit organizations in Alabama in 2012. Before you start a new nonprofit, make
sure you
have identified an unmet need in
your community and know that there are not any existing organizations serving your cause. If
another organization exists, consider working together, as that may be a better way to make
an impact in your community and use existing resources.
When you are ready to start your nonprofit, plan to incorporate and apply for 501(c)(3)
status, as these are important steps to fully achieve your goals. As a 501(c)(3) nonprofit,
you will be able to apply for grants and accept donations, be exempt from federal corporate
income tax, and limit the liability of your organization’s officers and directors. Most
importantly, you will gain credibility and legitimacy for your cause, instilling the public
with confidence in your organization.
This guide will walk you through the basic steps to start your nonprofit in Alabama.
Let’s
get started!
Name Your Organization
Your organization’s name establishes its brand and is also important for
incorporating with the
state. The legal name of your nonprofit corporation may not conflict with any other
organization
registered in the state. Make sure the name is available and meets state
requirements.
Name Search:
Alabama Secretary of State - Business Services Division Name search
The state will issue a Name Reservation Certificate that you will need to submit
with your
Certificate of Formation.
Names using a professional designation in the name (i.e., engineering) require
evidence of
licensing.
Recruit Incorporators and Initial Directors
The incorporator is the person who signs the Articles of Incorporation for your
nonprofit. You will
need at least one, but can have more than one. Directors make up the governing body
of your
nonprofit corporation and are stakeholders in your organization’s purpose and
success. You’ll want
to identify three, unrelated individuals to meet IRS requirements. You will also
want to be aware of
any age or residency requirements.
Alabama director requirements:
Number: minimum 3
Qualifications: Natural person. No residency requirement. No membership requirement.
Quorum: majority
Committee: minimum 2 directors
Alabama officer requirements:
A president, one or more vice-presidents, a secretary, a treasurer and other officers and assistant officers as deemed necessary are required.
Term: default is 1 year, 3 year maximum
Two or more offices may be held by the same person, except the offices of president and secretary
Appoint a Registered Agent
A registered agent is responsible for receiving legal notices on behalf of your
organization. The
appointed registered agent must be physically located in the state and maintain an
office that is
open during regular business hours. As a nationwide registered agent, our service is
designed to
receive your legal documents and provide secure access to those documents through
your online
account. Our local Alabama registered agent office is located in Dothan, AL. We
offer registered agent service independently or as part of
our nonprofit formation packages.
Prepare and File Articles of Incorporation
Your nonprofit’s articles of incorporation officially mark the creation of your
organization. They
document where and when the organization was formed and capture other information
necessary to
verify its existence. While requirements for language vary from state-to-state,
there are some basic
provisions that the IRS will look for when you apply for 501(c)(3) exemption. It is
important to
customize the articles for your organization and make sure you meet the state and
IRS requirements.
Meeting these requirements from the start will help avoid having to make amendments
later or risk
getting your 501(c)(3) application rejected. Some states will also require you to
publish your
articles of incorporation, so be mindful of any deadlines and publishing
instructions.
Agency:
Alabama Secretary of State - Business Services Division
2 copies of the Certificate of Formation must be mailed to the Secretary of State
File Initial Report
After filing articles of incorporation, you must file an initial report.
Not required
Obtain an Employer Identification Number (EIN)
This unique, nine-digit number is assigned by the IRS to identify your nonprofit. All
types of
nonprofits will apply for an EIN, not only those that hire employees. You will use
your EIN to open
a bank account, apply for 501(c)(3) status, and submit 990 returns to the IRS.
Immediately online or by phone. 4 business days by fax. 4-5 weeks by mail.
Notes:
The IRS website is only available during certain hours. Print your EIN before closing your session. For additional guidance, see IRS Pub 1635: Understanding Your EIN.
Store Nonprofit Records
As you launch your nonprofit, you will receive a number of official documents.
Organizing these
documents in one place will save you headaches down the road. You will soon have
numerous items to
keep in your records including your EIN letter, bylaws, meeting minutes, 501(c)(3)
determination
letter, and more.
A great way to maintain necessary documentation is Records Manager, our software for storing records securely, tracking directors and officers, and getting notified of meetings.
Establish Initial Governing Documents and Policies
Your bylaws are the governing document for your nonprofit. They serve as your
organization’s
operating manual and should be consistent with your articles of incorporation and
the law. When your
Board of Directors meets for the first time, you’ll review and ratify the bylaws and
they will be a
roadmap for governance from there.
At the same time, you’ll also want to create and adopt a conflict of interest policy.
A conflict of
interest is when someone in a key position in your nonprofit has competing interests
and is making
choices that could benefit themselves to the harm of the organization. Personal
interests should be
set aside and organizational interests prioritized. If a conflict of interest does
arise, it should
be disclosed immediately.
Your application to the IRS for 501(c)(3) exemption will require that both the bylaws
and the
conflict of interest policy are approved and adopted. Once they’ve been adopted,
safely store them
in your Nonprofit Records Kit.
Hold Organizational
Meeting of the Board of Directors
The initial organizational meeting of your Board of Directors will be incredibly
productive. At this
meeting you will approve the bylaws, adopt the conflict of interest policy, elect
directors, appoint
officers, and approve resolutions such as opening the organization’s bank account.
Important
decisions are being made so be sure to record them in the meeting minutes.
In Alabama, you must provide a minimum of three days notice for the initial meeting (AC §10A-3-3.04).
Get State Tax Identification Numbers and Accounts
Incorporating as a nonprofit corporation in your state comes with the obligation to follow state
laws. These requirements vary from state to state, so make sure you understand the tax and licensing
requirements that pertain to your organization.
Alabama offers a consolidated state tax registration application.
Applying for 501(c) tax exemption can feel like the most daunting step in bringing
your nonprofit
dream into reality, but obtaining tax exemption comes with many benefits. You will
be able to apply
for grants and grow your fundraising success in addition to being exempt from IRS
income tax. 501(c)
is the chapter of the Internal Revenue Code that regulates nonprofit organizations.
Like others, you
may be most familiar with 501(c)(3) nonprofits, including charities and foundations.
501(c)(3)
nonprofits apply using Form 1023 or Form 1023-EZ. Review the criteria for each
application and make
sure you meet the eligibility requirements set out by the IRS. Other types of
nonprofits, including
501(c)(4)s and 501(c)(6)s, apply using Form 1024. After reviewing and approving your
application,
the IRS will return a Determination Letter officially recognizing your
exemption.
Completing the federal application for tax exemption is significantly easier with the
assistance and
support of a professional. Find someone with the expertise to ensure the correct
application is
being used and is completed accurately. A well-prepared application takes time, over
100 hours by
IRS estimates, so put yourself on the path to success by finding a specialist to
walk alongside you
in the journey - from start to tax-exempt finish!
As of January 1, 2024, millions of entities in the US need to report beneficial ownership information (BOI) to the
Financial Crimes Enforcement Network (FinCEN) as part of the Corporate Transparency Act (CTA).
Nonprofits without 501(c) tax exemption formed before that date must submit BOI by December 31, 2024,
while those formed after must submit it within 30 days of formation. Once 501(c) tax exemption is granted,
the organization may claim an exemption from BOI reporting requirements via an update filing to FinCEN.
Our BOI Reporting Service includes up to four initial, updated, and corrected reports per year,
ensuring the data you report to FinCEN is updated.
Apply for State Tax Exemption(s)
With your IRS Determination Letter in hand, make sure you familiarize yourself with
your state’s
requirements for recognizing your nonprofit’s tax-exempt status. This is an area
where requirements
vary state-by-state. Many states issue their own tax-exempt certificate that can be
used for sales
and use tax purposes, but it may require application and periodic renewal.
To file to obtain exemption from state income tax:
Not required
Exempt upon obtaining Determination Letter from the IRS
Most nonprofit organizations will not qualify for a sales tax exemption in Alabama. Alabama Statutes § 40-9-1 et seq describes organizations that may qualify for an exemption.
Register for Charitable Solicitation (Fundraising)
This is another area where laws differ from state to state, but most states require
any nonprofit
soliciting donations to register to do so on an annual basis. This means registering
in the state
prior to soliciting any resident of that state. Registering in your home state is
essential, but you
may also need to register other states depending on the scope of your
organization.
A Charitable Organization is any benevolent, philanthropic, or patriotic person, or one purporting to be such, consistent with the then-controlling definition provided in the Internal Revenue Code of the United States of America, which solicits and collects funds for charitable purposes and includes each local, county, or area division within this state of the charitable organization; provided the local, county, or area division has authority and discretion to disburse funds or property otherwise than by transfer to any parent organization.
Alabama Charitable Organization Registration
Agency:
Alabama Attorney General - Consumer Interest Division
Charities that do not intent to solicit and receive and do not actually receive more than $25,000 in contributions during a fical year and do not use professional fundraisers
Educational institutions and their authorized and related foundations
Religious organizations
Political organizations
Fraternal, patriotic, benevolent, social, educational, alumni, health care foundation, historical, and civil rights organizations, including fraternities and sororities and any auxiliaries associated with any such organizations
Civic leagues and civic organizations which solicit contributions solely from their own membership
Appeals for individuals that raise $10,000 or less
Any charitable organization receiving an allocation from an incorporated community chest or united fund, provided the chest or fund is complying with this section relating to registration and filing of annual reports with the Attorney General, the charitable organization does not actually receive, in addition to an allocation, contributions in excess of $25,000 during the fiscal year, and all of the fundraising functions of the charitable organization are carried on by persons who are not paid for such services
A local post, camp, chapter, or similarly designated element, or a county unit of such elements of a bona fide veterans organization, which issues charters to local elements throughout this state, or a bona fide organization of volunteer firefighters, ambulance companies, or rescue squads, or a bona fide auxiliary or affiliate of such organizations, provided all of its fundraising activities are carried on by members of the organization, family members of the members of the organization, volunteers, or an affiliate of the organization and the members receive no compensation, directly or indirectly
Submit the online form or Charitable Organization Registration Form and all required attachments to apply for registration with the Alabama Attorney General - Consumer Interest Division.
Foreign Applicants:
Determine whether or not your charity will need to foreign qualify based on your activity in Alabama. If not required, skip to number 3.
Submit the online form or Charitable Organization Registration Form and all required attachments to apply for registration with the Alabama Attorney General - Consumer Interest Division.
Required Attachments:
Articles of incorporation or organization
A copy of any agreement of association, instrument of trust, constitution, or other organizational instrument
A copy of the bylaws adopted by the applicant
Organizational Charter
IRS determination letter
List of officers and directors including phone numbers and addresses
List of other states where the applicant is registered to solicit donations
Names and addresses of any professional fundraisers and commercial coventurers who are acting or have agreed to act on behalf of the applicant
Annually within 90 days after the close of your organization's fiscal year. So if your fiscal year ends December 31, then the report is due March 31.
Due Date Extension:
Due dates can be extended for 180 days beyond the original due date by submitting a request for extension through the online portal.
Original Ink:
Not required
Notarization Required?:
Not required
Penalties:
There are no late fees if a charity does not renew its registration. The Attorney General will mail the organization a 15-day notice of registration cancellation. The organization will have that period to cease solicitation and if the solicitation is ceased, then no penalties apply.
Notes:
One authorized officer must sign the renewal. Alabama does not require a specific title.
Required Attachments:
Either IRS form 990 or audited financials
Only if amended: IRS determination letter, articles of incorporation, and bylaws
The organization must notify the Attorney General within 10 days of any change in the information required for registration.
Reinstatement
Not required
Formal reinstatement is not required. Charities who wish to renew a lapsed registration should submit a renewal filing along with the required financials, attachments, and fee(s) for each year not registered.
Change of Fiscal Year
Filing Method:
Email to consumerinterest@alabamaag.gov
Agency Fee:
$0
Turnaround:
1-2 business days
Notes:
To update your fiscal year submit a letter to the Attorney General's office requesting the change. Make sure to include the full name of the charity and either the Alabama License number or your organization's FEIN.
To close out your registration, submit a notice of non-renewal on the state's portal. It will require a reason for withdrawal and the date that solicitations will be discontinued.
To fundraise nationally or online, please see our Fundraising Compliance Guide.
Our services
manage your initial, renewal, and exemption filings in every state.
Obtain Other Business Licenses & Permits
Running your nonprofit corporation legally also means securing all applicable
licenses and permits.
The range of local, state, and federal requirements is wide. Access resources like
the Small Business
Administration Business License & Permit look-up tool and search by your
business type and locality.
Some of our clients incorporate on their own and seek our professional assistance with the
next steps. In such cases, we review the existing documentation and make any necessary changes.
We’re happy to help at any point. Keep in mind, the earlier you enlist our expertise, the more time you’ll save and the greater success you'll experience in the end!
If you have an existing for-profit entity and are looking to transition to a nonprofit,
we are very familiar with this situation and can help! Simply sign up for our professional
formation services, and your specialist will review your existing entity and assist with
the appropriate next steps.
You are not required to use an attorney.
You can set up your nonprofit yourself but doing
so requires a great deal of expertise and time.
The IRS estimates the 501(c)(3) application takes
over 100 hours in research and preparation.
Enlisting the help of a professional greatly
increases your likelihood of success and saves you
time. With our professional formation services, your
specialist prepares and files your applications for
you with guaranteed approval. Take advantage of
our track record of 100% IRS approval and get your
nonprofit approved, guaranteed!
You’ve made it! You turned your passion into a legitimate nonprofit corporation exempt under IRS
501(c) and are benefiting your community. That solid foundation on which you built your
organization requires ongoing maintenance. Investing in maintaining compliance with all of the
government agencies is an ongoing responsibility and commitment needed to ensure your vision
continues long into the future. Check out our compliance guide to learn more!
Once you have registered your nonprofit per the steps listed above, you will need
to maintain compliance with all of the government agencies. Staying current with
the IRS and state requirements is an ongoing responsibility. Continue reading
our
Alabama nonprofit compliance guide to learn more!
We're committed to publishing free informational
resources such as this how-to guide. Our resources have been shared by important
industry organizations including:
Fast Facts
Below is an overview of the paperwork, cost, and time to start
an Alabama nonprofit.
Paperwork
Name Reservation Request Form for Domestic Entities
Name Reservation Certificate
Form SOSDF-5: Domestic Nonprofit Corporation Certificate of Formation template
Bylaws
IRS Form SS-4: Obtain an EIN
IRS Form 1023: 501(c) Tax Exempt Application
IRS Determination Letter
Form COM-101: Alabama Department of Revenue Combined Registration/Application
Incorporation: $100 state filing fee + min $50 county filing fee
501(c): $275 or $600 IRS fee
Alabama charitable registration: $25 ($0 if exempt)
Time
Name reservation: 24 hours
Incorporation: 4 days to ~6 weeks
501(c): 2 weeks to 3 months
Filing Fees
Filing fees depend on your individual situation. We do our best to calculate your filing fees
upfront and collect those fees today so we can get started. Your specialist will determine your
exact filing fees and invoice additional fees if required.