- 1). Establish a mission statement, which includes the purpose and the values of the organization and any and all services offered by the organization. The mission statement should be bold as it is often used to promote the organization and is included in most published materials. In addition, form a board of directors according to the state's regulations. Determine the state's specifications on how many members should be on the board. Also, identify the skills and qualities necessary to become a board member and, accordingly, select qualified individuals to become board members.
- 2). Protect the board members and workers of the organization by properly filing the articles of incorporation. Articles of incorporation protect individuals from debts and liabilities incurred by the organization. Information regarding how to file for the articles of incorporation is specialized for each state and can be acquired at the state Attorney General's or Secretary's office. In addition to the articles, create bylaws for the organization which define the rules of how the organization will operate. Bylaws should be written with the help of a lawyer (to avoid future liabilities) and should be approved by the board of directors.
- 3). Create an accounting system for the organization by employing an individual with a financial background such as an accountant. Since nonprofit organizations are accountable to the public and their funders for their finances, their accounting practices have to be clearly established. This includes developing a budget of how much money the organization has, needs to raise and can spend to achieve its objectives. In addition, the organizations should also keep and maintain all records, including meeting minutes and financial statements. Contact local state agencies to obtain information regarding which official records must be maintained and kept in official files.
- 4). Obtain a federal employer identification number (EIN), which is used when filing tax documents for the organization. The form for obtaining an EIN is Form SS-4 and is available from the IRS. Also, file for 501(c)(3) status by obtaining Form 1023 (the application) and Publication 557 (which includes detailed instructions), from the local IRS office. The forms can also be downloaded from the IRS website. Additionally, file for state and local tax exemption by contacting the appropriate Department of Revenue and county clerk's office.
- 5). Fulfill other requirements according to state regulations. The federal government allows nonprofits to do fundraising as long as the organization obtains the proper permit or license and files the appropriate annual financial report. Contact your city or county clerk's office for additional information.
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