How to Start a Nonprofit Organization: A Step-by-Step Guide
Bizee helps entrepreneurs start a nonprofit organization from mission to 501(c)(3) status. Learn the steps, costs, and timelines — and form your nonprofit for $0 + state fee.
Bizee Editorial Staff
Editorial Team
Introduction
Starting a nonprofit organization means incorporating your entity with the state, building a board, adopting bylaws, getting an Employer Identification Number (EIN), and applying for federal 501(c)(3) tax-exempt status with the IRS. The process takes planning, but each step is manageable when you know what comes next.
What types of nonprofit organizations can you form?
There are 4 main types of nonprofit organizations in the United States. The right structure depends on your mission, who you serve, and how you plan to fund the work.
Public charities
The most common nonprofit type. Public charities serve a broad public benefit — think food banks, schools, hospitals, and religious organizations. They receive funding from many sources, including donations, grants, and government support, and they qualify for 501(c)(3) tax-exempt status.
Private foundations
Private foundations are typically funded by a single source — a family, individual, or corporation — and make grants to other organizations rather than running programs directly. They also qualify for 501(c)(3) status but face stricter IRS rules around distributions and self-dealing.
Social advocacy organizations
These organizations — often 501(c)(4) social welfare organizations or 501(c)(6) trade associations — focus on advocacy, civic engagement, or member services rather than broad charitable work. Donations to them are generally not tax-deductible for the donor.
Trade and professional organizations
Trade associations and professional societies serve the interests of a specific industry or profession. They typically file as 501(c)(6) organizations. Membership dues fund operations, and the focus is on advocacy, networking, and industry standards rather than charitable giving.
Step 1: Define your mission and write a business plan
Your mission statement is the foundation of your nonprofit. It tells the IRS, donors, and the public what your organization does, who it serves, and what impact it aims to create. The IRS requires a clear mission statement as part of Form 1023, the application for 501(c)(3) tax-exempt status — and it must align with an exempt purpose like charitable, educational, religious, or scientific activity.
A business plan matters here more than most people expect. Funders and grant-making agencies want to see that your nonprofit has a clear strategy, realistic goals, and a plan for staying financially sustainable. The SBA's business plan framework — covering goals, organizational structure, operations, and evaluation — applies to nonprofits just as it does to for-profit businesses.
Step 2: Choose a name and entity type
Most nonprofits form as nonprofit corporations — the structure that gives directors and members limited liability protection and is required for 501(c)(3) status. Other options include unincorporated nonprofit associations and charitable trusts, but the nonprofit corporation is the standard path for organizations seeking federal tax exemption.
Your name needs to be distinguishable from other entities already registered in your state. Most states require the name to include a word like "Corporation," "Incorporated," or an abbreviation. Names can't imply government affiliation — terms like "federal" or "national" may require special approval. Check your state's Secretary of State website to search existing names before you commit.
Step 3: Recruit your board and adopt bylaws
Every nonprofit corporation needs a board of directors before it can incorporate. Most states require a minimum of 3 board members, though requirements vary. Your board is legally responsible for the organization's finances, strategy, and compliance — so who you recruit matters from day one.
Bylaws are your nonprofit's internal rulebook. They define how the board operates — meeting frequency, quorum requirements, voting procedures, and officer roles like president, secretary, and treasurer. The IRS reviews your bylaws as part of the Form 1023 application, and they're generally required for state incorporation too. A conflict of interest policy is also expected — the IRS asks about it directly on Form 1023.
Step 4: File your articles of incorporation
Filing articles of incorporation with your state creates your nonprofit as a legal entity. This is the step that gives your organization limited liability protection and makes it eligible to apply for federal tax-exempt status. State filing fees for nonprofit articles of incorporation typically range from $0 to $150, depending on the state.
Your articles must include the nonprofit's name, purpose, registered agent, and duration. If you're planning to apply for 501(c)(3) status, the IRS requires specific language in the articles stating the organization is formed exclusively for exempt purposes and that assets will be distributed to another exempt organization upon dissolution. The IRS publishes suggested language for this in Publication 557.
Step 5: Get an EIN and open a bank account
An Employer Identification Number (EIN) is your nonprofit's federal tax ID. You need one before you can open a bank account, hire staff, or file for 501(c)(3) status. Apply using IRS Form SS-4 — the online application at irs.gov is free and issues your EIN immediately. The IRS online application is available Monday through Friday, 7 AM – 10 PM ET.
Once you have your EIN, open a dedicated bank account in the nonprofit's name. Keeping the organization's finances separate from any personal accounts is a basic governance requirement — and it's what auditors and grant-makers will expect to see. Most banks require your EIN, articles of incorporation, and bylaws to open a nonprofit account.
Step 6: Apply for 501(c)(3) tax-exempt status
Federal tax-exempt status under Section 501(c)(3) means your nonprofit doesn't pay federal income tax on revenue related to its exempt purpose, and donors can deduct contributions on their federal tax returns. To get it, you file either Form 1023 or Form 1023-EZ with the IRS.
Form 1023-EZ is the shorter version, available to smaller organizations that meet IRS eligibility requirements — generally those with projected annual gross receipts under $50,000. Form 1023-EZ typically processes in 2 to 4 weeks. The full Form 1023 can take up to 12 months or more. Both require your articles of incorporation, bylaws, and EIN. The IRS user fee for Form 1023 is $600; Form 1023-EZ is $275.
Step 7: Register for state charitable solicitation
Most states require nonprofits to register before they solicit donations from residents in that state — even if the solicitation happens online. This is separate from your state incorporation filing. If your nonprofit plans to fundraise in multiple states, you may need to register in each one.
Registration requirements, fees, and renewal deadlines vary by state. Some states exempt small nonprofits below a certain revenue threshold. The Multistate Registration and Filing Portal (MRFP) lets eligible nonprofits file charitable solicitation registrations in multiple states through a single application. Check your state's Attorney General or Secretary of State website for the specific requirements where you're incorporated and where you plan to fundraise.
How much does it cost to start a nonprofit?
The cost to start a nonprofit depends on your state and which IRS form you file. Formation itself can be done for $0 in filing fees with Bizee — you pay only what the state charges. State filing fees for articles of incorporation typically range from $0 to $150. The IRS user fee for Form 1023 is $600; for Form 1023-EZ it's $275.
Here's a summary of the main costs to budget for:
- State articles of incorporation filing fee: $0–$150, depending on the state
- IRS Form 1023 user fee: $600 (full application) or $275 (Form 1023-EZ for eligible smaller organizations)
- EIN application: free through the IRS online portal
- State charitable solicitation registration: varies by state; some states charge $0–$100 or more
- Registered agent service: required in most states; fees vary
Starting a nonprofit with no money is possible at the formation stage — the state fee and IRS user fee are the real costs, and some states charge nothing to incorporate. The bigger challenge is funding ongoing operations, which is why a solid business plan and early fundraising strategy matter.
FAQ
Starting a nonprofit organization involves 7 core steps: define your mission, choose a name and entity type, recruit a board and adopt bylaws, file articles of incorporation with your state, get an EIN from the IRS, apply for 501(c)(3) tax-exempt status using Form 1023 or Form 1023-EZ, and register for state charitable solicitation if you plan to fundraise.
It depends on your state. State filing fees for articles of incorporation range from $0 to $150, and the IRS EIN application is free. The IRS user fee for Form 1023-EZ is $275 — that's the main unavoidable federal cost for smaller organizations. Bizee's nonprofit formation filing is $0 + state fee, so you only pay what the state charges at the formation stage.
Generally, a public charity is the most straightforward nonprofit to form. It qualifies for 501(c)(3) status, which makes donations tax-deductible for donors and opens access to most grant funding. Smaller public charities that expect annual gross receipts under $50,000 can use Form 1023-EZ, which the IRS typically processes in 2 to 4 weeks rather than the 12 months or more that the full Form 1023 can take.
The minimum out-of-pocket cost is your state's articles of incorporation filing fee ($0–$150) plus the IRS user fee for your 501(c)(3) application ($275 for Form 1023-EZ or $600 for Form 1023). The EIN is free. State charitable solicitation registration adds additional fees depending on where you fundraise. Budget at least $275–$750 for the core federal and state filings before any operational costs.
A nonprofit formation platform handles the state filing paperwork — preparing and filing your articles of incorporation, acting as or arranging a registered agent, and keeping your formation documents organized. Bizee's formation filing is $0 + state fee. Formation services don't replace a lawyer or accountant for the IRS 501(c)(3) application, but they take the state-level paperwork off your plate so you can focus on building the organization.
State incorporation processing times vary — most states take a few days to a few weeks. The IRS 501(c)(3) application is the longer step: Form 1023-EZ typically takes 2 to 4 weeks; the full Form 1023 can take up to 12 months or more. Bizee's standard processing time for state filings is 1 business day, but the total timeline depends on your state and which IRS form you file.
Yes. Every state has its own requirements for nonprofit incorporation — including name rules, minimum board size, articles of incorporation language, and filing fees. State charitable solicitation registration requirements also vary. The IRS maintains a state-by-state resource page for charities and nonprofits, and your state's Secretary of State or Attorney General website will have the specific rules for where you're incorporating.
No hidden costs with Bizee — you pay the state fee and that's it for formation. The costs that catch people off guard are the IRS user fee for the 501(c)(3) application ($275 or $600 depending on the form), state charitable solicitation registration fees, and ongoing compliance costs like annual report filings and registered agent fees. Those are real costs, but they're predictable if you plan for them up front.
