Creating a Non-Profit in North Carolina

Whether its for the protection of Pocosin Swamps, other natural areas, social activism, or religion, it is beneficial to know how to create a non-profit in your state. This specific example is for creating a non-profit in North Carolina.

How to establish a non-profit 501c(3) organization in North Carolina

 

Step/Task	Expertise needed	Timeline
1.      Select the initial directors of your non-profit. Although only one board member who is 18 years or older is required in NC, (16 years or older for some youth organizations), it is highly recommended that at least five individuals sit on an organization's board to maximize expertise and to look professional.	Knowledge of the hiring process and skills needed for board members to be successful in your organization	ASAP
2.      Mission and purpose statement. It is recommended that as soon as board members are hired that the group collectively determines and further refines the organization's goals. The short and long term goals, who the organization serves, values that will drive the organization, and planning for possible ways the organization may change should be thoroughly thought out and collected in a well-written and organized document for later use, reference, and submission for a variety of forms.	Collective knowledge and experience of the inner-workings of a non-profit organization and how one should be properly organized and operated.	Several weeks and beginning this process during the first step and further refined throughout the following steps.
3.      Select a name for your non-profit. First and foremost the selected name of your organization should represent what your company's primary goals are from the previous step. In addition, the name must be unique to others and contain one of the following words: corporation, incorporated, company, limited, or an abbreviation of one.	Only the knowledge and requirements to the left.	ASAP, could be completed during the prior step.
4.      Appoint a registered agent. A registered agent is in charge of receiving all official paperwork and is required for any kind of non-profit organization. This individual is also required to live within the state of North Carolina and is in charge of any legal issues that may arise. This individual is often also part of the Board of Directors.	An individual who is knowledgeable about North Carolina law is useful for this position.	Little time required for selecting a registered agent but it is an ongoing process.
5.      Prepare and file your articles of organization. Some of these are from previous steps and the form can be found on the Secretary of State website. Sections that will be included on this form include the nonprofit’s name, if the organization is charitable or religious, the address, if the organization will have members, and where assets would go upon dissolution. Furthermore, to be a non-profit the organization must also submit a statement of purpose that follows IRS guidelines, statements that the non-profit will not engage in non-related activities to its mission statement, and further specification of the dissolution clause.	Knowledge of North Carolina law and federal taxation laws would be very beneficial for streamlining the process. An individual with experience doing this would be invaluable.	Could take several weeks, however, if prior steps were completed thoroughly this portion should be streamlined. It may take the IRS several months to finalize the form.
6.      Create bylaws for your organization. The bylaws consist of how the organization will hold meetings, election of officers and directors, deal with corporate procedures, and any other rules and procedures of the organization. It is important that this step be completed with the entirety of the board of directors and should be reviewed by a lawyer prior to submission. Review of other non-profits bylaws in North Carolina could prove beneficial as a baseline for development.	Knowledge of the legal processes required for bylaw development as well as means of implementation. Knowledge and experience in other non-profits within North Carolina.	Could take several weeks. Working with a lawyer is beneficial. Next step must be completed before submission.
7.      Have a meeting of the Board of Directors. In the first major official meeting of the board the bylaws should be approved, officers and directors should be appointed if not previously, an accounting and financial year should be set, a corporate bank account must be created, and minutes should be recorded for this and all following meetings.	Same as two prior steps.	Must be completed before beginning any of the following steps.
8.      Obtain a Federal Employee Identification Number (EIN). Even if the organization has no current employees it is important for future hiring and getting non-profit status. This step can be completed on the IRS website.	Knowledge of tax law.	Must be completed before applying for non-profit status.
9.      Obtain a Business License. This step is not required statewide, however, depending on the North Carolina city or county the non-profit is within it may be required. The State Boards and Commision website of North Carolina can determine if your location requires a Business License.	Business knowledge or experience would be beneficial.	Varies
10.   Apply for a federal employer identification number. Regardless of whether or not you have employees, nonprofits are required to obtain a federal Employer Identification Number (EIN) — also referred to as the federal ID number.	Fairly straightforward process if previous steps are accurate.	Based on how long the federal government takes.
11.   File for federal tax exemption. The completion of filing the federal 1023 tax exemption application is required for all non-profits looking for tax exemption in the entirety of the United States. This very detailed form requires the knowledge acquired from previous steps. Very small non-profits may qualify based on income to file the streamlined 1023-EZ form. The form can be found on the IRS website.	It is strongly recommended to have an attorney familiar with federal tax laws to ensure everything is accurate.	It is expected to take the IRS 3-24 months to finalize the form.
12.   File for the State of North Carolina tax exemption. To avoid paying state income tax, similar information from the previous step must be filed with the state. If the organization has employees you should also get a State Withholding Identification Number. Sales tax must still be paid by nonprofits in North Carolina but it is possible to be refunded. Furthermore, an exemption of property tax can be filed with the county assessor. The initial tax exemption form can be found with the North Carolina Department of Revenue.	Knowledge of tax forms and finances. An attorney is once again beneficial for this step.	May take several months to hear back from the state and time can vary for county level documents.
13.   Form for fundraising. Before beginning any fundraising and if you intend to raise more than $25,000 every year, a Charitable Solicitation License must be received through the Charitable Solicitation Licensing Division of the North Carolina Secretary of State. Even if you intend to raise less than $25,000 yearly, your organization is still required to apply for an exemption.	Similar to prior two steps and knowledge of state law pertaining to fundraising and solicitation.	May take several months or longer depending on the form required.
14.   Worker’s compensation and unemployment taxes. Once you have three employees (including unpaid and part-time) the organization is required to get worker’s compensation insurance through the North Carolina Industrial Commision. Unemployment tax reimbursement may be applied for once the organization has at least four employees who work at at least 20 weeks per year.	Knowledge of worker rights and laws. An attorney specializing in this is once again useful.	Only completed once the required number of individuals are in the organization.
15.   Ongoing legal requirements. Based on the value of gross receipts of the organization, different forms must be filed annually. For organizations with less than $50,000 an e-Postcard is required, non-profits over $50,000 in gross receipts must file Form 990 or Form 990-EZ with the IRS every fiscal year. Religious organizations are exempt from this requirement. In addition, many of the previous forms must be refiled annually to ensure compliance with the organization's mission and finances.	Continued knowledge of state and federal tax law with an ongoing attorney beneficial.	Varies by form but done while the non-profit is operating.

 

Citations:

Fishman, S. (2020, March 6). How to form a North Carolina Nonprofit Corporation. www.nolo.com. https://www.nolo.com/legal-encyclopedia/forming-nonprofit-corporation-north-carolina-36080.html

North Carolina Center for Non-Profits. (2024). Starting a nonprofit?. North Carolina Center for Nonprofits. https://ncnonprofits.org/resources/nonprofit-starter-kit/starting-nonprofit