If you are finally ready to make your dream of starting a nonprofit a reality but are not quite sure where to start, you are not alone. Starting a nonprofit is a big step and one that will impact many lives in your community. Dreaming of starting a nonprofit is already farther than most people…
Choosing a name is the first step in the process of starting a nonprofit. Your name should be memorable and maybe even give an idea of what your organization hopes to accomplish. In Colorado, you will not need to add the legal titles of corp., inc., co., or ltd., but they can be included. Your name also does not have to be in English if it is written with English or Arabic letters or Roman numerals.
The one rule is that it is different from other organizations in the state. You can search on the Colorado Secretary of State’s website to see if your organization’s name has already been used. If not, you can file your new organization’s name here.
2. Name Incorporators and Directors
Every nonprofit in Colorado must have one Incorporator and at least one director. An Incorporator is a person who files the Articles of Incorporation with the state of Colorado. Anyone can do this, and once the Articles of Incorporation are filed and accepted by the state, the Incorporator’s job is finished.
Directors are members of your Board of Directors and will be the leadership team of your nonprofit for years to come. Board members are expected to provide legal and financial governance, promote the organization in the community, and recruit and support the staff as they run the organization’s daily operations.
You need only one director in Colorado, but at least three for your nonprofit to become tax-exempt with the IRS. The size of your board will depend on the organization.
As a nonprofit in Colorado, your board members will serve a one-year term, and each committee will need at least one director. Your nonprofit board of directors will also need to elect a President, Secretary, and Treasurer. You must be 18 years or older to become an officer of a nonprofit in Colorado. The same individual can hold these offices, but it is recommended that they don’t.
3. Appoint a Registered Agent
Registered Agents are responsible for receiving all legal notifications for the organization. An individual or a company can hold this role, but they must be located in the state of Colorado and have regular business hours.
4. File Colorado Articles of Incorporation
In Colorado, you must file your Articles of Incorporation online. You will need your organization’s name, address, Registered Agent name, and address, and list whether you will have a voting membership. There is a fee of $50 to file, and the turn-around is immediate.
You are deemed official once you have filed your Articles of Incorporation and will need to file with the Internal Revenue Service (IRS) around the same time. You can choose to delay the date of incorporation for up to 90 days. If you do not choose to delay, your organization will be incorporated immediately.
Be sure to keep a record of your Articles of Incorporation for your records after applying online. You will need these for a number of steps in the future.
5. Apply for an Employer Identification Number
Once you have filed your Articles of Incorporation with the state of Colorado, you can apply for an Employer Identification Number (EIN). The IRS provides a nine-digit number to every corporation in the United States. You’ll need this number for tax filing and reporting purposes. File by filling out Form SS-4. You can either file online and get an immediate response or file by fax or mail. Mail filings can take up to four to five weeks to get your EIN.
6. Hold Organization Meeting and Establish Nonprofit Bylaws
Now that you have become an official corporation with the IRS and state of Colorado and have chosen your board, your board members can get to work. The first meeting of your board of directors should be held at this point to review and ratify your nonprofit’s bylaws and to create a conflict-of-interest policy. The IRS requires that both be approved before filing for tax-exempt status.
Your bylaws should detail your nonprofit’s mission, goals, governance, operational needs, and all board election, term limits, and meeting requirements. For a better idea of how to write your organization’s bylaws visit our article, Nonprofit Bylaws Made Easy.
In addition to approving your bylaws and conflict of interest policy, you should also elect all the board’s directors and appoint all officers at this first meeting. Moreover, this is the time to approve a resolution to open a bank account. Many banks require a signed resolution by the board to start this bank account.
Your nonprofit can file to be tax-exempt with the IRS by filing Form 1023 or 1023EZ.
Form 1023EZ is for organizations that will not raise more than $50,000 in the first three years. Other requirements for this form are listed in the eligibility worksheet. The filing fee for this form is $275, and you should receive your letter of determination within a month.
Form 1023 is for all other organizations. The fee for this form is $600, and it will take anywhere from three to six months to receive your letter of determination.
8. Apply for Colorado State Tax Identification Numbers/Accounts
You will need to apply for a sales tax account with the state to apply for a charitable license. A copy of your 501(c)3 application and an $8 fee are required for a charitable license with the state. You need to deposit $50 if a retail sales tax license is also needed. However, you’ll get the $50 deposit back once your organization pays $50 in sales taxes.
Applications can be filed online, by mail, or in-person. The turn-around time is immediate in person, two to three weeks for online applications, and four to six weeks by mail. Each of these licenses is valid through the end of each odd-numbered year.
9. Apply for Colorado State Tax Exemption
Once you have received your letter of determination from the IRS, you are exempt from Colorado’s state income tax.
You must file an application for state tax exemption. You will need your federal determination letter, latest financial statements or projected statements for new organizations, your Colorado Articles of Incorporation, the specific purpose and function of your organization, and a copy of your most current Colorado Secretary of State’s “Certificate of Good Standing.” You can find this certificate online.
Self-collecting jurisdiction in Colorado may have different rules for tax exemptions, so you will need to contact your local government to make sure you have filed all necessary paperwork.
10. Register for Charitable Fundraising
Most nonprofits must register with the Colorado Secretary of State’s office before soliciting funds. Organizations that do not intend to raise or receive more than $25,000 a year, not including grants, or will not accept donations from more than ten people are exempt from filing a registration statement. Also, churches that do not file 990s with the IRS are also exempt.
All other nonprofit organizations will need to create an account and register online. You will need your organization’s EIN and email address.
11. Apply for Necessary Colorado State Business Licenses
Colorado nonprofits don’t need to get a statewide business license. Local governments may have different requirements. It is recommended that you contact your local government for their rules and requirements.
Over To You
Each state has different requirements to start a nonprofit, but with this information, we hope to clear up any questions you may have about starting an organization in Colorado.
Donorbox’s blog includes helpful tips and tricks to start your nonprofit off on the right foot, plus, numerous other useful resources.
If you want to learn more about the Donorbox fundraising tool, head over to our features page for all the details.
Starting a Nonprofit in Colorado – FAQs
1. How Much Does It Cost to Start a Colorado Nonprofit?
Articles of Incorporation: $50
IRS 501c3 Form 1023EZ: $275
IRS 501c3 Form 1023: $600
2. How Long Does It Take To Start a Colorado Nonprofit?
Articles of Incorporation: immediate
IRS 501c3 Form 1023EZ: under 1 month
IRS 501c3 Form 1023: 3 – 6 months
3. Does a Colorado Nonprofit Need a Registered Agent?
All nonprofits in Colorado need a Registered Agent to accept legal notifications.
4. Does a Colorado Nonprofit Need a Business License?
The state of Colorado does not require nonprofits to obtain a business license, but many locations have their own requirements. It is best to contact your local government offices to ensure you do not have to have a business license.
5. Should My Colorado Nonprofit Register as a Charity?
Most nonprofits must register in Colorado before soliciting donations. You are exempt from registering if your organization does not expect to raise more than $25,000 in a year or solicit more than ten individuals in a year. Churches who do not file Form 990 with the IRS are also exempt.
6. How Can I Keep My Nonprofit in Good Standing?
A periodic report is required to keep the state’s records up to date and keep your organization in good standing.
The Secretary of State sends you notices to remind you about important filing dates. As a Colorado nonprofit, you will need to submit yearly periodic reports or annual reports with the Colorado Secretary of State to keep your organization in good standing.
You can find the due date of your periodic report on your summary page at the Secretary of State’s office. You can file your report two months before and two months after the due date. Although the Secretary of State’s office will send you notification seven days before the start of the periodic report month. There is a $10 filing fee for your periodic report and a $50 late fee.
Kristine Ensor is a freelance writer with over a decade of experience working with local and international nonprofits. As a nonprofit professional she has specialized in fundraising, marketing, event planning, volunteer management, and board development.