How to Start a Nonprofit in Alabama
Thinking about starting a nonprofit in Alabama? Read on to discover everything you need to know, from incorporating your organization to registering as a charity.
Raj
Thinking about starting a nonprofit in Alabama? Read on to discover everything you need to know, from incorporating your organization to registering as a charity.
If you’re reading this, it probably means you’re ready to take the first steps towards creating a nonprofit that will benefit your community, fulfill your service dreams, and contribute to your field! Congratulations!
Naming, certifying, registering, and renewing a nonprofit in Alabama is a wonderful experience, but teasing through legal requirements can be tedious, confusing, and overwhelming. We want to make this process as easy and effective as possible for you. This incredibly comprehensive, 15-step guide will show you how to start a nonprofit in Alabama.
In this guide, we’ll walk you through every step of how to start a nonprofit in Alabama including how to obtain NY agency approval, prepare your Articles of Incorporation, and apply for 501(c) status. This will not only allow you to establish and grow your nonprofit but also recruit your initial board of directors and employees, accept donations, and claim your tax-exempt status. Let’s get it done!
Your nonprofit’s name is key for establishing your brand and important for incorporating your nonprofit with the state of Alabama.
As you brainstorm the most powerful and representative name possible for your nonprofit, be sure to confirm that your name of choice is not already in use for another organization. Alabama’s Business Entity Records search engine will allow you to search for your name and ensure that it’s not been claimed. The State of Alabama also requires that your nonprofit corporation can not conflict with any other organizations in the state.
What are some things to be thinking about while searching for the perfect name? Take a look:
Once you’ve chosen an available name, the State of Alabama requires that you officially register your nonprofit’s name with the state.
Recruiting and building your inaugural team is a critical next step that can have lasting impacts on your nonprofit.
Your nonprofit’s Incorporator will sign the Articles of Incorporation for your nonprofit. You will need at least one incorporator but can have more than one.
Not only will your Board of Directors provide financial oversight for, govern, fundraise, represent, and make important decisions for your nonprofit, but it will also be responsible for writing and signing into effect your organization’s bylaws.
Nonprofit best practice recommends you recruit a very diverse board of directors that effectively represents the community you are planning to serve. Consider recruiting individuals across all age groups, of all races, classes, religions, and sexual orientations. Your efforts will establish a strong sense of trust and responsibility. Your community, funders, volunteers, and beneficiaries will also notice and appreciate your commitment to representing them through your work.
The State of Alabama requires that your organization recruits at least 3 un-related directors in order to meet IRS requirements. There are no requirements that your directors reside in a certain geographical area or secure some specific type of professional membership. At least two directors (i.e., the quorum) must be present at a meeting in order to ensure that the proceedings of that meeting are valid.
The State of Alabama requires that your nonprofit hire a president, one or more vice presidents, a secretary, a treasurer, and other officers or assistant officers as deemed necessary to successfully operate your organization. These officers will serve for at least 1 year and a maximum of 3 years. Two or more positions may be held by one individual, except for the roles of president and secretary.
Your nonprofit’s registered agent must be physically located in Alabama and maintain an office that operates during normal business hours. The registered agent is responsible for receiving legal notices for your organization. The Alabama Secretary of State website also includes an updated list of registered agents in Alabama.
Congratulations! Your nonprofit’s Articles of Incorporation is the first legal document you’ll need to file to officially create your organization. This document contains basic information about your nonprofit, including but not limited to your name and location.
The following are specific steps to filing your Articles of Incorporation according to the Alabama Secretary of State – Business Services Division:
This step will be beneficial to your nonprofit but is not required in Alabama. Filing an initial report – or publishing the news of your nonprofit in a local media outlet – can get the word out about your new organization’s purpose, services, and needs for funding. The Alabama Press Association provides a comprehensive list of newspaper publications throughout the state.
Your EIN will allow you to open a bank account, apply for 501(c)(3) status, and submit 990 tax returns to the IRS. Your EIN is a unique, nine-digit number assigned by the IRS to legally identify your nonprofit.
Your nonprofit bylaws describe how your organization will be run. They should encourage transparency and accountability to your community. Include an outline of your organization’s mission, meeting and officer requirements, and key stakeholder regulations. Be sure to include the following in your bylaws:
Your inaugural meeting for your Board is the time to approve your nonprofit bylaws and conflict of interest policy, appoint officers, and open a bank account. In Alabama, you must also provide a minimum of 3 days’ notice for the initial meeting to directors. Drafting and dispersing an agenda prior to the meeting and taking diligent notes will also make your meeting efficient and productive.
The laws your nonprofit must follow vary by state, so make sure you understand the tax and licensing requirements that exist for your organization.
Alabama also offers a consolidated state tax registration application.
This may feel like an extremely daunting task, but it comes with immeasurable and lifelong tax benefits. With this exemption, you’ll be exempt from IRS income tax, can apply for grants, and will grow your fundraising success. Consider hiring a professional to assist you in filing this form – doing so can be a lengthy process and you’ll want to make sure you get it right.
Many states issue their own tax-exempt certificate that can be used for sales and use tax purposes. Once you’ve received your Determination Letter from the IRS, Alabama does not require your nonprofit to file to obtain an exemption from state income tax.
Registering in Alabama is required, but you may also consider registering in other states dependent on your nonprofit’s scope of work. In Alabama, you must register for solicitation with the Alabama Attorney General – Consumer Interest Division. Alabama requires solicitation registration to be renewed annually.
Initial requirements for solicitation registration are the following:
Alabama nonprofits do not need to obtain a state-level business license or permit. However, your nonprofit should check with your city and county clerk’s office to determine whether there are any local requirements you must follow.
Congratulations! You’ve officially turned your dream of starting a nonprofit into a reality! Though you’ve wrapped up the most critical first steps, it is key that you maintain your nonprofit’s compliance with ongoing requirements throughout the years. Alabama requires you to file the following on an annual basis:
That you’ve decided to start a nonprofit in Alabama to support lives in need itself makes a lot of difference. The process may seem a little overwhelming at the beginning but there are enough resources available on the IRS and Alabama state government sites. Plus, you can always come back to refer to this thorough guide to have a check on the steps and find the important links.
Every good change starts with a little effort on the changemaker’s side but with it, imagine the thousands of lives you can change! We wish you the best in this endeavor of starting a nonprofit in Alabama.
If you wish to learn more about nonprofit management, tips, and resources, do feel free to check out our blog.
Raviraj heads the sales and marketing team at Donorbox. His growth-hacking abilities have helped Donorbox boost fundraising efforts for thousands of nonprofit organizations.
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