Welcome to our 12 step guide on how to start a nonprofit in Arizona! Whether you’ve been thinking about starting your nonprofit organization for some time and are looking for a quick breakdown of the forms you need to file, or you’re just starting out and want to get an idea of the overall process, we’re here to help.
Starting a nonprofit in Arizona can be a fulfilling experience and through it, you can make valuable contributions to your community and field. Once you’ve identified an unfulfilled need or niche in your area, you can start helping others on a hyper-local, national, or even international scale.
This guide will take you through building your initial team, filing your articles of incorporation, applying for tax exemption, and registering for charitable fundraising. Beyond that, it will help you understand important regulations and rules around naming your organization, drafting bylaws, and more. We’re excited to help you turn your dreams into reality and effectively navigate state and federal regulations!
Naming your organization is one of the most important first steps to starting a nonprofit. This is the first interaction many people will have with your organization and it will influence their perception of you. Beyond confirming that it’s available as a domain name for your website, and social media handle for your preferred channels, you’ll need to make sure that it’s compliant with Arizona’s requirements.
First, you’ll need to make sure your name’s available by searching on the Arizona Corporation Commission’s (ACC) entity search index. Your name can’t be the same as another registered corporation in the state, unless that corporation consents in writing, a court ruling allows it, you’ve merged with that organization, were formed through its reorganization, or you’ve acquired all of its assets. In addition, your name can’t imply that your organization is for any other purpose than the one it’s registered for.
Building your initial team is an important next step. Naming your Directors, who will make up your inaugural Board of Directors, requires careful consideration. They will make up the governing body of your organization and will help you draft your initial bylaws, you should choose a group of people with experience in your nonprofit’s field, connections to the community you’re serving, and diverse viewpoints. If you’re not sure where to start, check out our article on how to find nonprofit board members.
Arizona has a few requirements to be aware of as well. You must have at least one director who will serve a term of one year. They don’t need to live in Arizona and there are no membership requirements. Be aware that the IRS requires you to have at least three directors over the age of 18 when you apply for tax-exempt status. Your director(s) may hold officer positions as well, and one must prepare minutes for meetings and authenticate records. The same person can hold more than one office.
Your incorporator(s) is responsible for signing and delivering your articles of incorporation and is a short-term role. This role can be filled by anyone, and it can be more than one person.
A registered agent (also known as a statutory agent) is the person or service responsible for accepting legal documents on your organization’s behalf. Arizona requires that your registered agent be also located in the state and have an office that is open during regular business hours.
Filing your articles of incorporation formally marks the formation of your nonprofit organization. Both Arizona and the federal government have requirements that you should be aware of, and while Arizona may have fewer regulations than the IRS, you’ll need to meet both sets of requirements in your original articles of incorporation to successfully file for tax exemption. The IRS requires that you include your organization’s purpose (review their list of acceptable purposes), any restrictions on activities and distribution of assets in case of dissolution, and any limitations on distributions.
Arizona requires that your articles of incorporation outline and include:
In addition to the legislative site outlining the requirements, Arizona provides instructions (CO11i) on filing your articles of incorporation that are worth reviewing. You can file online, by mail, or in-person and there is a $40 fee (plus an additional $35 fee if you wish to expedite the process). It should take about 2 months, or 7 to 10 business days if you choose to expedite.
Arizona, like many other states, requires you to publish your incorporation. Once the ACC approves your articles of incorporation, you need to include the name of your organization, its address, and your registered agent’s address, and whether it’s manager-managed or member-managed. This needs to be done within 60 days of incorporation. it must also be published for three consecutive publications in your registered agent’s county. Arizona provides a list of acceptable newspapers, by county, that you can publish with.
Applying for your Employer Identification Number (EIN) is a crucial step because this nine-digit number assigned by the IRS (like a social security number for organizations) is required to open a bank account; this will also help you pursue tax exemption and allow donors to receive tax benefits.
To get an EIN, you can apply online, by phone or fax, or by mailing in a filled-out Form SS-4. It’s a free application and if you file online (which must be done in one session), you will get your number immediately. If you choose to fax or mail the application, it will take 4 business days for the former or 4 to 5 weeks for the latter.
Your inaugural organization meeting of your Board of Directors is an important event; this is also the time to approve your nonprofit bylaws and conflict of interest policy, appoint officers, and open a bank account. The meeting will be much more effective if you draft and share an agenda in advance with the prepared bylaws and policies.
Your nonprofit bylaws outline how your organization will be run. They should encourage transparency and accountability to your community, so you’ll want to include an outline of your organization’s mission, meeting and officer requirements, and key stakeholder regulations.
The conflict-of-interest policy is a document that will help you monitor the key members of your nonprofit to make sure they’re prioritizing the interests of your organization. Important stakeholders like directors should always put the nonprofit first while they are making important decisions for it, so this policy will outline how to work through any potential issues that would prevent them from doing so.
It’s also worthwhile to appoint someone to take minutes during the meeting, to record important decisions and resolutions. Read more about how to run an effective nonprofit meeting on our blog.
In order to comply with Arizona state regulations and pay your business taxes, you need to visit the Arizona Department of Revenue; you’ll also have to apply for any individual tax accounts that are relevant to your nonprofit organization. Review A Guide to Taxes for Arizona Businesses for a full breakdown of possible tax accounts, payment methods, and much more. Each license will cost $12.
If you’re applying for Employer Withholding and Unemployment Insurance, Transaction Privilege Tax, and Use Tax, you can file the Arizona Joint Tax Application (JT-1).
Regardless of which state you’re starting your nonprofit in, you’ll want to file for 501(c) federal tax exemption. This also saves you money on business-related expenses; moreover, it will help with applying for grants and sponsorships. In order to file as a 501(c)3, 501(c)4, 501(c)6, or any other nonprofit organization, you need to apply for this status with the IRS by filling out one of the following forms:
You’ll also need to include your articles of incorporation, using the same language you used when you originally filed them with the state. While the IRS fully outlines the different statuses and filing requirements, you might want to work with a specialist. This is both an important and difficult step of starting a nonprofit in Arizona; errors in these forms can cause delays and frustration.
You’ll receive a Determination Letter from the IRS recognizing your exemption when your application is approved.
Unlike many other states, Arizona does not require you to file an additional application for exemption from state income tax; if you’ve received your determination letter from the IRS. Meaning, if you’ve successfully received federal tax exemption, you’re already exempt from Arizona’s state income tax.
Applicability for Transaction Privilege Tax (TPT) exemptions or deductions is specific to each business classification. See Arizona State Legislature, Arizona Revised Statutes (ARS), Title 42 Chapter 5, article 2 to see the classifications and whether you can apply.
If you’re interested in applying for property tax exemption, you need to contact your local county assessor.
Also unlike many states, Arizona no longer requires most charities to register for or annually renew charitable solicitation fundraising. You should check with your local county or municipality to confirm whether you’ll need to register for in-person solicitations.
You might want to consider a professional service like Donorbox to help you solicit and accept donations. Our customizable donation forms offer features like company matching, you can add a goal meter on your donation page to showcase your fundraising progress, amplify your campaign and encourage people to give. If you’re unsure about what platform is right for you, check out our article on reasons why nonprofits choose Donorbox over PayPal.
You may potentially need other business licenses, but there are many possibilities depending on your location and business type. This is another realm covered in A Guide to Taxes for Arizona Businesses, but another great resource to check out is the Arizona Commerce Authority (ACA). Included in the ACA checklist program is detailed information on business licensing. Review the types of business licensing to see if any apply to you. You can also call your local county, city, town, or village clerk to ask about any local requirements.
Congratulations! You have all the tools and information you need to start your nonprofit organization in Arizona. When you go through these steps, and submit your forms, remember to take your time, reread everything, and make sure that you’re being consistent. This could be a lot, although being thorough at this stage will save you headaches down the line.
We also recommend setting up an efficient organizational system early on. Being able to file all your paperwork, copies of everything you’ve submitted, and your meeting agendas and notes will help you fact check in the future; it will build a structure that you can use throughout your nonprofit’s lifetime.
Now that you’ve begun the initial setup, you and your organization are ready to start making a difference! And we’re here to help you every step of the way, so don’t miss our nonprofit blog and the many articles covering questions and topics ranging from fundraising strategies to the top nonprofit conferences this year.
We’re going to answer some commonly asked questions about starting a nonprofit in Arizona in this section.
There are a few state and federal costs you’ll need to be aware of when starting a nonprofit in Arizona. On the state level, you’ll need to pay a filing fee for your Articles of Incorporation, which is $40. You can pay an additional $35 dollars to expedite. There’s also a $12 fee for any state tax licenses you may need. On the federal level, you’ll have to pay between $275-$600 to file for 501(c) tax status, depending on the form you file.
In total, you can expect to pay between $315-$687 (though potentially more), depending on your eligibility.
There are both state and federal timelines to be aware of when starting a nonprofit in Arizona. Filing your Articles of Incorporation with the state takes about two months, or seven-ten business days if you expedite. Getting your EIN from the IRS is immediate when filed online, or takes around five weeks when mailed. Filing for 501(c) status with the IRS can take 1 to 6 months depending on the form you apply with.
Yes. In Arizona, a registered office is referred to as a statutory agent and is needed for all nonprofit organizations. Your statutory agent is responsible for accepting legal documents on behalf of your organization. You will need to include their information on your Articles of Incorporation, 501(c) application, and when publishing your incorporation.
Your statutory agent must be located within the state and have regular business hours. While you can do this yourself, it limits your flexibility as you would have to be in your office during your appointed regular hours to accept any legal documents. In addition, you’ll receive a lot of potential junk mail since the address is entered into the public record.
The state of Arizona doesn’t require nonprofit organizations to have a business license, but different counties, cities, municipalities, or towns may have business license requirements. Review A Guide to Taxes for Arizona Businesses or the Arizona Commerce Authority (ACA) to see if you may need one based on your location. You can also call your local clerk’s office to check.