Congratulations, you’re ready to take the first steps towards building an organization that will benefit your community and contribute to your field!
Starting a nonprofit in NY is a rewarding experience, but working through the legal requirements can be confusing and overwhelming. We want to help you understand your state and federal regulations, what forms you need to fill out and in what order, and how you can start a nonprofit organization in NY smoothly and effectively.
In this 16 step guide, we will show you how to obtain NY agency approval, prepare your Articles of Incorporation, get your EIN, and apply for 501(c) status. This will allow you to start growing your nonprofit, accept donations and apply for grants, and claim your tax-exempt status. Here, we’ll answer some of your most pressing questions – let’s go!
16 Steps to Starting a Nonprofit in New York
- Name Your Organization
- Choose a Nonprofit Corporation Structure
- Recruit Incorporators and Initial Directors
- Appoint a Registered Agent
- Obtain New York Agency Approval
- Prepare and File Articles of Incorporation
- File Initial Report
- Obtain an Employer Identification Number (EIN)
- Store Nonprofit Records
- Establish Initial Governing Documents and Policies
- Hold Organization Meeting of the Board of Directors
- Get New York State Tax Identification Numbers and Accounts
- Apply for 501(c) Status
- Apply for New York State Tax Exemption(s)
- Register for Charitable Solicitation (Fundraising)
- Obtain Other Business Licenses and Permits
1. Name Your Organization
You may already have a great name selected for your organization, but there are a few rules you should be aware of. First, you must follow these naming guidelines outlined by NY:
- You need to include relevant legal designations like “corporation”, “incorporated” or “limited” (or their abbreviations), unless you fall into one of the following categories:
- You’re a charitable or religious organization
- You’re a bar association
- You already have to get “the approval of the commissioner of social services or the public health and health planning council”
- You can’t have the same name as an existing organization doing business in NY. Search NYS’ Corporation and Business Entity Database for all names currently in use.
- It can’t contain any word or phrase prohibited by NYS.
- The name can’t imply that your organization is for any other purpose than the one it is registered for, or that it is a subdivision of the state or federal government if it’s not.
If your name includes characters or symbols, you should also review the IRS’ guidelines.
Pro tip: An online search of your name to see what else might come up, and confirming that it’s an available social media handle and domain name are additional useful steps.
Once you have a name that you’re happy with and meets these requirements, you can hold the name for up to 60 days by reserving it with NYS. You do this by filing an Application for Reservation of Name, which can only be sent by mail with a $10 fee.
2. Choose a Nonprofit Corporation Structure
At this point, you’ll need to confirm what your nonprofit corporation structure is going to be. NYS defines nonprofit corporations as two basic structures: religious and non-religious.
If your nonprofit’s purpose is to allow members to meet for divine worship or religious observations, then you can file as religious. Every other purpose must be filed as non-religious, and as Type A, B, C, or D. If your organization falls into multiple types, you will file as the latter type; meaning if you’re both Type A and B, you will file as Type B, etc. The Types are classified as:
- A: Your non-business purposes are “civic, patriotic, political, social, fraternal, athletic, agricultural, horticultural, animal husbandry, and for a professional, commercial, industrial, trade or service association.”
- B: Your non-business purposes are “charitable, educational, religious, scientific, literary, cultural or for the prevention of cruelty to children or animals.”
- C: Your business purposes (those “typically pursued by a business corporation for profit”) serve a public or quasi-public objective.
- Please note that when you file the Certificate of Incorporation for this type, you need to include a statement identifying the public or quasi-public objectives for each business purpose you’ll pursue.
- D: Your organization conducts any business or non-business not otherwise outlined above, regardless of whether you also fall under A, B, or C.
If you have any questions or confusion over terms or designations, you can review section 102.
3. Recruit Incorporator(s) and Initial Directors
Next, you’ll need to build your inaugural Board of Directors, which is the governing body of your organization. You’ll want to bring together a group of people with diverse experiences and viewpoints who can speak to your field, the work you’re looking to do, and the community you’re serving.
In NY you need at least three directors over eighteen (the IRS has the same requirement). There is no residency or membership requirement, and they can serve a term of one to five years. Each committee needs at least three directors.
The incorporator is the person who will sign and deliver your nonprofit’s Articles (or Certificate) of Incorporation. This is a short-term role and can be filled by anyone, it can even be more than one person.
4. Appoint a Registered Agent
There are also a few state guidelines for appointing a registered agent, which is the person or service responsible for accepting legal documents on your organization’s behalf. For NYS, this means they must be located in NY and operate within normal business hours.
5. Obtain New York Agency Approval
NY requires that certain businesses obtain the approval of the state agency that matches the purpose of their organization. You will need to reach out to the corresponding agency for your nonprofit type; obtain written consent from them for starting your business; then attach this consent to your Certificate of Incorporation when it’s filed.
Here are a few business types and their corresponding agencies:
- Trade or business association – section 404(a): Office of the Attorney General (Antitrust Bureau)
- Institutions for the care of children, destitute mothers, or victims of domestic violence – section 404(b): Office of Children and Family Services
- Facilities for adult care and aged care – section 404(b): Department of Health (Division of Legal Affairs)
- Educational purposes or the promotion of knowledge (science, literature, art, history, etc) – 404(d): Department of Education (Office of Counsel)
- This includes a $10 fee to obtain consent
- Hospital or health-related services – 404(o) and (t): Department of Health (Division of Legal Affairs)
- Treatment and recovery of persons who suffer from mental illnesses, as per article 31 – 404(q): Department of Mental Health (Office of Counsel)
- Substance abuse or dependence program – 404(u): Office of Alcoholism and Substance Abuse Services (Bureau of Certification)
6. Prepare and File Articles of Incorporation
Each state has its own requirement for filing your Articles of Incorporation in addition to the IRS requirements required for filing for 501(c) tax exemption (outlined in Step #13). The language has to match across your forms; the IRS requirements need to be submitted with your original Articles of Incorporation, so it’s important to confirm if there are any additional requirements outlined by the IRS that aren’t required by your state.
You will need to include
- The corporation’s name,
- Purpose, whether it’s charitable or non-charitable,
- The county where it’s located,
- The names and addresses of your initial directors,
- Information on your registered agent, and
- Any internal affairs provisions.
The filing will take about fourteen business days, but you can expedite it to within twenty-four hours for an additional $25; same day for $75; within two hours of receipt for $150.
7. File Initial Report
Initial reports are an outline of the initial state of your business upon formation. This usually includes your business address, the name and information of your registered agent and initial directors, and your business purpose.
While several states require you to file an initial report after filing your Articles of Incorporation, this is not required by NYS.
8. Obtain an Employer Identification Number (EIN)
Employer Identification Numbers (EIN) are nine-digit numbers assigned to organizations by the IRS. Similar to an individual’s social security number, they are unique identifiers used for tax purposes and opening bank accounts.
You can obtain one for free by applying online, by phone or fax, or by mailing in a filled-out Form SS-4. The online application needs to be completed in one session and you will receive your EIN immediately.
A faxed application will take four business days and mail will take four to five weeks.
9. Store Nonprofit Records
Organization is an important part of a well-run nonprofit. If you haven’t already, now is a great time to build a filing and storage system.
As you continue to build and legalize your nonprofit, you’ll gather several important documents that you will need to reference later on.
First, find a safe place to store things like your EIN, Certificate of Incorporation, copies of all forms you’ve filed, and meeting agendas and notes; then design and stick with a clear organizational system that will allow you to easily find when you need them.
10. Establish Initial Governing Documents and Policies
Your initial governing documents and policies include your conflict-of-interest policy and your nonprofit bylaws.
A conflict-of-interest policy is meant to regulate key members of your organization, like your directors. It should outline what you and these members need to do if a conflict of interest arises that would prevent them from putting your organization first while doing their job there.
Nonprofit bylaws, on the other hand, outline how your organization will be governed; and should encourage accountability to your community and mission, while following NYS laws.
You should include an outline of your nonprofit’s purpose, meeting requirements, and board regulations, among other things. Check out our article on how to draft nonprofit bylaws to get started.
11. Hold Organization Meeting of the Board of Directors
From here, you should hold your inaugural meeting of the Board of Directors to go over your governing documents and policies, and to designate officers. NYS requires you to appoint a President, at least one Vice-President, a Secretary, and a Treasurer. Each will have a one-year term. The same person can fill multiple offices, as long as they aren’t the President or Secretary.
You’ll need to confirm your bylaws and conflict of interest policy at this meeting in order to apply for federal tax-exempt status; you should also discuss a company bank account and important accounting decisions like your tax year. You’ll want to have a plan and take detailed notes; so be sure to send an agenda before the meeting and assign someone to take notes.
12. Get New York State Tax Identification Numbers and Accounts
NYS doesn’t offer a consolidated state tax registration application, so you’ll need to identify and register for any individual tax accounts that are relevant to your organization and submit them to the NYS Department of Taxation and Finance. If you’ll be conducting business in NYC, you’ll also need to register for city taxes with the City of NY Finance Commissioner
Review the NYS Tax Guide for New Businesses to confirm what tax accounts you’ll need to register for.
13. Apply for 501(c) Status
As a nonprofit, you’ll be able to get federal tax exemption, which will save you money and will help with applying for grants and sponsorships.
You’ll need to apply for 501(c) status with the IRS to get this exemption, which you can do by filling out Form 1023-EZ, Form 1023, or Form 1024; it depends on your eligibility:
- Form 1023-EZ eligibility: you expect to raise less than $50,000 in the next three years and can answer “no” to every question on the eligibility worksheet (pg 13).
- This form costs $275, must be filed by mail, and takes around one month.
- Form 1023 eligibility: you don’t meet the requirements for Form 1023-EZ, but want to file as a 501(c)(3).
- This form costs $600, must be filed by mail, and takes three to six months.
- Form 1024 eligibility: any other 501(c) organization.
You’ll also need to submit your Certificate of Incorporation, which must include your organization’s purpose (review acceptable purposes), restrictions on activities and distribution of assets in case of dissolution, and limitations on distributions.
When the IRS approves your application, they’ll send you a Determination Letter recognizing your exemption.
The IRS fully outlines the different statuses and filing requirements, but given the difficulty and importance of this part of the process, it’s worth considering working with a specialist.
14. Apply for New York State Tax Exemption(s)
Once you’ve filed for federal tax exemption, you should also look into NYS tax exemptions. You can file with the NYS Department of Taxation and Finance for exemption from:
- State income tax and corporation franchise taxes: file Form CT-247
- Sales tax: file Form 25-119.2
- Property taxes: there are several potential forms, review NYS property tax forms – exemptions
- NYC organizations can apply for property tax exemption through the NYC Department of Finance
None of these forms have a filing fee.
15. Register for Charitable Solicitation (Fundraising)
If you plan on soliciting and accepting charitable donations, you’ll need to register with the NYS Attorney General (Charities Bureau).
If you’ll be soliciting donations outside of NYS, you should review the other state’s requirements and register if required. But inside of NYS, any charitable and nonprofit corporations must register.
Your initial registration can be online, has a $25 fee, and will take about two to three months. You’ll need the signature of your President and CFO (or Treasurer) and the Attorney General’s provided checklist for any forms or attachments.
If your charitable organization will receive less than $25,000 and you don’t use a professional fundraiser; or it’s a religious, educational, or membership organization, PTA, government agency, hospital, skilled nursing facility, treatment center, volunteer firefighter, or ambulance service, historical society, or appeals for individuals; you can register a one-time exemption form online.
Once your initial registration is complete, you’ll need to file annually four and a half months after the end of your fiscal year. You will need your Form 990, unredacted Form 990 Schedule B, fundraising contacts, and some will need their audited financials. This can cost $0-$1500, depending on your net worth.
Criteria for filing online
If you made more than $250,000 in gross revenue and support in a year, you’ll need to file annual financial reports. This costs $25 and you should file them four and a half months after the end of your fiscal year.
But if you’re a 501(c)(3) charity that made an in-kind donation of over $10,000 to a 501(c)(4) during a reporting period; or a 501(c)(4) charity that spent over $10,000 on covered communications; you’ll also need to file an annual financial report within thirty days of the close of each applicable reporting period.
Pro tip: Soliciting and accepting donations can be smoother and more effective by allowing donors to give online. Tools like Donorbox help you get started with online fundraising. With customizable donation forms that easily embed into your website, we can help you meet your campaign goals and stay organized.
16. Obtain Other Business Licenses and Permits
Since there are a lot of potential licenses and permits you’ll need to apply for in NYS, you should review New York’s Business Express site.
You can search by business type and locality to see what may be relevant to your needs. You can also call your local county/city/town/village clerk to ask about local requirements.
You’ve filed your state and federal forms, are tax-exempt, and have your initial board. You’re all set to start growing your nonprofit organization and helping out your local, state, or even national community!
You’re in a great spot to start building your social media presence, digital content, brand identity, and audience. Use what you’ve already put together, like your policies and Board of Directors. A mission statement can grow from your bylaws since you’ve already outlined your organization’s principles and standards of accountability. Your initial Board can help you grow your audience and select key staff members as you grow in size.
A strong fundraising campaign and donation strategy are also important next steps.
We’re here to help you grow and create an impact with effective tools and features. Check out our Nonprofit Blog for useful articles, tips, and resources.
Frequently Asked Questions (FAQs)
In this section, we’ll help you by answering some common questions associated with starting a nonprofit in NY.
1. How do I determine if the name I want to use is available?
NYS’ Corporation and Business Entity Database have a complete list of all names currently being used.
You should conduct a search with the name that you would like to use. Select “all” under name type, and “contains” under search type to confirm that your name is neither the same as, nor too similar to an existing corporation.
You can also submit a written request to the Department of State (Division of Corporations) asking for the availability of your name. There is a fee of $5 per name search request.
2. What is a “backer” or “cover sheet”?
“Backer” and “cover sheet” are similar terms for the sheet of information that must be submitted with any forms you are filing.
They have to include the name of the document you are submitting, the corresponding statute that requires this filing, your name and address (or that of the filer).
You will receive a filing receipt or rejection letter to this address. If the forms are preprinted, the backer should be on the last page.
3. When I file the Certificate of Incorporation, what will I receive from the Department of State?
Once you file your Certificate of Incorporation, the Department of State sends a filing receipt to the Incorporator’s listed address.
This receipt will include the date you filed, the name of your organization, a snapshot of the information in the certificate, and an outline of the fees paid.
Confirm that all the included information is correct, as this is your proof of filing. Keep it in a safe place with your other records, too, since you can’t get another copy.
4. How do I obtain copies of documents filed with the Division of Corporations?
To get copies of any documents you filed with the Division of Corporations, you’ll need to submit a written request to the NYS Department of State (Division of Corporations).
The request should include your organization’s name, your DOS ID number or the exact date of formation/authorization, the document(s) you’re requesting, whether you want a plain or certified copy, and the address you want the copies mailed to. Plain copies cost $5, certified copies cost $10.