Have you asked yourself why you want to start a nonprofit? Are you passionate about a problem affecting your community? Do you have a new or better idea of how to fix it? The reason for starting a nonprofit is the first step in the process of starting a nonprofit.
Once your purpose is clear to you, next come the steps to incorporate your organization and get all the legal paperwork in place. With the paperwork falling in place, you will need to establish your mission, purpose and build the foundation of a strong organization – a clear vision and your nonprofit’s core values.
In this article, we cover each step in the process of starting your nonprofit. This process can feel tedious and lengthy at times, but your purpose should inspire you to keep going even when things get tough. As you move through these steps of starting a nonprofit, always keep your vision in mind.
13 Steps to Starting a Nonprofit in Pennsylvania
- Name Your Organization
- Name Incorporators and Directors
- Appoint a Registered Agent
- Publish the Notice of Intent to Incorporate
- File Pennsylvania Articles of Incorporation
- Publish Incorporation
- Apply for an Employer Identification Number (EIN)
- Hold Organization Meeting and Establish Nonprofit Bylaws
- 501(c) Federal Tax Exemption
- Apply for Pennsylvania State Tax Exemption
- Register with the Pennsylvania Bureau of Corporations and Charitable Organizations
- Apply for Necessary Pennsylvania State Business Licenses
- Open a Nonprofit Bank Account
1. Name your organization
After defining the purpose of your organization, you need to choose a name. If you have done the work to outline your purpose, choosing a name should be pretty easy.
Nonprofits in Pennsylvania are not required to include the words or abbreviations for corporation, company, incorporated, limited, association, fund, or syndicate. That does not mean those terms cannot be used if the organization chooses.
The only rule Pennsylvania has for choosing a name for your nonprofit is that the name cannot be similar to other organizations. If you have a name in mind, visit the Pennsylvania Department of State to see if the name is available. If your name has not been chosen, you can register the name online and continue with the process.
2. Name your Incorporators and Directors
Now that you have your name, you can choose the individuals who will have the most impact on your organization.
Your Incorporator will be necessary at the beginning, but once their initial job is done, the role is not as vital. An Incorporate will be the person who signs the Articles of Incorporation for your organization. You will need at least one person for this role.
The Directors are the individuals who serve on your organization’s Board of Directors. The state of Pennsylvania requires a minimum of one director but encourages at least three. If you plan to apply for tax-exempt status with the Internal Revenue Service (IRS), you will need at least three directors. The number of board members will depend on your organization’s size and the roles these members play in the organization.
Board Directors in Pennsylvania must be naturally born and at least 18 years old. There is no state residency or membership requirement. In the state of Pennsylvania, term limits for each director are one year, so elections will be annual. All committees within the organization need to include one director.
Your board will also require officers to fill the roles of President, Secretary, and Treasurer. Your President and Secretary must be naturally born and at least 18 years old. The Treasurer can be a corporation or naturally born person who is at least 18. The same individual can hold two or more offices, but they will only be able to sign legal paperwork as one officeholder. Hence, it is best to have different people fill each role.
We have written an article to help walk you through the process of finding the right board members for your organization. Visit our blog to find more information on how to find nonprofit board members.
3. Appoint a Registered Agent
A Registered Agent is responsible for receiving all legal notices for your organization. This role can be held by an individual or company. They must be physically located in the state of Pennsylvania and be open and available during regular business hours.
4. Publish the Notice of Intent to Incorporate
In the state of Pennsylvania, you must publish your intent to incorporate before filling out the Articles of Incorporation. Nonprofits must publish a Notice of Intent to Incorporate in two separate newspapers in the state. One of these newspapers must be a legal newspaper.
There are fees for publishing that are generally around $100. The Pennsylvania Department of State has provided a list of Legal Publications in Pennsylvania to make this step a little easier.
5. File Pennsylvania Articles of Incorporation
Once you have published your Notice of Intent, you can file your Articles of Incorporation. The Articles of Incorporation is the first legal form that asks for your organization’s purpose. It is important to be clear on your organization’s purpose and keep track of how you have worded it on these legal documents. All documents with the state of Pennsylvania and the IRS will need to include the same purpose.
The Articles of Incorporation asks for the following information:
- Name of Organization
- Physical Address
- Whether the nonprofit is organized on a nonstock or stock basis
- The name and address of your Incorporators
- The start date of your organization
There is a $125 fee that veterans and reservists are exempt from. You can file your Articles of Incorporation by mail or online, and processing for this step can range from 10 to 15 business days. Expedite options are available if your articles are delivered in person. The costs for expediting can range from $100 to $1,000.
6. Publish Incorporation
After you receive the approval for your Articles of Incorporation, or even while waiting for a response, you must publish the Articles of Incorporation in two separate general circulation newspapers. Once again, one of these papers must be a legal newspaper. Visit the list here to find a suitable publication. There are fees for this step as well.
7. Apply for an Employer Identification Number (EIN)
An Employer Identification Number (EIN) is needed to hire employees for your nonprofit, open a bank account, apply for tax-exempt status with the IRS, and submit your annual 990s. The EIN will also be needed when applying for grants and many corporate sponsorships.
You will need to file IRS Form SS-4 to receive an EIN. This can be done online, by phone, fax, or by mail. Turnaround for your EIN is immediately online and by phone, four days by fax, or four to five weeks by mail.
8. Hold Organization Meeting and Establish Nonprofit Bylaws
Filing your paperwork is only one part of starting a nonprofit in Pennsylvania. Even more critical is starting your Board of Directors off on the right foot. Once you have filed your Articles of Incorporation and gotten your EIN, you should be holding your first board meeting to elect your directors and officers, hire directors, and approve your organization’s bylaws.
Next to your organization’s purpose, your bylaws are the most crucial document in this process. They are the operating manual that must be followed when running your organization. These bylaws will need to be detailed and guide the board when making crucial decisions. Visit our blog post on Nonprofit Bylaws Made Easy to help you with this vital step.
After your bylaws, your board will also need to create and adopt a conflict-of-interest policy for your members to follow and approve a resolution to create a bank account. The conflict of interest is important to detail what decisions board members can make when serving on your board. Banks often require this resolution to create a bank account.
9. 501(c) Federal Tax Exemption
The next step in the process of starting a nonprofit in Pennsylvania is to apply for tax-exempt status with the IRS. This step can be cumbersome but is essential if you hope to save money for your organization. Tax-exempt status is also necessary for many grants and corporate sponsorships.
All nonprofits must file either Form 1023-EZ or Form 1023 with the IRS to receive tax-exempt status. Form 1023-EZ can be filed by small to mid-size nonprofit organizations. To apply using this form, you must complete the Eligibility Worksheet.
If you have marked yes to any of the questions on the Eligibility Worksheet, your organization will need to file Form 1023.
There are fees to file these forms. Form 1023-EZ has a fee of $275 to complete. Once you have filed your form, you can expect to receive a letter of determination from the IRS in less than one month. Form 1023 is more detailed and costs $600 to file. You can expect your letter of determination after filing this form within three to six months.
Remember, when filing either of these forms, it is essential to include the purpose of your organization in the exact same way you filled it out in your Articles of Incorporation. The IRS will look closely at this when determining your tax-exempt status.
10. Apply for Pennsylvania Tax Exemption
As you can assume, the IRS will grant your organization tax exemption from federal taxes, but in the state of Pennsylvania, nonprofits must pay corporate state income tax even with the 501(c)3 status from the IRS.
Some nonprofits may be eligible for Pennsylvania state sales tax, though. The form to file for this tax exemption can be found at the Pennsylvania Department of Revue.
You will need the following forms when filing for sales tax exemption with the state of Pennsylvania:
- Copy of Articles of Incorporation
- Organization’s bylaws
- Current financial statements
- IRS Form 990
- Letter of Determination from the IRS
Your organization will need to fax or email the completed application to 717-787-3708 or .
11. Register with the Pennsylvania Bureau of Corporations and Charitable Organizations
In most states, nonprofits must register before soliciting donations. The state of Pennsylvania is no exception. Nonprofits in Pennsylvania must register with the Bureau of Charitable Organizations, which is part of the Pennsylvania Department of State.
Your organization must file Form BCO-10, the Charitable Organizations Registration Statement, and include a copy of your Articles of Incorporation and your organization’s bylaws.
This form must be signed by two different officers on your board, one being the Chief Financial Officer or Treasurer. This is an example of why it is important to have more than one individual in these roles.
12. Apply for Necessary Pennsylvania State Business Licenses
It’s okay for nonprofits to not hold business licenses in Pennsylvania, but local laws may require nonprofits to seek a license for any bingo, poker, or game of chance games they use for fundraising. It is best to contact your local representatives to find out these local ordinances.
13. Open a Nonprofit Bank Account
As a nonprofit, you will need a bank account to keep track of all funds. Banks require organizations to send an Incorporator when opening an account. They will also need the following:
- A copy of the Articles of Incorporation
- Organization’s Bylaws
- Nonprofit EIN
Many banks will also require a signed resolution by the board to open the account.
As you can see, the process to start a nonprofit in Pennsylvania can be cumbersome and time-consuming, but we hope the tips we have included in this article make the process a little easier. Keep in mind your nonprofit’s purpose each step of the way.
Whether you are choosing your board members, writing your organization’s bylaws, or filing for tax-exempt status, this purpose will be the defining strategy of your organization.
Donorbox is here to help you as you start your nonprofit and you continue to fundraise while you grow. We also have guides covering how to start a nonprofit in Ohio, Michigan, California, Florida, and more. Head over to our nonprofit blog for more nonprofit guides and resources to help strengthen your organization. You can also learn more about our features that help you maximize your online fundraising.
1. How Much Does it Cost to Incorporate a Pennsylvania Nonprofit?
In the state of Pennsylvania, you will not only need to pay a filing fee for your Articles of Incorporation but also a fee to publish your Intent to Incorporate and your Incorporation.
All nonprofits must publish their Intent to Incorporate with two independent newspapers. Each will likely include a $100 fee.
After filing your Intent to Incorporate, the filing fee for your Articles of Incorporation with the state of Pennsylvania is $125.
Once you have finished filing your Articles of Incorporation, your organization will need to publish your Incorporation once again with two separate publications. There is likely a fee of $100 for these publications.
Finally, after this process of filing your Articles of Incorporation, the IRS requires you to pay a fee of either $275 or $600 to apply for tax-exempt status. The cost depends on the size of your organization.
2. How Long Does It Take to Start a Pennsylvania Nonprofit?
In the state of Pennsylvania, there are a few steps to starting a nonprofit. Each of these steps will take time to finalize, but the two longest waits will likely be filing your Articles of Incorporation and applying for tax-exempt status with the IRS.
The Articles of Incorporation will take 10-15 business days to finalize with the state. This time does not include the process of publishing your Intent to Incorporate or your Incorporation.
When filing for tax-exempt status with the IRS, you can expect the process to take anywhere from one month to three to six months, depending on the size of your organization. Visit the Eligibility Worksheet to see how fast you can expect your letter of determination from the IRS.
3. Does a Pennsylvania Nonprofit Need a Registered Office?
Pennsylvania, like other states, does require a Registered Officer to start a nonprofit. This can either be an induvial or company with a physical office in the state.
4. Does a Pennsylvania Nonprofit Need a Business License?
Pennsylvania does not require nonprofits to obtain a business license to work within the state. If a nonprofit chooses to hold poker, bingo, or other games of chance fundraising events, though, there may be licenses required with your local government. It is best to check with your local government before holding any of these events.
5. Should My Pennsylvania Nonprofit Register as a Charity?
Yes, in the state of Pennsylvania, all nonprofits must register with the Department of State before soliciting funds.
6. What is a Pennsylvania Decennial Report?
Pennsylvania is different from other states in regards to filing an Annual Report with the state. Pennsylvania does not require nonprofits to file an Annual Report. Instead, nonprofits in Pennsylvania should submit a Decennial Report every ten years ending in 1 (for example 2021, 2031, etc.).
The purpose of these reports is to keep the state up to date on any changes to your organization’s name or registered office information. There is a $70 fee to file, and you can file online.
Even though the state of Pennsylvania does not require nonprofits to file Annual Reports, your organization may want to research the reasons why you should. Visit our article on writing an effective nonprofit annual report and see how it can benefit your organization.