Before you begin, ask yourself:

• What is my goal and who do I want to help?
• Do similar nonprofits already exist?
• Do I have the time, funding, and support to sustain this work?
• Writing down your mission, vision, and a basic budget will help you focus your idea and prepare for next steps.

Key tasks include:

• Choose a name and make sure it’s available.
• Create a board of directors (at least three people in New York).
• Write bylaws to outline how your nonprofit will operate.
• Decide on your structure. In New York, there is one corporate form for not-for-profits, but in some cases you may operate as an unincorporated association instead.
• File your Certificate of Incorporation with the NY Department of State ($75 fee).
• If you don’t incorporate, you can work with a fiscal sponsor, which is an existing nonprofit that accepts donations and grants on your behalf, provides oversight, and usually charges a small administrative fee.

Most nonprofits apply for 501(c)(3) status from the IRS so they are exempt from federal income tax and can receive tax-deductible donations. You may file Form 1023-EZ if you expect under $50,000 in annual gross revenue in each of the next 3 years. File form 1023 if you expect more. You’ll need to provide incorporation documents, bylaws, a budget, and a summary of your activities when filing form 1023. This is a longer form and more expensive to file.

If you plan to raise funds in New York, you must register with the Attorney General’s Charities Bureau by filing Form CHAR410 and providing your incorporation papers, IRS determination letter, and bylaws. This is why it’s important to incorporate and obtain federal tax-exempt status first.

Once you have federal tax-exempt status, you may also qualify for:

• NYC General Corporation Tax exemption
• NY State Franchise Tax exemption (Form CT-247)
• NY Sales Tax exemption (Form ST-119.2)
• Property Tax exemption (Forms RP-420-a or RP-420-b)
• These exemptions help your nonprofit save money and direct more resources toward your mission.

Looking for more details? Download our full guide here.

For help with small businesses, not-for-profit organizations, and HDFCs contact the Community Development Project at 212-298-3340, CommunityDevProject@legal-aid.org, or complete our online intake form.

The information in this document has been prepared by The Legal Aid Society for informational purposes only and is not legal advice. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. You should not act upon any information without retaining professional legal counsel.