Starting a nonprofit organization can be a very exciting endeavor, but one that requires a lot of planning. Many people want to develop an organization to make the world a better place; but it is a risky road to take. Although you're not starting out with the intention to get rich, it is still important that you set yourself up for success.

Not just anyone can start a nonprofit organization. You really need to begin with the right attitude, financial backing, and dedication. Your goal is essentially to give as much as you can, and for little financial reward, if any. So before quitting your full time job in the hopes of opening a small nonprofit start up, ask yourself the following:

1. Are you committed? It takes more than just a good idea to launch a non-profit. It takes time, money and hard work.

2. If applicable, do you have the right partners? Vet potential collaborators as objectively as possible.

3. Have you done your research to make sure there's demand for your service? How will you pitch your idea to the folks with the funding?

Action Steps
The best contacts and resources to help you get it done

Get licensed before starting a charity

Non-profit organizations are legally required to obtain certain government licenses. Your state may regulate a nonprofit startup through permits, zoning and land use permits, and a business name certificate. Regulations vary from state to state, especially in regards to taxes and your role as a nonprofit. There are online resources that can assist in the filing of these documents.

I recommend: Business.gov can help you obtain the necessary federal, state and local permits, licenses, and registrations for starting your non-profit successfully. FindLaw provides a useful checklist of all the documentation necessary for your non-profit.

Join an association to build credibility when starting a non-profit

As a non-profit organizer, you don't have to go it completely alone. Consider joining an industry association for support. Organizations bring together professionals with the same goals and challenges. As a member you'll have access to certification and educational opportunities, in addition to networking events.

I recommend: The Society for Nonprofit Organizations and the the National Council of Nonprofit Associations both organize events for educational and networking opportunities. They also offer access to publications and other tools to assist you towards success.

Partner with reliable employees when launching a nonprofit organization

As a non-profit organizer, it's imperative that you partner with employees who can help grow your organization. Your employees must be reliable, accommodating and thorough. You want to build a long-term relationship with your staff, and they must also share your desire to serve.

I recommend: The NonProfit Times offers employers job posting packages and access to a resume searching database, in addition to a customer service section. The Nonprofit Jobs Cooporative provides free access to employers for posting jobs.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  When you first open a non-profit start up, you may decide to balance your own finances. But as your business grows, consider partnering with an accountant who can help you with tax issues, and help you build a financially sound organization.

Most nonprofits filed with the Internal Revenue Service fall under IRS code 501(c)(3). These organizations include public charities or private foundations, which are established for purposes such as religious, educational, scientific, literary and testing for public safety, to name a few. There are other nonprofits — 501(c)(4) and 501(c)(27) — that are considered tax-exempt, but not charitable. You must apply separately for tax-exempt status via the IRS.

Be prepared: The process of forming a nonprofit with the IRS isn’t simple and can be time-consuming. You may become overwhelmed when starting out after discovering all of the rules, regulations and paperwork that come with it. However, there are some significant perks.

Three primary benefits of being tax-exempt under a 501(c)(3) nonprofit are:

1. You are tax-exempt from federal and/or state corporate income taxes.
2. You are able to apply for grants and other public or private allocations available only to IRS-recognized, 501(c)(3) organizations.
3. You have potentially higher thresholds before incurring federal and/or state unemployment tax liabilities.

Action Steps
The best contacts and resources to help you get it done

Do you qualify to be a nonprofit?

First determine if your business qualifies for nonprofit status under IRS stipulations.

I recommend: The IRS lists requirements for an organization's eligibility for tax-exemption, which these FAQs can help you determine. Refer to Managementhelp.org for help getting started, or use the University of Wisconsin's company assessment to assist with strategic planning.

Get a checklist to simplify the must-dos

Before applying for nonprofit status, your business must have a mission statement, articles of organization, and be incorporated, among other things. Save time by having a checklist to ensure you have everything in order on the front end.

I recommend: IRS Publication 557 stipulates in detail what you need. Use Columbus Metropolitan Library's online tutorial to walk you through the initial steps.

Forms and fees to apply

Filling out forms can be the worst part of the process. Applying for 501(c)(3) status requires filling out the 28-page-long IRS form 1023. The IRS estimates a preparation time of more than 100 hours for a novice to complete. Approval can take four to six months.

I recommend: Print 1023 from the IRS Web site. It also lists user fees associated with all tax-exempt applications. Call (877) 829-5500 for specific questions.

Hire someone to help

While you can do a lot of the work yourself, you should also enlist the professional help of an attorney and/or accountant to review your application. Use specialists in forming nonprofits. Many businesses will skip the hassle and hire a firm to complete all of the paperwork.

I recommend: Try the American Bar Association for referrals to local attorneys. Seek out attorneys who do pro bono work for nonprofits, as well as for reputable consulting firms such as the Foundation Group and the Authenticity Consulting.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  If your application is rejected, you can appeal within 30 days or apply again from scratch.
• •  Don't forget your user fee; it is required to process your application.
• •  You cannot file an application online.
• •  Call (800) 829-3676 to order forms, instructions and publications from the IRS regarding nonprofits.