In order to establish a legally recognized charitable organization, you must first receive recognition from the Internal Revenue Service (IRS) that your planned corporation is a 501c3, or a “tax-exempt” non-profit for use in the public interest. The task of applying for a 501c3 designation is by no means a simple matter, and there are a number of legal considerations when filing the paperwork. If you’re looking for local counsel to understand the nuances of Los Angeles regulations, the experienced attorneys at UpCounsel are waiting to assist. Read on for five crucial considerations in the 501c3 application process.

1. Determining the exempt purpose of your non-profit organization. The first and arguably most important consideration for your 501c3 application is to determine and document why your organization should qualify for exemption from federal income tax. The IRS requires 501c3 organizations to operate for exclusively charitable or public purposes, such as relief of poverty, advancement of education, and greater understanding of international and community matters. To determine what qualifies as a charitable or public purpose, the IRS provides a guide that contains a list of approved activities.

2. Structuring and organizing your non-profit organization. Once you’ve determined why your organization should qualify as exempt from federal income tax, the next step in the 501c3 application process is to set up the corporate structure and organize the organization to ensure that it will maintain its existence. When structuring the organization, it’s pivotal to legally document the mission and purposes in order to clearly outline the basis for tax-exempt status. Additionally, you must create a responsible governance structure to provide management oversight through a board of directors.

3. Applying for a “doing business as” (DBA) name. 501c3 organizations are required to use a Doing Business As (DBA) name that explains the charitable purpose of the organization. The organization’s DBA may appear on all business publications, websites, and other accounts. The legal requirements of a DBA name vary from state to state, but the general requirements are that the name reflects the mission of the organization without causing confusion with other business names.

4. Obtaining employer identification number (EIN). All legal entities including 501c3 organizations must secure an Employer Identification Number (EIN) at a local branch of the IRS. The process is relatively straightforward, and the organization’s designated representative can apply online or via regular mailed forms. It’s important to note that the 501c3 application paperwork, when it’s ready to be submitted, must list the organization’s EIN.

5. Filing the 501c3 application paperwork. After addressing the aforementioned considerations, the organization is almost ready to file the 501c3 application paperwork. It’s important to note that the application must be accurate and complete in order for the IRS to verify its legitimacy. Additionally, the organization must fulfill the recommended financial statement requirements to provide transparency over how the revenue and donations are managed and secured.

Applying for a 501c3 designation is a formidable task with many legal considerations and complexities involved. Whether you need a one-time consult or an entire freelance legal department, trusted attorneys from local counsel such as UpCounsel could help clarify these regulations and simplify the incorporation process.


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