About the Nonprofit Corporation Act of 1991

  • The act applies to domestic and foreign nonprofit organizations interested in Indiana as a base of operations.
  • It provides provisions applicable for setting up religious corporations, mutual benefit foundations, and public benefit organizations.
  • The act doesn't apply if the goal is to start a homeowners association.
  • An application to start a nonprofit organization must be initiated by at least one incorporator/director. There's no limit on the number of incorporators a nonprofit organization may have.

Information for Starting a Nonprofit in Indiana

Several steps must be taken into consideration when starting a nonprofit.

Name

Choose an appropriate name for the nonprofit. There are restrictions in place per Section 23-17-5-1 of the Nonprofit Corporation Act. The name must use a corporate designator such as incorporated, limited, company, corporation, or their abbreviations. It can't be misleading or similar to a similar Indiana registered organization. Existing foreign companies are allowed to use fictitious names when the name they want isn't available.

Registered Agent

Appoint a registered agent to be the person or business that receives official paperwork for the organization. This could include tax forms, legal notifications, and state filings. The registered agent must have a physical street address in Indiana and have regular business days and hours.

Select Incorporators and Directors

An incorporator is a person or persons who have the authority to sign and file the Articles of Incorporation for the nonprofit. A nonprofit must have a minimum of three directors to oversee the initial startup of the nonprofit organization. These individuals may be replaced once the formation is complete and voting of directors takes place.

Drafting Bylaws

In Indiana, a set of bylaws must be prepared according to state law that contain the procedures the nonprofit will follow and the rules it must adhere to. The bylaws aren't filed with the state but kept with the nonprofit's internal operating manual.

Articles of Incorporation

Per the Nonprofit Corporation Act, the following information must be included in the articles:

  • The name of the organization that's being created.
  • A statement clarifying if the organization is a religious corporation, public benefit corporation, or a mutual benefit corporation.
  • Valid street address for the initial organization's office.
  • Name and address of the registered agent. The name and address of all incorporators. Note that the address for incorporators may or may not pertain to Indiana.
  • The rules of the organization for allowing one or more types of members to be admitted.
  • A dissolution clause indicating how assets will be distributed in the event that the organization is dissolved.

Corporate Records Book

Place a copy of all pertinent paperwork into the book or binder. This will include annual reports, corporate minutes, formation/registration information, and licenses and permits.

Initial Meeting

Initiate the first meeting with directors/incorporators to establish the organization's foundation. Take minutes.

Employer Identification Number

Apply for a free Employer Identification Number from the IRS. This number is used to track financial activity within the organization.

Tax Exemptions

File Form 1023 with the IRS. Form 1023-EZ is available for smaller nonprofit organizations.

Bank Account

Set up an appropriate bank account specifically for the nonprofit. Personal accounts can't be used.

Retaining Nonprofit Status

Each year, the nonprofit will be required to file a Business Entity Report. The date due is the last day of the anniversary month. It's due yearly, but no initial report is required.

Keep accurate record books of the organization that are thorough and easily accessible if needed. Keep meticulous financial records to include any income from related and unrelated activities as well as donations. Pay income tax on non-charitable funds. Make sure the funds earned from unrelated nonprofit activities isn't the bulk of the nonprofit's business. Directors or other individuals aren't to be paid dividends nor issued stock.

Advantages of Nonprofit Organizations

  • An incorporated nonprofit stands as its own legal entity, which means the business is liable for debts and legal issues.
  • A nonprofit that qualifies for tax-exempt status will be exempt from many state and federal taxes.
  • Some types of nonprofits qualify for property tax exemptions.

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