How to start a nonprofit organization in SC, so you can apply for 501(c)(3) status, includes several key steps including planning and filing your application with the state. The 501(C)(3) status is the most common form of nonprofit. These are formed as religious, literary, charitable, educational, and scientific organizations, and this makes them eligible for state and Federal tax exemptions.

Advantages of a Nonprofit

This type of nonprofit is permitted to file applications for grants. They can also take donations while remaining tax exempt from corporate taxes. This type of organization is also able to maintain a smaller board of directors while maintaining their limited liability protections. It also helps the public feel more confident when dealing with your organization.

Naming a Nonprofit

The name you choose is the first step in branding your organization, and choosing a name is also one of the first steps of incorporating in SC. The legal name you choose for your nonprofit entity can't match or be too similar to any other South Carolina institution's name. You have to confirm the availability of the name and make sure it meets the requirements set forth by SC.

Each corporate name in SC is required to be completely distinguishable from all other corporation names. The SC Secretary of State website makes it easy to search through corporate filings to make sure the name you're considering using isn't already being used by another corporation.

Choose Incorporators and Directors

Once you've chosen your nonprofit's name and made sure it's available, the next thing you need to handle is choosing incorporators and directors. An incorporator is:

  • Responsible for signing and filing the Articles of Incorporation for the nonprofit.
  • At least one incorporator is required, but having more than one is an option.

Directors are:

  • The members of the body that governs over a nonprofit
  • Stakeholders in the success and goals of the nonprofit

Assigning a Registered Agent

Choosing and appointing your registered agent is the next step, once your incorporator and directors are in place. The registered agent is the person responsible for being available to receive legal notifications for your nonprofit. The registered agent has to be located in SC and has to keep an office open during normal business hours to receive mailings.

Articles of Incorporation

When the articles of incorporation have been prepared and filed, this is the official beginning of your nonprofit organization. The IRS requires some specific language to be included in the articles of incorporation if you're establishing it as a 501(c)(3) organization. Be sure the document is formatted with information specific to your nonprofit in addition to ensuring it fulfills IRS and SC requirements. Information documented in the articles of incorporation includes where it was formed as well as other data that's required to confirm its existence.

Some information that needs to be included are:

  • The nonprofit's chosen name
  • A statement confirming that it exists for the benefit of the public, that it's a religious corporation, or that it's for mutual benefit
  • The nonprofit's street address as well as the registered agent's street address in the same zip code
  • Each incorporator's name, and mailing address
  • Details about the absence or presence of members in the organization
  • An explanation of how the organization will be dissolved and how assets will be distributed
  • The address of the principal office either inside of or outside of South Carolina

Employer Identification Number Acquisition

The next step is getting your employer identification number, or EIN. This is a unique, nine-digit number the IRS assigns to your nonprofit. All nonprofits need to apply for this number, even if not planning to bring employees on board. The EIN is required by banks in order to open a bank account. It's also required to apply for your nonprofit's 501(c)(3) status. You also need the EIN to file IRS tax returns.

Establish Good Recordkeeping Practices

Many official documents will be required to launch and run your nonprofit. Organizing and storing these documents in one place is ideal. It helps to establish a policy on maintaining documents for your nonprofit from the very beginning.

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