Starting a Nonprofit in VA: Everything You Need To Know
Starting a nonprofit in Virginia means doing a significant amount of research before jumping in.3 min read
Starting a nonprofit in Virginia means doing a significant amount of research before jumping in. Most states have different ways of handling business law and structure, and Virginia is no different. For one thing, Virginia refers to nonprofits as “nonstock.”
Qualifying as a Nonprofit
The first thing you should do before launching a nonprofit is to create a mission statement. Write down everything you want to accomplish with your nonprofit organization, and later you can narrow it down to the most important points. This will help you later on by providing guidance and inspiration. It will also assist with the process of qualifying as a nonprofit.
In Virginia, there are several different types of nonprofits. They include:
- Health Care
- Veterans Organizations
However, none of these categories is automatically considered tax-exempt. Nonprofit organizations need to file Form 1023, Application for Recognition of Exemption, with the Internal Revenue Service.
Incorporating a Nonprofit
Nonprofit organizations are still considered corporations, which means that the personal property of officers, managers, and trustees is protected from liability and not at risk from a lawsuit or claim by a creditor. Only the corporation's assets are at risk. Because of the corporation status, planning and maintaining a nonprofit takes a lot of time and effort.
As the organization's founder, you may have strong opinions about how to run the organization, but since it's a corporation and others have a stake in the business as well, you must give up some of that independence and control. Major decisions will require the input of officers and board members.
Nonprofit Eligibility in Virginia
An organization must meet certain criteria for consideration as a nonprofit in Virginia including:
- One or more incorporators must file the application for starting the organization.
- The organization needs a street address located in Virginia. It may not use a post office box for this purpose.
- The address used should belong to the Registered Agent, an individual who is available to receive mail on behalf of the nonprofit there. The address provided does not have to match the business address or be located in Virginia.
- A nonprofit organization in Virginia must have at least one director.
Steps for Starting a Nonprofit in Virginia
The first thing to do when starting a nonprofit is to decide on a business name. Just like any other business, it needs to have a unique name that has no restricted wording such as “redevelopment.”.
Think carefully when choosing the name. One important consideration is to see if there is a good website URL available for the organization's name.
Your nonprofit needs a board of directors. When choosing these board members, try to include people who have knowledge related to the organization's purpose and good leadership skills.
It also needs bylaws, which outline the running of the organization. One important part of the bylaws is the method by which the nonprofit will eventually be dissolved. Other issues include holding meetings, electing directors and officers, and keeping records. Provide a process for adding or amending the bylaws document as well as any specific requirements relevant to your organization's purpose.
The next step is to conduct the initial, official meeting of the board of directors. Be sure to record meeting minutes, and have them signed by all directors in attendance. At this meeting, you need to discuss issues such as setting a tax year, applying for tax-exempt status and acquiring all required licenses and permits that your organization will need.
Open a separate bank account for your nonprofit. Keep all financial transactions totally separated from other personal or business accounts. It pays to shop around at various financial institutions to get the best deal and find the best fit for your nonprofit. Look for online banking, good interest rates, and waived fees.
After the nonprofit is in operation, you'll need to file annual reports with the State Corporation Commission. They are due by the last day of the 12th month after filing for incorporation and filed with the Office of the County Clerk. The due date for all future years will be the same day. You must also pay annual registration fees.
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