What Type of Attorney Is Needed When Starting Up a Nonprofit Organization?

By Etta Mills-MacDonald

Forming and operating a nonprofit organization is a complicated process that must comply with state and federal laws. Hiring a business or corporate attorney with experience in incorporation, taxes and human resources can help your organization avoid the many pitfalls of trying to do all the legal work on your own.

Forming and operating a nonprofit organization is a complicated process that must comply with state and federal laws. Hiring a business or corporate attorney with experience in incorporation, taxes and human resources can help your organization avoid the many pitfalls of trying to do all the legal work on your own.

Planning

You should hire your attorney early in the planning phase for your organization so it has the best possible chance of qualifying for nonprofit status. Nonprofit formation is a specialized field of law. Look for a lawyer that advertises as a business attorney, corporate attorney, or nonprofit attorney. It’s a real plus if your attorney has specific experience in the field where your nonprofit will operate, such as political action, church groups, or the arts.

Ready to appoint a power of attorney? Get Started Now

Incorporation

Each state has its own requirements for creating a nonprofit, but all of them require your group to form a corporation as a first step. Your attorney should be an expert in the corporate laws of your state. He will fill out your state incorporation forms, help you choose your board of directors, write your corporate bylaws and check for potential conflicts of interest.

IRS Recognition

After incorporating, the next step is applying for a tax exemption with the Internal Revenue Service. Although the IRS instructions for Form 1023 seem straightforward, your application can be delayed or rejected because of a simple misstep or missing information. The federal tax code has several categories for nonprofits, with different requirements for each one. An attorney with a specialty in nonprofit formation will choose the category that provides the best fit for your organization’s purpose and goals.

Compliance

After you receive tax exemption from the IRS, your organization needs to follow the many federal and state laws that govern nonprofits. Fundraising is one area where nonprofits can run afoul of the law by straying outside their tax-exempt purposes, especially if you plan to provide goods or services. Your attorney should also understand human resources issues and how they apply to nonprofits in case your organization grows enough to hire employees.

Nonprofit Attorneys

If you don’t know an attorney who specializes in nonprofit law, you can ask for referrals from nonprofit organizations in your community. Your state bar association also may be helpful. If you use a phone book or online directory, avoid listings for specialties like criminal law or family law. Find a law office that specializes in business, nonprofit, or corporate law.

Ready to appoint a power of attorney? Get Started Now
How to Start a Nonprofit Foundation

References

Related articles

How to Start a 501(c)(3) Nonprofit Rescue

Starting a 501(c)(3) rescue is a great opportunity to help animals in need, saving them from kill shelters and getting them connected with people who want to adopt them into forever homes. After you've checked with other animal shelters in your area to make sure you're not duplicating efforts, you'll be ready to begin a series of state and federal filings that will keep your animal shelter tax-free.

Non-Profit Bylaws

The bylaws of a non-profit organization guide its directors, officers, and employees on how to conduct themselves and the business of the organization. If the non-profit wants to maintain its tax-exempt standing, these bylaws must be drafted subject to standards established by the tax code and applicable state law. Although bylaws may be amended, it is important that the rules are drafted well to ensure that the non-profit runs smoothly.

How to Register a Nonprofit Organization in Iowa

An organization created for any lawful purpose other than generating profit may be registered as a nonprofit in Iowa. While the company may actually earn a profit, no benefits beyond reasonable compensation for services may be paid out to any members, directors or employees. State laws require that you file certain documents to form a nonprofit organization, and limitations apply if you want to pursue state and federal tax-exempt status.

Related articles

How to Relocate a Non-Profit to Another State

A nonprofit organization is a type of business entity that operates for charitable or educational purposes and does not ...

Can an Entertainment Company Be Non-Profit?

The formation of a nonprofit organization is governed by state law. To take full advantage of beneficial tax treatment ...

How to Run Your Own 501(c)(3)

Running a 501(c)(3) tax exempt nonprofit requires you to adhere to both state and federal law. Tax exempt status is ...

How to Apply for Nonprofit Status in New York State

For an organization to be exempt from New York state taxes, it must incorporate as a nonprofit corporation by filing ...

Browse by category