Alabama Non Profit Corporation Laws

By David Carnes

In Alabama, you must form a nonprofit corporation by filing a specific type of incorporation document. Although the corporation will be subject to restrictions that do not bind for-profit corporations, Alabama nonprofit corporations enjoy significant tax advantages, and so do their donors. To receive federal tax benefits, you must apply separately to the IRS.

Forming a Nonprofit

To form a nonprofit corporation in Alabama, you must complete a Domestic Nonprofit Corporation Certificate of Formation, file it with the Office of the Judge Probate and pay the filing fee. The Certificate of Formation requires you to list the corporation's name, your name and address, the corporation's mailing and principal office addresses, the name of the corporation's registered agent, the purpose of the corporation, and the names and addresses of at least three directors. You must also prepare corporate bylaws and keep them on file. Corporate bylaws act as a corporate governance operating manual and must comply with Alabama state law.

Federal and State Nonprofit Tax Status

If the corporation was established for charitable, religious, educational, literary or scientific purposes, it can apply for federal 501(c)(3) nonprofit status by completing Form 1023. Form 1023 is a 28-page document that requires you to reveal extensive information about the corporation, its finances and its activities. If the IRS approves the application, the corporation will be exempt from most forms of federal income tax. The corporation may also declare itself exempt on its Alabama income tax return as long as it was formed for a 501(c)(3) purpose other than a literary purpose. Alabama may also exempt your corporation from other taxes, such as property and sales taxes.

Ready to incorporate your business? Get Started Now

Donor Tax Advantages

If you donate to a nonprofit corporation, you may deduct the amount of your donation from your taxable income if you itemize your deductions. If the donation kicks you into a lower tax bracket, your tax burden may be reduced by an amount greater than the amount of your donation. Generally, you may donate up to 50 percent of your adjusted gross income.


An Alabama nonprofit corporation has no shareholders, and its ultimate authority must rest with the directors. Day-do-day matters can be handled by members, and by officers and other employees. The officers must include a president, a vice-president, a secretary and a treasurer. Salaries must be reasonable so that taxation authorities will not consider them to be disguised profits. The corporation may not make loans to its directors, officers or members. The corporation's activities must be geared primarily to its tax-exempt purpose.


Directors, members, officers and rank-and-file employees of an Alabama nonprofit are not liable for the financial obligations of the corporation. These people may be held liable under extraordinary circumstances, however: if the corporation commingles corporate and individual funds, for example, or distributes profits.


An Alabama nonprofit corporation may be dissolved by the directors or, if there are voting members, by the voting members. The dissolution must be evidenced by a written resolution. The corporation must pay its creditors and transfer any surplus assets to another nonprofit organization with a similar corporate purpose. The corporation must then file a Certificate of Termination with the Alabama secretary of state and pay a filing fee.

Ready to incorporate your business? Get Started Now
Tax-Exempt Status in Massachusetts


Related articles

Dissolving Non-Exempt and Nonprofit in Massachusetts

Dissolving a Massachusetts nonprofit corporation requires filing a petition with the court. If the nonprofit operated as a tax-exempt charity, the organization must notify the Attorney General's office before filing the petition. A non-exempt, nonprofit corporation is not subject to this requirement. As long as a majority of the nonprofit's members vote to dissolve the corporation, the petition for dissolution can be filed with the court.

How to Convert From an LLC to a Nonprofit Corporation

A nonprofit corporation is a corporate business structure that has obtained tax-exempt status under Section 501(c) of the Internal Revenue Code. Businesses that qualify under Section 501(c) do not have to pay tax on business income, and are eligible to receive grant money from the government and charitable organizations. Depending on the purpose of your company, it may be advantageous to convert your LLC to a corporation and obtain 501(c) status. This conversion requires filing with both the IRS and the state agency responsible for regulating business organizations.

How to Form a 501(c)(3) Non-Profit Corporation in California

Some organizations may consider becoming 501(c)(3) corporations because their leadership believes that doing so will increase fundraising capabilities. According to the Internal Revenue Service, donations to 501(c)(3) nonprofit organizations are tax-deductible. For this reason, many individual donors and philanthropic organizations only donate to 501(c)(3) entities. Becoming a 501(c)(3) corporation involves successfully navigating a blend of state and federal law. In California, the organization must comply with the California Corporations Code as well as guidelines established by the IRS.

LLCs, Corporations, Patents, Attorney Help Incorporation

Related articles

How to Start a Nonprofit in California

A California nonprofit organization enjoys important tax advantages. It may be established only for certain limited ...

Delaware Nonprofit Filing Requirements

A nonprofit organization issues no shares and distributes no dividends. Because of its nonprofit status, it is eligible ...

Steps for Dissolving a Nonprofit

Nonprofit organizations usually aim to raise funds for a particular social, educational, charitable or religious ...

How to Incorporate a New Church in Indiana

Federal and state tax relief is available to churches that are formed as nonprofit corporations in Indiana. This ...

Browse by category
Ready to Begin? GET STARTED