How to Create a 501C3 in California

By Ronna L. DeLoe, Esq.

How to Create a 501C3 in California

By Ronna L. DeLoe, Esq.

You've considered creating a nonprofit 501(c)(3) in California, and you've researched it thoroughly, knowing you can create a thriving nonprofit to help your community. The next steps involve setting it up. You can have an attorney set up your nonprofit for you, but you can also do it yourself if you follow these steps.

Decide Your Nonprofit's Purpose and Name

Nonprofits under 501(c)(3) of the Internal Revenue Service (IRS) tax code are for charitable purposes or to address social issues, such as an animal rescue shelter, church, nonprofit hospital, domestic violence shelter, or research organization.

Once you know your purpose, you need to create a catchy and memorable name. You should check your business name on the California government's business site to make sure it hasn't already been taken and isn't too similar to another business name in the state. Reserve the name and trademark it as soon as possible.

Directors and Articles of Incorporation

Choose at least one person to serve on your board of directors. Make sure you pick people you trust and who can work well together.

Next, prepare your California articles of incorporation. Use the California form for this purpose. The form comes with instructions about how to prepare articles of incorporation. If you're not sure how to do them, consult an attorney, or have an online legal company help you prepare them. It's acceptable to ask for help in setting up and running your nonprofit. You'll need attorneys, bookkeepers, accountants and other professionals to help you run your organization effectively.

File the articles of incorporation with the California secretary of state and pay the fee. You'll need to run your 501(c)(3) organization as a corporation to get the tax exemption, so ensure that you're following the steps to incorporate. Appoint a registered agent to represent your corporation.

Create the Corporation's Bylaws

Prepare bylaws for your corporation, which don't require filing with the state but are for your nonprofit's use. Bylaws are governing rules for the company's day-to-day operations. Your nonprofit will use the bylaws so everyone will understand what procedures you and other members or employees must follow.

Corporate bylaws should contain at least the following information:

  • Name and purpose of your nonprofit corporation
  • What the board can and cannot do
  • How and when to elect directors and officers
  • When and how often to hold meetings
  • Rules about taking the minutes of meetings
  • The names of the officers and their responsibilities
  • What the nonprofit can do to fulfill its mission
  • How you will accomplish fundraising
  • How you will market your organization
  • Rights of voting and non-voting members
  • Conflict of interests policy

Employer Identification Number, Meeting and Statement of Information

You can request an employer identification number (EIN) online. You'll need that for your 501(c)(3) filing with the IRS.

Hold your first directors' meeting and have someone record minutes of the meeting. Vote to adopt the bylaws and conflict of interest policy. File the Statement of Information in California within 90 days of filing the articles of incorporation. Register your nonprofit for fundraising in California.

File for Tax-Exempt Status Under IRS 501(c)(3)

After all the steps above, file for tax-exempt status pursuant to IRS 501(c)(3) by filing Form 1023. The IRS maintains many pages of information about how to file this form.

You'll find a few versions of Form 1023, including an interactive version and a streamlined version (Form 1023-EZ) for small entities. The directions on the Form 1023-EZ site explain how your nonprofit could qualify for the streamlined version.

File for State Tax-Exempt Status

After you get approved for nonprofit status by the IRS, file for your state tax exemption by submitting Form 3500a. Make sure you have the form for the correct tax year. File your completed form with the California Franchise Tax Board.

If, for some reason, you don't get 501(c)(3) status with the IRS, file Form 3500 instead of Form 3500a with the California Franchise Tax Board.

Your goal, though, is to obtain 501(c)(3) status, so if you've had a problem getting it, you may want to consult an attorney to help you refile.

Other Requirements

Obtain licenses, certifications, permits, appropriate zoning and whatever else you need to operate your organization efficiently. After all, even though it's a nonprofit, it's still a business and you want it to succeed.

Screen your employees and volunteers carefully. Get references, and get to know them before you add them to your team.

Creating a 501(c)(3) nonprofit corporation in California requires several steps, but you can do this yourself by using the forms included here or hiring a corporate or business attorney to do the paperwork for you. If you have the right frame of mind, a good staff and board of directors, and someone with good marketing and fundraising skills, your 501(c)(3) can make a difference in California.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.