How to Form a Nonprofit in Delaware

There are two types of Delaware non-profit corporations

First, you need to decide what type of nonprofit corporation to create. You can either form an exempt corporation or an nonstock company in Delaware.

Exempt corporations may be available if your organization is involved in a charitable, religious or civic mission. Exempt corporations are exempt from paying state and local property taxes, business fees, or corporate taxes.

Don’t worry if you don’t meet the Internal Revenue Service criteria to be exempt. Instead, you can start your company as a nonstock organization. A nonstock corporation, as the name implies, is one that does not issue shares of stock and doesn’t have shareholders. It is composed of members and a board. A nonstock corporation is not exempt from Delaware’s annual franchise taxes, unlike a nonprofit corporation.

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Step 1: Choose the initial directors

Delaware law requires that every nonprofit corporation has a board of directors. The board oversees the activities of the organization. You may be the founder of your organization and serve as a director on its board.

Step 2: Select a name

Choose a name that is easy to spell and pronounce. When brainstorming, remember that Delaware has many rules you must follow when you name a nonprofit corporation. You must choose a unique name. It is not possible to choose a name that is already in use, or that is too similar to the one of another organization. A designator must be included in the name of your nonprofit, whether it is written out or abbreviated.

Avoid the use of “Bank”, “University,” and “Trust” as these titles are only for organizations that perform activities in those areas. You can search Delaware’s databases to find out if the name you are looking for is available. You can reserve the name on the state website if you have found the right name for your non-profit corporation. The $75 fee will allow them to hold the name for 120 consecutive days.

A strong online presence is crucial for nonprofit success. You may wish to register your domain name before anyone else.

Step 3: Select a Delaware registered agent

Every nonprofit corporation must have a registered agent in Delaware. The agent must reside in Delaware. It can be either an individual or a company. The agent accepts legal documents such as lawsuit notices on behalf of your nonprofit during normal business hours. The agent then forwards the documents on your behalf to the right person at your nonprofit.

There are many disadvantages to acting as your own registered agent. It requires that you are available for business during normal hours. If you’re not, you might miss an important document delivery. Most nonprofit founders turn to a service company for this purpose.

Step 4: File a Certificate of Incorporation With Delaware

For an exempt corporation, you will need to file a Delaware Certificate of Incorporation. This certificate should include the name of your nonprofit and its purpose as well as the address and name of your registered agent. You must note the IRS subsection you are applying for nonprofit status. You will need to include specific language in your Certificate Of Incorporation. This information can be found on the IRS website.

The fee is $90 The fee can be paid by Visa, Mastercard, or American Express.

Send payment information to (302) 739-3812 by fax.

Mail or in person

Division of CorporationsJohn G. Towsend Bldg.

401 Federal St., Suite 4

Dover, DE 19901

Step 5: Make corporate bylaws

Next, create bylaws. These are the rules that govern how your nonprofit operates. Your organization’s name, mission, and goals can all be covered by your bylaws. All Delaware corporations must have bylaws. They don’t need to be filed with the state but it is a good idea to keep them handy and follow their instructions.

Step 6: Call an organizational meeting of the Board of Directors

The first meeting of your board will be crucial for your nonprofit’s success. This meeting will allow you to appoint officers and directors, establish minute books, and authorize a bank account. You can also review bylaws and put everything in a binder during this meeting.

Step 7: Establish a corporate record keeping program

A key decision is how to maintain your nonprofit’s records. Your nonprofit’s success depends on accurate recordkeeping. You can also keep your records in a book or manual. This is an easy, inexpensive way to keep records. A cloud service is another option.

Step 8: Get your tax ID numbers

You will need an EIN to open a bank account and hire staff.

Once you have received your EIN, it is time to register your nonprofit with the Delaware Division of Revenue. The website will guide you through the entire process.

Step 9: Apply for licenses and permits

To operate in Delaware, your nonprofit corporation might need permits or licenses. There are many licensing requirements that must be met at the federal, state, or local levels. The requirements vary depending on the industry. While it is your responsibility to obtain all required licenses and permits, it can be difficult to determine which ones are necessary.

Step 10: Apply for tax-exempt status

501(c), the part of the tax code which allows charitable organizations to be exempted from federal taxes, is known as 501(c). There are many types of charitable organizations, including those that have educational, scientific, or religious missions.

Fill out Form 1023 to apply for federal tax-exempt status for your non-profit. You can then submit your completed application online to www.pay.gov. You will need to pay $600. You have the option to use the 1023-EZ form if your business is smaller. It is shorter and costs only $275

You don’t have to apply for tax-exempt status at state level in Delaware. If your nonprofit is tax-exempt by the IRS, it will be exempted from Delaware’s corporate income taxes.

Step 11: Register with other states as a charity

To fundraise in Delaware, you do not need to register with the state. If you intend to raise funds in another state, you might need to register your non-profit as a charity there.

Step 12: Get insurance for your non-profit

You should consider what type of insurance you might need. If your nonprofit has employees, you will need workers’ compensation insurance. We recommend that you speak with an insurance agent who is qualified to help you determine the right type of insurance for you.

Step 13: Open a Bank Account

You can manage the finances of your non-profit corporation by opening a bank account. This allows you to keep your personal and nonprofit finances separate.

Wrapping Up

Remember to visit these reference links on how to form a Nonprofit in Delaware.

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