How to Start a Nonprofit in Vermont

This guide will help you understand the basics of starting a nonprofit in Vermont.

Reference links and Resources for Vermont Nonprofits

Step 1: Choose the initial directors

First, choose your first directors. Vermont requires that you have at least three members of your board who are not relatives. No residency is required.

Step 2: Select a name

Choose a name that is memorable and reflects the mission of your organization.

  • It isn’t the same as or similar to a Vermont registered name.
  • Include the words “corporation,” incorporated, “company,” or limited. Or their abbreviations “corp.,” “inc.,” “co.,” and “ltd.”
  • It doesn’t contain the word “cooperative” and its abbreviation.
  • This doesn’t mean that you have a different business purpose than the one described in your Articles of Incorporation, or anything illegal.

You can check the Vermont Secretary-of-State’s Corporations Division website to find out if your name has been made available. If your name is available, but you are not ready to file, you may reserve it for 120 days.

This is the best time to search for a domain name that matches your business name.

Step 4: Select a Vermont registered agent

An registered agent can be an individual or a business that accepts legal notices and other documentation from the state for your nonprofit corporation. The agent must be present in person at a Vermont registered office during regular business hours.

While you are allowed to nominate yourself as your registered agent however, there are some benefits to having an outside party do this job.

  • You will not receive any lawsuit notices at the place you work.
  • You don’t have to be available for all hours of business.
  • You don’t need an office if you are a web-based non-profit.

Step 5: Filing Articles of Incorporation With Vermont

To legally establish your Vermont nonprofit corporation, file Articles of Incorporation. You can file online at the Vermont Secretary-of-State’s online business filing agency, or by mail or in person.

These are the details of Articles of Incorporation:

  • The registered name and purpose of your nonprofit
  • Contact information for each incorporator
  • Address of the corporation’s principal office
  • Name and address of the registered agent
  • Plan for dissolution of your nonprofit

Step 6: Make your Vermont nonprofit corporation’s bylaws

Your nonprofit’s operating manual is the bylaws. They are an important legal document. These documents outline your operational and managerial principles. This document contains the rules and procedures of your nonprofit.

  • Election of directors and officers
  • Holding meetings
  • Assisting with other corporate responsibilities as required by state law

These are some questions that your bylaws should address:

  • Is your non-profit eligible to vote?
  • What rights and responsibilities will these members have?
  • What is the tenure of a director?

Vermont does not require you to file a copy of the corporate bylaws along with your Articles of Incorporation. You must instead keep a copy at your nonprofit’s principal offices.

Your nonprofit must have a conflict-of-interest policy that was adopted at the first meeting of its board of directors to be eligible for tax-exempt status. This policy makes sure that the decisions of the directors benefit the nonprofit, not the individual members.

Step 7: Conduct an initial organizational meeting of the board of directors

You will need to review the bylaws of your nonprofit and ratify them at the first meeting of the board.

  • Both a fiscal year-end and a tax year-end should be set
  • Elect directors and appoint officials
  • Things like opening a corporate bank account are approved
  • Keep accurate meeting minutes

Step 8: Create a corporate records binder

The aforementioned documents are important to your non-profit corporation and can be stored in a corporate records binder, or online storage platforms like the cloud. These documents must be kept in order to ensure compliance and auditing.

Step 9: Get your tax ID numbers

Nonprofit corporations in Vermont require an Employer Identification Number. This personal number of nine digits allows the IRS to identify your company on tax returns and other financial paperwork. This number allows you to open a bank accounts and protect your personal assets. They are issued by IRS.

You are legally required to register for Vermont’s business tax account.

Step 10: Apply to all Vermont permits and licenses

It is your responsibility to obtain all permits and business licenses that your nonprofit might need in Vermont. The federal, state, and local levels can all be used for licensing.

Understanding the requirements can be difficult because they vary depending on where you are located and what industry you work in. This information is not available in a single place.

Step 11: Apply to tax-exempt status

The IRS may grant tax-exempt status to your Vermont nonprofit corporation. Complete and submit IRS Form 1023 to apply. There are two types of IRS Form 1023: one long and one short. The one that meets your needs best is the one you fill out. You will need to use specific language, so be sure to read the IRS website.

Once your application is approved, you will receive a letter of determination that confirms your tax-exempt status. Vermont’s Department of Taxes has information about filing requirements and exemptions from income, sales, and property taxes.

Step 12: Register with the state as a charity

Vermont doesn’t require charitable licensure for Vermont nonprofits. All paid fundraisers and paid solicitors that solicit donations directly or indirectly must register each year and pay a fee. You can find more information on registration and fundraising requirements for Vermont nonprofits at the Attorney General’s Website.

Nonprofits from outside of the United States that wish to solicit Vermont membership must apply for a Certificate of Authority at the Secretary of State’s office. Visit the Foreign Business Registration website for more information on how to register as a foreign non-profit.

Your business activities, as well as other factors, will determine the type of insurance you need for your nonprofit. Unemployment insurance and worker’s comp are essential if you have employees. To help you decide your insurance needs, consult a licensed insurance agent.

Step 13: Open a Bank Account

Business bank accounts protect your personal assets by seperating them from company assets. They also make tax filing and accounting easier. You will need the following information to open an account:

  • Your EIN
  • A copy of Articles of Incorporation
  • A copy of the bylaws

Reference links and Resources for Vermont Nonprofits

 

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