What are the requirements to establish a nonprofit organization in New York, and what steps should be taken to ensure compliance with state and federal laws?
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Step 1: Choose a name for the nonprofit organization
The name of the nonprofit organization must not already be in use by another organization in New York, and it must not contain any terms that would imply a for-profit nature. A name availability search can be conducted through the New York Department of State's business entity database to check the availability of the desired name.
Step 2: Obtain a federal tax identification number
A nonprofit organization must obtain a federal tax identification number from the Internal Revenue Service (IRS). This number is necessary for tax reporting purposes and is also required to open a bank account.
Step 3: Draft bylaws and articles of incorporation
Bylaws are the internal governance rules of the organization, while articles of incorporation are legal documents filed with the state that create the organization. The bylaws and articles of incorporation must be drafted to comply with state and federal law and should address issues such as membership, meetings, elections, and how the organization will operate.
Step 4: Obtain tax-exempt status
To qualify for tax-exempt status, the organization must file an application with the IRS. The most common tax-exempt status for nonprofits is 501(c)(3), which allows donations made to the organization to be tax-deductible for the donor.
Step 5: Register with the New York State Charities Bureau
In New York, nonprofit organizations that solicit donations must be registered with the New York State Charities Bureau. This registration is necessary to ensure that the organization is legitimate and operating according to state law.
Step 6: Comply with ongoing reporting and record-keeping requirements
A nonprofit organization must comply with ongoing reporting and record-keeping requirements to maintain its tax-exempt status and avoid legal complications. For example, the organization must file annual tax returns with the IRS and the New York State Charities Bureau.
In addition to the above steps, it is recommended that nonprofit organizations consult with an attorney who specializes in nonprofit law to ensure compliance with all state and federal laws. This will help avoid potential legal complications and ensure that the organization is structured and operating in accordance with its mission and purpose.
