How to Start a Nonprofit in Colorado

1. Name Your Organization

   Your organization’s name establishes its brand and is also important for incorporating with the state. The legal name of your nonprofit corporation may not conflict with any other organization registered in the state. Make sure the name is available and meets state requirements.

   Name Search:	Colorado Secretary of State Name search
   Suffix:	"(b) The entity name of a nonprofit corporation may, but need not, contain the term or abbreviation "corporation", "incorporated", "company", "limited", "corp.", "inc.", "co.", or "ltd."."  CRS §7-90-601

2. Recruit Incorporators and Initial Directors

   The incorporator is the person who signs the Articles of Incorporation for your nonprofit. You will need at least one, but can have more than one. Directors make up the governing body of your nonprofit corporation and are stakeholders in your organization’s purpose and success. You’ll want to identify three, unrelated individuals to meet IRS requirements. You will also want to be aware of any age or residency requirements.

   Colorado director requirements:	Number: minimum 1 Qualifications: An individual. No residency requirement. No membership requirement. Term: 1 year Quorum: majority Committee: minimum 1 director
   Colorado officer requirements:	A president, a secretary, a treasurer, and such other officers as may be designated by the board of directors Qualifications: an individual 18 years or older Two or more offices may be held by the same individual.

3. Appoint a Registered Agent

   A registered agent is responsible for receiving legal notices on behalf of your organization. The appointed registered agent must be physically located in the state and maintain an office that is open during regular business hours. As a nationwide registered agent, our service is designed to receive your legal documents and provide secure access to those documents through your online account. Our local Colorado registered agent office is located in Boulder, CO. We offer registered agent service independently or as part of our nonprofit formation packages.

4. Prepare and File Articles of Incorporation

   Your nonprofit’s articles of incorporation officially mark the creation of your organization. They document where and when the organization was formed and capture other information necessary to verify its existence. While requirements for language vary from state-to-state, there are some basic provisions that the IRS will look for when you apply for 501(c)(3) exemption. It is important to customize the articles for your organization and make sure you meet the state and IRS requirements. Meeting these requirements from the start will help avoid having to make amendments later or risk getting your 501(c)(3) application rejected. Some states will also require you to publish your articles of incorporation, so be mindful of any deadlines and publishing instructions.

   Agency:	Colorado Secretary of State
   Form:	Articles of Incorporation for a Nonprofit Corporation
   Instructions:	Instructions: Articles of Incorporation for a Nonprofit Corporation
   Filing Method:	Online
   Agency Fee:	$50
   Turnaround:	Immediately
   Law:	Colorado Revised Statutes - Title 7: Corporations and Associations - Articles 121-137: Colorado Revised Nonprofit Corporation Act
   Notes:	Immediately after incorporating you can setup Secure Business Filing on your record so that no one else can make changes to it. Click “setup secure business filing” on the transaction confirmation page. Even though the articles of incorporation are filed electronically, you should download a copy for secure storage in your company records and for use during the course of business (e.g. for setting up a business bank account).

5. File Initial Report

   After filing articles of incorporation, you must file an initial report.

   Not required

   
   
   

6. Obtain an Employer Identification Number (EIN)

   This unique, nine-digit number is assigned by the IRS to identify your nonprofit. All types of nonprofits will apply for an EIN, not only those that hire employees. You will use your EIN to open a bank account, apply for 501(c)(3) status, and submit 990 returns to the IRS.

   Agency:	Internal Revenue Service (IRS)
   Form:	IRS Form SS-4
   Filing Method:	Mail, phone, fax, or online.
   IRS fee:	$0
   Turnaround:	Immediately online or by phone. 4 business days by fax. 4-5 weeks by mail.
   Notes:	The IRS website is only available during certain hours. Print your EIN before closing your session. For additional guidance, see IRS Pub 1635: Understanding Your EIN.

7. Store Nonprofit Records

   As you launch your nonprofit, you will receive a number of official documents. Organizing these documents in one place will save you headaches down the road. You will soon have numerous items to keep in your records including your EIN letter, bylaws, meeting minutes, 501(c)(3) determination letter, and more.

   
   
   

   A great way to maintain necessary documentation is Records Manager, our software for storing records securely, tracking directors and officers, and getting notified of meetings.

8. Establish Initial Governing Documents and Policies

   Your bylaws are the governing document for your nonprofit. They serve as your organization’s operating manual and should be consistent with your articles of incorporation and the law. When your Board of Directors meets for the first time, you’ll review and ratify the bylaws and they will be a roadmap for governance from there.

   At the same time, you’ll also want to create and adopt a conflict of interest policy. A conflict of interest is when someone in a key position in your nonprofit has competing interests and is making choices that could benefit themselves to the harm of the organization. Personal interests should be set aside and organizational interests prioritized. If a conflict of interest does arise, it should be disclosed immediately.

   Your application to the IRS for 501(c)(3) exemption will require that both the bylaws and the conflict of interest policy are approved and adopted. Once they’ve been adopted, safely store them in your Nonprofit Records Kit.

9. Hold Organizational Meeting of the Board of Directors

   The initial organizational meeting of your Board of Directors will be incredibly productive. At this meeting you will approve the bylaws, adopt the conflict of interest policy, elect directors, appoint officers, and approve resolutions such as opening the organization’s bank account. Important decisions are being made so be sure to record them in the meeting minutes.

10. Get Colorado State Tax Identification Numbers/Accounts

    Colorado offers a consolidated state tax registration application online or you can file two registrations by mail.

    To apply for a sales tax account and/or wage withholding account:

    Submit to:	Colorado Department of Revenue http://www.colorado.gov/revenue
    Form:	Form CR-0100: Colorado Sales Tax Withholding Account Application
    Filing Method:	Mail, in-person, or online
    Fee:	$8 for charitable license. $50 deposit if retail sales tax license needed.
    Turnaround:	~2-3 weeks online. ~4-6 weeks by mail. Immediately in-person.

    
    

    If your nonprofit has employees and withholds income, then you must obtain an unemployment insurance tax account number and rate:

    Submit to:	Colorado Department of Labor and Employment http://www.colorado.gov/cs/Satellite/CDLE-UnempBenefits/CDLE/1240336898069
    Form:	Form UITL-100: Application for Unemployment Insurance Account and Determination of Employer Liability
    Filing Method:	Mail or online
    Fee:	$0
    Notes:	This application is only for unemployment insurance purposes.

11. Apply for 501(c)

    Applying for 501(c) tax exemption can feel like the most daunting step in bringing your nonprofit dream into reality, but obtaining tax exemption comes with many benefits. You will be able to apply for grants and grow your fundraising success in addition to being exempt from IRS income tax. 501(c) is the chapter of the Internal Revenue Code that regulates nonprofit organizations. Like others, you may be most familiar with 501(c)(3) nonprofits, including charities and foundations. 501(c)(3) nonprofits apply using Form 1023 or Form 1023-EZ. Review the criteria for each application and make sure you meet the eligibility requirements set out by the IRS. Other types of nonprofits, including 501(c)(4)s and 501(c)(6)s, apply using Form 1024. After reviewing and approving your application, the IRS will return a Determination Letter officially recognizing your exemption.

    Completing the federal application for tax exemption is significantly easier with the assistance and support of a professional. Find someone with the expertise to ensure the correct application is being used and is completed accurately. A well-prepared application takes time, over 100 hours by IRS estimates, so put yourself on the path to success by finding a specialist to walk alongside you in the journey - from start to tax-exempt finish!

    Agency:	Internal Revenue Service (IRS)
    Form:	IRS Form 1023, IRS Form 1023-EZ, or IRS Form 1024
    Instructions:	IRS Instructions for Form 1023, IRS Instructions for Form 1023-EZ, or IRS Instructions for Form 1024.  Also see guidance IRS Pub 557: Tax-Exempt Status for Your Organization.
    Filing Method:	Mail
    Agency Fee:	$275 for organizations filing Form 1023-EZ and $600 for organizations filing Form 1023.
    Turnaround:	1023-EZ average: <1 month. 1023 average: 3-6 months.

    

    Tax-Exempt in 2 Weeks!

    Download the case study of how our client, Reform It Now, obtained 501(c)(3) tax exemption in only two weeks using the new IRS Form 1023-EZ!

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    Dr. Bob A.Reform It Now, Inc.

12. Apply for State Tax Exemption(s)

    With your IRS Determination Letter in hand, make sure you familiarize yourself with your state’s requirements for recognizing your nonprofit’s tax-exempt status. This is an area where requirements vary state-by-state. Many states issue their own tax-exempt certificate that can be used for sales and use tax purposes, but it may require application and periodic renewal.

    To file to obtain exemption from state income tax:

    Not required

    
    
    

    Exempt upon obtaining Determination Letter from the IRS

    More information: Colorado Department of Revenue

    To file to obtain Exemption form Sales Tax & State-Administered Local Sales Tax:

    Agency:	Colorado Department of Revenue
    Form:	DR 0715: Application for Sales Tax Exemption and Form DR-0716: Statement of Non-Profit - Church, Synagogue, or Organization
    Agency Fee:	$0
    Notes:	Colorado organizations can apply for state sales tax exemption if they have an IRS determination letter. If approved, you will receive a Certificate of Exemption.

    Bingo and raffles are regulated by the Colorado Secretary of State. Apply for a bingo and raffle license by filing Form LE7-8_COMB ($100 state fee).

13. Register for Charitable Solicitation (Fundraising)

    This is another area where laws differ from state to state, but most states require any nonprofit soliciting donations to register to do so on an annual basis. This means registering in the state prior to soliciting any resident of that state. Registering in your home state is essential, but you may also need to register other states depending on the scope of your organization.

    Colorado Charitable Organization Registration

    Agency:	Colorado Secretary of State (Charities)
    Law:	C.R.S. § 6-16-104
    Foreign Qualification is Prerequisite:	No
    Registered Agent (Special Agency) Required?	No

    Automatic Exemption

    More Details

    Exemption Eligible Organizations:

    Charities that do not intent to solicit and receive and do not actually receive more than $25,000 in contributions during a fical year Charities that do not receive contributions from more than 10 persons during a fiscal year Religious organizations that are exempt from filing the IRS 990 Below college level educational organizations that are affiliated with a church or operated by a religious order Political organizations Appeals for individuals

    Notes:

    Exempt charities can file an optional exemption claim to have a public record of their exempt status created in the secretary of state's database.

    Initial Registration

    More Details

    Instructions:	Instructions for Registering as a Charitable Organization
    Filing Method:	Online
    Agency Fee:	$10
    Turnaround:	1 week
    Notes:	Any charitable organization that (1) solicits contributions in Colorado, (2) has contributions solicited in Colorado on its behalf, or (3) participates in a charitable sales promotion must register in Colorado. Any authorized officer must sign electronically. After approval you will receive a registration number and a printable "certificate of registration".  You can view and print a Certificate of Registration from the summary screen of any registered group. Some Colorado counties and municipalities may require charities that solicit in-person to register prior to fundraising.
    Before you Apply:	All Applicants: Check the available exemptions to see if your charity is eligible for exemption from the full registration requirement. Appoint a registered agent to receive legal documents in Colorado. Look through the list of required attachments and make sure that you have each required document in hand before starting the registration application.
    How to Apply:	Domestic Applicants: File entity formation documents with the Colorado Secretary of State. Create an efile account and submit an online application with all required attachments to the charities section of the Colorado Secretary of State. Foreign Applicants: Determine whether or not your charity will need to foreign qualify based on your activity in Colorado. If not required, skip to number 3. File foreign qualification documents with the Colorado Secretary of State. Create an efile account and submit an online application with all required attachments to the charities section of the Colorado Secretary of State.
    Required Attachments:	IRS form 990 IRS determination letter List of officers and directors Information for all paid solicitors, professional fundraisers, and commercial coventurers used by or contracted to the organization

    Registration Renewal

    More Details

    Filing Method:	Online
    Agency Fee:	$10
    Due:	Annually by the 15th day of the 5th month after the close of your organization's fiscal year, however, Colorado automatically grants a 3 month extension of this deadline. There is no official start to the renewal period, so renewals may be submitted as soon as financials become available for the most recently completed fiscal year.
    Due Date Extension:	Due dates are automatically extended for 3 months after the original due date, but charities needing more time can request an additional 3 months extension by making a request online. For more information and detailed instructions, see this page.
    Penalties:	There is a $60 fee for failure to file a renewal.
    Notes:	Also file your annual financial report Any authorized officer must sign electronically. After approval you will receive a registration number and a printable "certificate of registration"
    Required Attachments:	List of officers and directors IRS determination letter

    Change of Fiscal Year

    More Details

    Filing Method:	Online
    Agency Fee:	$0
    Turnaround:	Immediately online
    Notes:	Fiscal year can be changed online.

    Cancellation

    More Details

    Form:	Charities Registration Withdrawal
    Agency Fee:	$0
    Notes:	To close out your registration, file a withdrawal form with the Secretary of State.

    To fundraise nationally or online, please see our Fundraising Compliance Guide. Our services manage your initial, renewal, and exemption filings in every state.

14. Obtain Other Business Licenses & Permits

    Running your nonprofit corporation legally also means securing all applicable licenses and permits. The range of local, state, and federal requirements is wide. Access resources like the Small Business Administration Business License & Permit look-up tool and search by your business type and locality.

You’ve made it! You turned your passion into a legitimate nonprofit corporation exempt under IRS 501(c) and are benefiting your community. That solid foundation on which you built your organization requires ongoing maintenance. Investing in maintaining compliance with all of the government agencies is an ongoing responsibility and commitment needed to ensure your vision continues long into the future. Check out our compliance guide to learn more!

Once you have registered your nonprofit per the steps listed above, you will need to maintain compliance with all of the government agencies. Staying current with the IRS and state requirements is an ongoing responsibility. Continue reading our Colorado nonprofit compliance guide to learn more!

Continue reading "Colorado Nonprofit Compliance"

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