How to Start a Nonprofit in Massachusetts

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:	Massachusetts Secretary of the Commonwealth Name search
   Suffix:	The name of the organization must indicate that it is a corporation. Churches and other religious societies are exempt from this requirement. MA Gen. L Chapter 155 § 9

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.

   Massachusetts director requirements:	Number: minimum 1 Qualifications: Natural persons. No residency requirement. No membership requirement. Term: minimum 1 year, maximum 5 years Quorum: majority Committee: minimum 1 director
   Massachusetts officer requirements:	A president, a treasurer, and a clerk are required. The president must be a director. The clerk must be a Massachusetts resident unless a resident agent was appointed.

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 Massachusetts registered agent office is located in Pittsfield, MA. 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:	Massachusetts Secretary of the Commonwealth
   Form:	Articles of Organization
   Filing Method:	Mail, fax, in-person, or online.
   Agency Fee:	$35 by mail and $40 if filing online or by fax.
   Turnaround:	~2-3 business days
   Law:	Massachusetts General Laws (M.G.L.) - Part I: Administration of the Government - Title XXII: Corporations - Charpter 180: Corporations for Charitable and Other Purposes

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 Massachusetts State Tax Identification Numbers/Accounts

    Massachusetts offers a consolidated state tax registration application.

    Submit to:	Massachusetts Department of Revenue http://www.mass.gov/dor/
    Instructions:	Instructions
    Guidance:	Tax type descriptions
    Filing Method:	Online
    Fee:	$0
    Notes:	Obtain an EIN first. If needed, the Massachusetts Department of Revenue will mail you Form ST-1: Sales and Use Tax Registration (access to this form is restricted).

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:

    Agency:	Massachusetts Department of Revenue
    Agency Fee:	$0
    Notes:	Submit: Registration (if not already registered), a copy of the IRS Determination Letter of Exemption granting the corporation Section 501 (c) status, a copy of the Articles of Organization filed with the Secretary of State's Office, and a copy of the IRS documentation of Employer Federal Identification Number if it is not stated on the IRS Section 501 (c) Determination Letter.

    To file to obtain Sales Tax Exemption:

    Agency:	Massachusetts Department of Revenue
    Notes:	There is no application form for sales tax exemption; simply send in your IRS determination letter with an explanation and the department will review the request.

    To apply for exemptions on local property taxes, submit Form 3ABC to your local assessor with a copy of the IRS Determination Letter.

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.

    Massachusetts Charity Registration

    Agency:	Massachusetts Attorney General - Non-Profit Organizations/Public Charities Division
    Law:	Massachusetts General Laws Ch 12, §8e and 8f; Ch 68 §18 through 35
    Foreign Qualification is Prerequisite:	No
    Registered Agent (Special Agency) Required?	No

    Automatic Exemption

    More Details

    Exemption Eligible Organizations:

    An organization that is primarily religious in purpose and falls under the regulations 940 CMR 2.00 An organization that does not raise or receive contributions from the public in excess of $5,000 during a calendar year or does not receive contributions from more than ten persons during a calendar year, if all of their functions, including fundraising activities, are performed by persons who are not paid for their services and if no part of their assets or income inures to the benefit of, or is paid to, any officer or members

    Initial Registration

    More Details

    Form:	Charity Registration Form (and Form PC if filing after the initial fiscal year end date of the charity).
    Filing Method:	Mail or email to charitiesfilings@mass.gov.
    Agency Fee:	Initial registration fee of $100 plus: $50 Schedule A-2 fee for organizations registering before their initial fiscal year end date, or $35-$2,000 (depending on gross support and revenue) for organizations registering in subsequent fiscal years
    Turnaround:	4-6 months
    Notes:	The President and another officer or trustee must sign. Signatures need not be notarized. Some Massachusetts counties and municipalities may require charities that solicit in-person to register prior to fundraising.
    Before you Apply:	Domestic Applicants: Check the available exemptions to see if your charity is eligible for exemption from the full registration requirement. If your charity meets the audit threshold, obtain an audited financial report to submit with your registration application. Look through the list of required attachments and make sure that you have each required document in hand before starting the registration application. Foreign Applicants: Check the available exemptions to see if your charity is eligible for exemption from the full registration requirement. If your charity meets the audit threshold, obtain an audited financial report to submit with your registration application. Look through the list of required attachments and make sure that you have each required document in hand before starting the registration application. If you will foreign qualify in Massachusetts, obtain a certificate of good standing from your home state to submit during the foreign qualification process. The certificate cannot be more than 60 days old when filing foreign qualification documents.
    How to Apply:	Domestic Applicants: File entity formation documents with the Massachusetts Secretary of the Commonwealth. Submit a Charity Registration Form, Form PC (if applicable), and all required attachments to the Massachusetts Attorney General - Non-Profit Organizations/Public Charities Division. Foreign Applicants: Determine whether or not your charity will need to foreign qualify based on your activity in Massachusetts. If not required, skip to number 3. File foreign qualification documents with the Massachusetts Secretary of the Commonwealth. Submit a Charity Registration Form, Form PC (if applicable), and all required attachments to the Massachusetts Attorney General - Non-Profit Organizations/Public Charities Division.
    Required Attachments:	IRS form 990 Audited financials (if applicable) Articles of incorporation Bylaws IRS determination letter List of officers and directors

    Registration Renewal

    More Details

    Form:	Form PC
    Filing Method:	Mail
    Agency Fee:	$35-$2,000, depending on gross support and revenue.
    Due:	Annually within 4.5 months after the close of your nonprofit's fiscal year. So if your fiscal calendar ends December 31, then the renewal is due by May 15. 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 can be extended for 6 months beyond the original due date by emailing charitiesextensions@state.ma.us with an explanation of your request for extension.
    Notes:	Charities raising $200K+ must submit a financial statement
    Required Attachments:	IRS form 990 Audited financials (if applicable) List of officers and directors Only if amended: IRS determination letter, articles of incorporation, and bylaws

    Contract Filing

    More Details

    Form:	Form 10B: Addendum to Registration Statement to be Filed by Commercial Co-venturers
    Filing Method:	Mail
    Agency Fee:	$0
    Due:	Within 10 days of signing and prior to the commencement of any new co-venturing activity.
    Notes:	Every contract or agreement between a professional solicitor or a commercial co-venturer and a charitable organization must include: A statement of the charitable purposes to be described in the solicitation; and A statement of the guaranteed minimum percentage of the gross receipts from fund-raising which will be utilized exclusively for the charitable purposes described in the solicitation.

    Change of Fiscal Year

    More Details

    Form:	Form PC
    Notes:	Send a cover letter explaining the change in fiscal year along with the Form PC and a copy of the amended Articles of Incorporation.

    Cancellation

    More Details

    Agency Fee:	$0
    Notes:	To close out your registration, submit a letter indicating the desire to withdraw and include the date Massachusetts solicitations will end. If soliciting took place in a partial fiscal year, submit a renewal for that year.

    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.

    Massachusetts nonprofits who wish to conduct bingo, casino nights, raffles, pull tabs, and other charitable games must become a charitable gaming agent at Massachusetts Lottery - Charitable Gaming Division. License requirements and fees vary based on the game.

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 Massachusetts nonprofit compliance guide to learn more!

Continue reading "Massachusetts Nonprofit Compliance"

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