How to Start a Nonprofit in Virginia

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:	Virginia State Corporation Commission Name search
   Suffix:	Not required.  Code of Virginia §13.1-829

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.

   Virginia director requirements:	Number: minimum 1 Qualifications: None. No residency requirement. No membership requirement. Term: 1 year Quorum: majority Committee: minimum 2 directors
   Virginia officer requirements:	Defined in bylaws or board resolution. One officer prepares minutes of the directors' and members' meetings and authenticates records. 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 Virginia registered agent office is located in Virginia Beach, VA. 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:	Virginia State Corporation Commission
   Form:	Articles of Incorporation of a Virginia Nonstock Corporation
   Filing Method:	Mail or online.
   Agency Fee:	$50 charter fee + $25 filing fee = $75 total
   Turnaround:	~7 business days by mail. ~3-7 business day online. Expedited options available for a fee.
   Law:	Code of Virginia - Title 13.1: Corporations - Chapter 10: Virginia Nonstock Corporations Act
   Notes:	Submit the original signed articles.

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 Virginia State Tax Identification Numbers/Accounts

    Virginia offers a consolidated state tax registration application for new businesses.

    Submit to:	Virginia Department of Taxation http://www.tax.virginia.gov/
    Form:	Form R-1: Virginia Department of Taxation Business Registration Form
    Filing Method:	Mail or online
    Fee:	$0

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

    
    
    

    Upon obtaining your IRS Determination Letter, your organization is automatically exempt from Virginia corporation income tax. No application or notification is necessary.

    More information: Virginia Department of Taxation

    To file to obtain Sales & Use Tax Exemption:

    Agency:	Virginia Department of Taxation
    Form:	Form NP-1: Exemption Application for Nonprofit Organizations
    Instructions:	http://www.tax.virginia.gov/forms/search/business/sales-and-use-tax
    Agency Fee:	$0

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.

    Virginia Charitable Organization Registration

    Agency:	Virginia Office of Charitable and Regulatory Programs (OCRP)
    Law:	Virginia Code Annotated §57-48 thorugh 57-61.1; Virginia Administrative Code, Title 2, §5-610-10 through 5-610-40. Virginia Solicitation of Contributions Law
    Foreign Qualification is Prerequisite:	No
    Registered Agent (Special Agency) Required?	Yes

    Automatic Exemption

    More Details

    Exemption Eligible Organizations:

    Churches and associations of churches Political parties or political campaign committees

    One-Time Exemption Registration

    More Details

    Exemption Eligible Organizations:	Educational institutions that are accredited by the Board of Education, by a regional accrediting association or by an organization affiliated with the National Commission on Accrediting, the Association Montessori Internationale, the American Montessori Society, the Virginia Independent Schools Association, or the Virginia Association of Independent Schools, any foundation having an established identity with any of the aforementioned educational institutions, and any other educational institution confining its solicitation of contributions to its student body, alumni, faculty and trustees, and their families Persons requesting contributions for the relief of any individual specified by name at the time of the solicitation when all of the contributions collected without any deductions whatsoever are turned over to the named beneficiary for his use Charitable organizations that do not intend to solicit and receive, during a calendar year, and have not actually raised or received, during any of the three next preceding calendar years, contributions from the public in excess of $5,000, if all of their functions, including fund-raising activities, are carried on by persons who are unpaid for their services and if no part of their assets or income inures to the benefit of or is paid to any officer or member Organizations that solicit only within the membership of the organization by the members thereof Organizations that have no office within the Commonwealth, that solicit in the Commonwealth from without the Commonwealth solely by means of telephone or telegraph, direct mail or advertising in national media, and that have a chapter, branch, or affiliate within the Commonwealth that has registered with the Commissioner Organizations that have been granted tax-exempt status under § 501(c)(3) of the Internal Revenue Code and that are organized wholly as Area Health Education Centers in accordance with § 32.1-122.7 Health care institutions defined herein as any facilities that have been granted tax-exempt status under § 501(c)(3) of the Internal Revenue Code, and that are (i) licensed by the Department of Health or the Department of Behavioral Health and Developmental Services; (ii) designated by the Health Care Financing Administration (HCFA) as federally qualified health centers; (iii) certified by the HCFA as rural health clinics; or (iv) wholly organized for the delivery of health care services without charge; and any supporting organization that exists solely to support any such health care institutions. For the purposes of clause (iv), "delivery of health care services without charge" includes the delivery of dental, medical or other health services where a reasonable minimum fee is charged to cover administrative costs Civic organizations as defined in § 57-48 Agencies providing or offering to provide debt management plans for consumers that are licensed pursuant to Chapter 20 (§ 6.2-2000 et seq.) of Title 6.2 Agencies designated by the Virginia Department for Aging and Rehabilitative Services pursuant to subdivision A 6 of § 51.5-135 as area agencies on aging Labor unions, labor associations and labor organizations that have been granted tax-exempt status under § 501(c)(5) of the Internal Revenue Code Trade associations that have been granted tax-exempt status under § 501(c)(6) of the Internal Revenue Code Organizations that have been granted tax-exempt status under § 501(c)(3) of the Internal Revenue Code and that are organized wholly as regional emergency medical services councils in accordance with § 32.1-111.4:2 Nonprofit organizations that have been granted tax-exempt status under § 501(c)(3) of the Internal Revenue Code and that solicit contributions only through (i) grant proposals submitted to for-profit corporations, (ii) grant proposals submitted to other nonprofit organizations that have been granted tax-exempt status under § 501(c)(3) of the Internal Revenue Code, or (iii) grant proposals submitted to organizations determined to be private foundations under § 509(a) of the Internal Revenue Code Organizations whose solicitations are confined to five or fewer contiguous cities and counties
    Form:	Form 100: Virginia Exemption Application for Charitable or Civic Organization
    Agency Fee:	$10
    Law:	VA Code § 57-60
    Notes:	Exemptions do not expire as long as the organization continues to qualify under the exemption criteria.

    Initial Registration

    More Details

    Form:	Form OCRP-102: Registration Statement for a Charitable Organization
    Instructions:	Is Your Registration Statement for a Charitable Organization (Form 102) Complete?
    Filing Method:	Mail
    Agency Fee:	$100 initial registration fee + $30-325 annual fee depending on gross contributions (organizations with no financial history are exempt from the annual fee)
    Turnaround:	4-6 months
    Notes:	File the original - copies are not allowed. The CFO and President must sign. Some Virginia 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. Appoint a registered agent to receive legal documents in Virginia. 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. Appoint a registered agent to receive legal documents in Virginia. 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 Virginia, obtain a certified copy of your articles of incorporation and all amendments from your home state to submit during the foreign qualification process. The certified copy cannot be more than 1 year old when filing foreign qualification documents.
    How to Apply:	Domestic Applicants: File entity formation documents with Virginia State Corporation Commission. Submit a Registration Statement for a Charitable Organization and all required attachments to the Virginia Office of Charitable and Regulatory Programs (OCRP). Foreign Applicants: Determine whether or not your charity will need to foreign qualify based on your activity in Virginia. If not required, skip to number 3. File foreign qualification documents with Virginia State Corporation Commission. Submit a Registration Statement for a Charitable Organization and all required attachments to the Virginia Office of Charitable and Regulatory Programs (OCRP).
    Required Attachments:	Either IRS form 990 or audited financials Articles of incorporation Bylaws List of officers and directors Either IRS determination letter or IRS form 1023 Professional fundraising contracts

    Registration Renewal

    More Details

    Form:	Form OCRP-102: Registration Statement for a Charitable Organization (Renewal)
    Filing Method:	Mail
    Agency Fee:	$30-325 depending on gross contributions
    Due:	Annually within 4.5 months after the close of your fiscal year. So if your fiscal calendar ends December 31, then 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 180 days beyond the original due date by emailing your request to ocarpunit.vdacs@vdacs.virginia.gov.
    Penalties:	There is a late fee of $100 for registrations that have lapsed.
    Notes:	File the original - copies are not allowed. The CFO and President must sign. Attach your annual financial report.
    Required Attachments:	IRS form 990 List of officers and directors Professional fundraising contracts Only if amended: IRS determination letter, articles of incorporation, and bylaws

    Change of Fiscal Year

    More Details

    Form:	Form OCRP-102: Registration Statement for a Charitable Organization
    Agency Fee:	Varies
    Notes:	Indicate change of fiscal year on the form and submit the financial statement reflecting the new fiscal year.

    Cancellation

    More Details

    Agency Fee:	$0
    Notes:	To close out your registration, send a letter stating that the organization is ceasing their solicitation in Virginia and attach a copy of the most recently completed financial statement. If the organization is dissolving, send a certificate of dissolution and the latest financial statement.

    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 Virginia nonprofit compliance guide to learn more!

Continue reading "Virginia Nonprofit Compliance"

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