How to Start a Nonprofit in Washington

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:	Washington Secretary of State - Corporations Division Name search
   Suffix:	Not required. Nonprofits may use "club," "league," "association," "services," "committee," "fund," "society," "foundation," "guild," "a nonprofit corporation," "a nonprofit mutual corporation," or any name of like import.  RCW &sect23.95.305

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.

   Washington director requirements:	Number: minimum 1 Qualifications: None. No residency requirement. No membership requirement. Term: until successor selected and qualified Quorum: majority Committee: minimum 2 directors
   Washington officer requirements:	A president, one or more vice presidents, a secretary, and a treasurer are required. Two or more offices may be held by the same individual, except president and secretary.

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 Washington registered agent office is located in Spokane, WA. 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:	Washington Secretary of State - Corporations Division
   Form:	Articles of Incorporation - Washington Nonprofit Corporation
   Instructions:	Washington Nonprofit Handbook
   Filing Method:	Mail or online.
   Agency Fee:	$30 by mail. $80 expedited by mail. $50 online.
   Turnaround:	~2 months by mail. ~2-3 business days expedited by mail or online.
   Law:	Washington Nonprofit Corporation Act
   Notes:	The Secretary of State will issue your Unified Business Identifier (UBI) which is your state id across state departments. Nonprofit professional service corporations are an exception to the above instruction - they should be formed under RCW § 18.100.

5. File Initial Report

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

   Agency:	Washington Secretary of State - Corporations Division
   Form:	Use the form the secretary mailed to you with your formation certificate or file online.
   Filing Method:	Mail or online.
   Agency Fee:	$10 application fee + $20 online filing fee.
   Due:	Within 120 days of incorporation or qualification.
   Law:	RCW 23B.16.220.

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 Washington State Tax Identification Numbers/Accounts

    The Unified Business Identifier (UBI) issued to your nonprofit by the Secretary of State is also your organization's id with the Department of Revenue.
    
    You must register with the Department of Revenue if you meet any of the following conditions:

    • Your business is required to collect sales tax.
    • Your gross income is $12,000 per year or more.
    • Your business is required to pay taxes or fees to the Department of Revenue.
    • You are a buyer or processor of specialty wood products.

    Submit to:	Washington Department of Revenue http://dor.wa.gov/
    Guidance:	Washington Department of Revenue - Nonprofit Organizations Guide
    Form:	Form BLS-700-028: Washington Business License Application
    Filing Method:	Mail or online
    Fee:	$19
    Turnaround:	~2 business days online. ~21 business days by mail.

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:

    Washington Department of Revenue

    Notes:

    In Washington, nonprofit organizations are generally taxed like any other business. They must pay business and occupation (B&O) tax on gross revenues generated from regular business activities they conduct. They must pay sales tax on all goods and retail services they purchase as consumers, such as supplies, lodging, equipment, and construction services. In addition, nonprofit organizations must collect and remit retail sales tax on their sales of goods and retail services.

    To file to obtain exemption from state sales tax:

    Instructions:

    Washington Department of Revenue - Nonprofit Organizations Guide

    Notes:

    Currently, Washington does not grant nonprofits exemption from state sales tax. They must pay sales tax on all goods and retail services they purchase as consumers, such as supplies, lodging, equipment, and construction services. In addition, nonprofit organizations must collect and remit retail sales tax on their sales of goods and retail services. Limited B&O and sales tax exemptions are provided for nonprofit fundraising activities, donations, and for certain types of organizations.

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.

    Washington Charitable Organization Registration

    Agency:	Washington Secretary of State - Charities Program
    Law:	Washington Revised Code Annotated §19.09.020 and following; Washington Administrative Code §434-120-100 through 434-120-175
    Foreign Qualification is Prerequisite:	No
    Registered Agent (Special Agency) Required?	No

    Automatic Exemption

    More Details

    Exemption Eligible Organizations:	Organizations that raise less than $50,000 from the public in any accounting year when all the activities of the organization, including all fundraising activities, are performed by volunteers Appeals for funds on behalf of a specific individual named in the solicitation, but only if all of the proceeds of the solicitation are given to or expended for the direct benefit of that individual Churches and their integrated auxiliaries Political organizations
    Law:	RCW 19.09.020 and RCW 19.09.081
    Notes:	Exempt organizations can elect to file an Optional Registration for Charitable Organization application with the secretary of state.

    Initial Registration

    More Details

    Form:	Charitable Organization Registration / Renewal (Including the WA State Combined Fund Drive)
    Instructions:	Washington Charitable Organization Registration Instructions
    Filing Method:	Mail or online.
    Agency Fee:	$60 + optional $50 expedite fee for 2-3 business day processing.
    Turnaround:	1 week
    Notes:	Some Washington 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. 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. 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 Washington, 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 Washington Secretary of State - Corporations Division. Submit a Charitable Organization Registration form and all required attachments to the Washington Secretary of State - Charities Program. Foreign Applicants: Determine whether or not your charity will need to foreign qualify based on your activity in Washington. If not required, skip to number 3. File foreign qualification documents with the Washington Secretary of State - Corporations Division. Submit a Charitable Organization Registration form and all required attachments to the Washington Secretary of State - Charities Program.
    Required Attachments:	IRS determination letter List of officers and directors Professional fundraising contracts List of other states where registered to solicit

    Registration Renewal

    More Details

    Form:	Charitable Organization Registration / Renewal
    Instructions:	Washington Charitable Organization Registration Instructions
    Filing Method:	Mail or online.
    Agency Fee:	$40 + optional $50 expedite fee for 2-3 business day processing
    Due:	Annually within 11 months after the close of your fiscal year. So if your fiscal calendar ends December 31, then renewal is due by November 30. 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:	No extensions are available for charitable registration due dates.
    Penalties:	There is a late fee of $50.
    Notes:	The late fee is assessed by the received date, not the postmarked date. The state accepts overnight/express mail at a different mailing address. Attach your annual financial report. The URS is no longer accepted as of September 12, 2014.
    Required Attachments:	List of officers and directors Professional fundraising contracts List of other states where registered to solicit

    Contract Filing

    More Details

    Form:	Fundraising Service Contract Registration
    Agency Fee:	$20
    Due:	Before a charitable organization may contract with a commercial fund-raiser for any fund-raising service or activity, the charitable organization and commercial fund-raiser shall complete and file a registration form with the secretary. The registration must be filed by the charitable organization on the form approved by the secretary.

    Change of Fiscal Year

    More Details

    Form:	Charitable Organization Amendment
    Filing Method:	Mail or online.
    Agency Fee:	$0 by mail or $20 online.
    Turnaround:	1-2 business days

    Cancellation

    More Details

    Form:	Charitable Organization Closure
    Agency Fee:	$0
    Notes:	To close out your registration, submit a closure application with the required attachments.

    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 Washington nonprofit compliance guide to learn more!

Continue reading "Washington Nonprofit Compliance"

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