How to Start a Nonprofit in Rhode Island

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:	Rhode Island Secretary of State Name search
   Suffix:	Not required.  R.I. Gen. Laws §7-6-11

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.

   Rhode Island director requirements:	Number: minimum 3 Qualifications: None. No residency requirement. No membership requirement. Term: default is 1 year, 3 year maximum Quorum: majority Committee: minimum 2 directors
   Rhode Island officer requirements:	A president, a secretary, and a treasurer are required. Term: 1 year unless otherwise specified in the articles or bylaws, 3 year maximum Two or more offices may be held by the same individual, except the offices of 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 Rhode Island registered agent office is located in Barrington, RI. 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:	Rhode Island Secretary of State
   Form:	Form 200: Articles of Incorporation
   Filing Method:	Mail, in-person, or online
   Agency Fee:	$35
   Turnaround:	~7 business days by mail or online. Same day for in-person filings.
   Law:	Rhode Island Nonprofit Corporation Act
   Notes:	A certificate of incorporation is issued upon approval.

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 Rhode Island State Tax Identification Numbers/Accounts

    Rhode Island offers a combined registration application for retail sales, income tax withholding, and unemployment insurance. Apply for all other tax accounts / licenses / permits individually.

    Submit to:	State of Rhode Island: Division of Taxation http://www.tax.ri.gov/
    Form:	Form BAR: Business Application and Registration
    Filing Method:	Mail or using RI Division of Taxation Combined Online Registration Service
    Fee:	Varies based on taxes/licenses/permits required

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!

    From filing the 1023EZ on August 1st to receipt of the determination letter on August 14th is, in my humble opinion, simply breathtaking and I dare say, ONLY Harbor Compliance could have achieved that.

    

    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

    
    
    

    When you receive your IRS Determination Letter granting federal income tax exemption (and file IRS Form 990 or 990EZ annually), you are automatically also granted exemption from Rhode Island corporate income tax. You need not apply or notify the Rhode Island Division of Taxation.

    More information: Rhode Island Department of Revenue - Division of Taxation

    To file to obtain Sales & Use Tax Exemption:

    Agency:	Rhode Island Department of Revenue - Division of Taxation
    Form:	Form EXO-APP: Application for Exemption for an Exempt Organization
    Agency Fee:	$25

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.

    Rhode Island Charitable Organization Registration

    Agency:	Rhode Island Department of Business Regulation
    Law:	RIGL § 5-53.1-2
    Foreign Qualification is Prerequisite:	No
    Registered Agent (Special Agency) Required?	No

    Automatic Exemption

    More Details

    Exemption Eligible Organizations:	Educational institutions, including parent-teacher associations, the curricula of which in whole or in part are registered or approved by a governmental agency as well as all other educational institutions within this state recognized or certified as educational institutions by a generally recognized and accepted regional or national educational accrediting organization Persons requesting any contributions for the relief of any individual, specified by name at the time of the solicitation, if all of the contributions collected, without any deductions whatsoever, are turned over to the named beneficiary Any charitable organization that does not intend to solicit and receive and does not actually raise or receive contributions in excess of $25,000 during a fiscal year of the charitable organization, provided none of its fundraising functions are carried on by professional fundraisers and no part of its assets or income inures to the benefit of or is paid to any officer, director, member (if a limited-liability company), trustee, partner, or member of the charitable organization (Not including contributions received from corporations, charitable foundations, government agencies, or a duly registered federated fund, incorporated community appeal, or United Way, shall not be included in determining the total amount of contributions received) Organizations that solicit only from their own membership. The term "membership" shall not include those persons who are granted a membership upon making a contribution as the result of a solicitation Persons soliciting contributions solely from corporations, charitable foundations, or governmental agencies Foundations or associations exclusively for the benefit of religious organizations, education institutions, nonprofit or charitable hospitals, and public libraries Hospitals that are nonprofit and charitable Veterans' organizations and their auxiliaries so long as the veterans' organizations are chartered under chapter 6 of title 7 Public libraries Historical societies duly organized under the laws of this state Free, not-for-profit, public art museums Grange organizations and their auxiliaries Churches or recognized denominations and religious organizations, societies, and institutions operated, supervised, or controlled by a religious organization or society that solicit from other than their own membership. Institutions indirectly or affiliated with but that are not operated, supervised, or controlled by any religious organizations or religious society that own, maintain, and operate homes for the aged, orphanages, and homes for unwed mothers Volunteer fire and rescue associations Land trusts duly organized under the laws of this state
    Law:	RI Gen L § 5-53.1-3
    Notes:	Charities must register within 30 days if they exceed $25,000 in contributions.

    Initial Registration

    More Details

    Form:	Charitable Organizations Application
    Filing Method:	Online or submitted on CD-Rom or on a USB flash drive (paper filings are not accepted)
    Agency Fee:	$90 + $3 online filing fee.
    Turnaround:	2-3 weeks
    Notes:	Make check payable to General Treasurer, State of Rhode Island Some Rhode Island 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 Rhode Island, 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 Rhode Island Secretary of State. Create an online account and complete the charitable organization registration through the Rhode Island Department of Business Regulation. Foreign Applicants: Determine whether or not your charity will need to foreign qualify based on your activity in Rhode Island. If not required, skip to number 3. File foreign qualification documents with the Rhode Island Secretary of State. Create an online account and complete the charitable organization registration through the Rhode Island Department of Business Regulation.
    Required Attachments:	IRS form 990 Audited financials (if applicable) List of officers and directors Professional fundraising contracts List of other states where registered to solicit

    Registration Renewal

    More Details

    Form:	Charitable Organizations Application
    Filing Method:	Online or mail the form on CD-ROM (paper filings are not accepted)
    Agency Fee:	$90 + $3 online filing fee.
    Due:	Annually by the registration anniversary date.
    Due Date Extension:	Due dates can be extended for 6 months beyond the original due date by submitting either IRS form 8868 or a letter requesting an extension.
    Notes:	Make check payable to General Treasurer, State of Rhode Island You must attach an annual financial report.
    Required Attachments:	IRS form 990 Audited financials (if applicable) List of officers and directors Professional fundraising contracts List of other states where registered to solicit

    Cancellation

    More Details

    Agency Fee:	$0
    Notes:	To close out your registration, simply submit a letter asking to withdraw registration.

    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 Rhode Island nonprofit compliance guide to learn more!

Continue reading "Rhode Island Nonprofit Compliance"

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