The name of your nonprofit corporation cannot be the same as or similar to, or likely to be confused with, another corporation or business name already registered with the Secretary of State.
In addition, the name must include the word “corporation,” “incorporated,” “company,” or “limited,” or the abbreviation “corp.,” “inc.,” “co.,” or “ltd” and you cannot use the word “cooperative” or an abbreviation of that word in your name. To see if your proposed name is available, you can search the Vermont Corporations Database Keyword search on the Secretary of State’s website.
In Vermont you need have at least three directors to form your nonprofit. They should also be aged 18 years old and above and must be residents of Vermont. Their names are to be included in your articles of incorporation.
To operate your business efficiently, you are also requirement by the state government of appoint officers. These officers will be at forefront of your nonprofit, making decisions and executing plans of action.
In Vermont all businesses even if you’re a nonprofit is required to designate and maintain a registered agent to accept service of process notices and other important document on behalf of the organization.
A Vermont Registered Agent can be an individual or a business authorized by Vermont to conduct its operations within the state. Your agent must also have a physical address where documents are delivered.
Your Vermont Nonprofit is formed legally by filing a certificate of incorporation before the Vermont Secretary of State. Before you fill-out the form, make sure that you prepare the following information ahead:
Complete this fillable articles of incorporation form which you can find at the Secretary of State’s website. Read the instructions and file your articles accurately. The IRS also requires specific languages to be included inorder to get a 501(c)(3) tax-exempt status. They include the following:
Understand the IRS requirements for tax exemption further, you can check out the IRS Publication 557, Tax-Exempt Status for Your Organization on the IRS website.
Otherwise known as an organizational meeting, the initial meeting of the board of directors is where you will discuss a lot of important things that will affect the operations of your nonprofit. Some of the following agenda to be discussed include:
All discussions and decisions should be recorded in the minutes of the meeting. You should also let your board of directors sign the minutes and keep it in your Corporate Records Book.
Your Corporate Records Book or a Corporate Records Binder is not a mandatory requirement but it is still needed by your nonprofit. All important documents and paperwork are kept in your Corporate Records Book so it is important that you have one.
You can buy it in your local office supply or you may place a direct order from Amazon.
An Vermont Employer Identification Number (EIN) is a 9-series identification number that enables the IRS to keep track of your state taxes and activities.
The EIN serves a variety of purposes you must get one before you officially launch your Vermont nonprofit. Obtain your EIN now at the at the IRS website for free.
It is best to open a business bank account from a credible bank if you want to avoid using your personal savings for your nonprofit or vice-versa.
Having a business bank account will be will good for your nonprofit because it will help you keep track of donations and funding given by benefactors. You will also be more organized because every transaction is recorded.
Recommended Resource: Read this roundup to help you choose which type of business bank account is best for you.
The federal and Vermont government does not give you automatically a tax-exempt status, you have to file necessary documents and apply to be able to obtain one. To get started, you can follow the process below.
The Form 1023 or the Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code is a requirement that you have to complete first if you want to be given a tax exempt status.
It is a highly detailed form which will ask you several information such as your nonprofit history, nonprofit finances, organizational structure, nonprofit policies and even your planned nonprofit activities. Once the form is completely filled-out double check and send it in this address.
Internal Revenue Service
P.O. Box 12192
Covington, KY 41012-0192
There is also another form which you can file if you pass the eligibility as a small nonprofit, this is the Form 1023-EZ, Streamlined Application for Recognition of Exemption under Section 501(c)(3) of the Internal Revenue Code. To qualify in this category, you must have less than $50,000 in a year and assets of lower than $250,000.
Compared to the Form 1023, this form is less comprehensive. You need to prepare a filing fee of $850 for the form 1023 and $400 for IRS Form 1023-EZ.
After obtaining a federal 501(c)(3) tax-exempt status from the Internal Revenue Service, your nonprofit is now qualified to take advantage of other state tax exemptions. For further information about additional exemptions, you can visit Vermont’s Department of Taxes.
If you’ve paid fundraisers, you have to register first before you can proceed with your fundraising activities. You can visit the Attorney General’s website for more information regarding the rule and requirements that you have to follow for nonprofits.
This is a mandatory requirement regardless of your entity type so your Vermont Nonprofit is not exempted from this.
By obtaining the necessary licenses and permits for your nonprofit, you adhere to the standards and requirements set by the state of Vermont. Once you are able to obtain your licenses you can legally start operating your business in the state.
Recommended Resource: Business licenses are different from business to business. For professional assistance on compiling your licenses, here is a great package. You can also check out this resource roundup prepared by the SBA.
Congratulations! You are now officially a Vermont Nonprofit. But before you celebrate, don’t forget to complete these additional tasks. They are not mandatory requirements but they will make a huge difference as you run your nonprofit.
Even if you’re not doing business, you still have to make a business plan if you want to achieve your goals and objectives.
A business plan will give you an idea how to execute plans of action and evaluate outcomes in an objective manner. For the good of your nonprofit and for your own good, write a business plan now with the use of these resources!
A business website is a big help if you’re operating a nonprofit. It allows you to relay your message or mission better and encourage more people to participate in your case.
These days building a business website is easier because there are platforms like WordPress and Bluehost which you can use. WordPress enables you to build and customize a business website in just minutes. Bluehost on the otherhand has a one-click WordPress installation tool and customer support feature.
Resource for Getting Started: If you want another resource to help you start your business website, you can read this step-by-step guide to assist you.
The article is only an informational/instructional guide and should not be considered a legal advice or a legal document. If you have any questions on the legalities of starting a nonprofit in Vermont, you should consult your lawyer for professional legal advice.