How To Form a 501(c)(3) Non-Profit In Tennessee

How to Use this Guide

Use the guide below to form a 501(c)(3) non-profit in Tennessee. Keep in mind that the process requires forming a non-profit corporation and getting tax-exempt status with the IRS.

Since the overall process is extremely complex, we highly recommend consulting with an attorney or using a service like Harbor Compliance for personalized top-to-bottom non-profit formation and obtaining IRS 501(c)(3) status.

Step 1) Verify & Secure Brand Name

Choose a Business NameFirst and foremost, you need to name your non-profit with something unique and unlike any other business entity registered with the state. There are a number of other naming rules, so be sure to bookmark the Business Name Availability Guidelines document through the Tennessee Sec. of State, Division of Business Services for specifics.

Also, be sure to conduct a Name Availability Search to check for naming conflicts. If needed, you have the option of filing an Application for Reservation of Corporate Name that protects the name until you can file Articles of Incorporation in Step 5.

Filing Fee: $20

Quick Note: Before you commit 100% to a name, you may also want to check that there’s a decent URL available for your business. Use WEEBLY to search your options. If there’s a quality domain name for purchase, we advise buying it right away. Even if launching a business website isn’t on your radar right now, it’s going to be soon, and you might as well nail down a domain name that’ll make it easy for customers to find you!

Step 2) Appoint A Registered Agent

Choose a Registered Agent

Every non-profit organization in the state must have a Registered Agent to officially receive and help to handle/process legal paperwork like all state filings & important business forms, legal notices, etc. Basic requirements are:

  • The agent can be a TN resident or certified individual citizen.
  • The agent can be registered business entity within the state.
  • The agent must have a non-P.O. Box physical street address and be available M-F during business hours.

A couple options are to hire a 3rd party professional and shell out up to $160/yr, or when you incorporate with Harbor Compliance (see details) you can get a qualified registered agent to perform “process of service” for free for your first year.

Step 3) Select Incorporators & Directors

Choose the Initial Directors

The state of Tennessee requires your non-profit have one declared incorporator who will be responsible for assembling the initial foundation and filing Articles of Incorporation with the state/public record. Then, if your non-profit will be run by directors (vs members), you’ll need to select or recruit them to oversee the non-profit until official directors can be voted in during your initial meeting in Step 7.

Resource: Bookmark the free 2016 “What Every Board Member Should Know” guidebook from the state.

Because of the potentially complex legal/tax nature of these entities, it’s highly suggested you work with a legal professional if possible. A good alternative that’s less expensive are modern incorporation providers who can help you understand the ins and outs.

Step 4) Draft Non-Profit Bylaws

Register an LLCIncorporated non-profits must have officially declared bylaws, or in other words, rules and regulations that form the basis of your organization. For beginners, or those with no business training they can be confusing, but general topics should include:

  • How meetings are to be conducted.
  • How new officers and directors are elected.
  • How voting takes place, disputes handled, and records kept/managed.
  • Adding/Amending bylaws (any changes must be reported to the IRS after incorporation).
  • How to handle other non-profit organization formalities in the state of Tennessee.

If you want some direction and structure to follow, check out this savvy Corporate Bylaws Template that you can use to customize around the particulars of your non-profit.

Step 5) File Articles Of Incorporation

How to Choose a Business Structure

Once you and your team decide it’s time to form the initial corporation before the law and in the public record, either use Tennessee’s Online Portal to file your non-profit Articles of Incorporation ($100 Filing Fee) or submit them via mail to the Sec. of State. Some data includes:

  • The name, type, duration of existence, and statement of purpose (provisions for non-profit vs corp);
  • Complete names & addresses of registered agent (and office), incorporators, and directors.
  • Any specific provisions/bylaws set forth as part of the internal operations of your organization.
  • A stipulation of apportioning assets to any 501(c)(3) upon termination of your organization.

To get more details on your charter bookmark TCA §48-52-102. of the Tennessee code. Make sure to complete all the entries so your application won’t be rejected. Also, for tax exemption requirements set forth by the IRS, check IRS Publication 557 on the IRS website. The state and federal tax exemption language should be included in the articles you create.

Step 6) Start A Corporate Records Book

File Annual Reports & Publication Requirements

While not mandatory, having physical records books is very common practice among corporations/non-profits along with cloud-based storage/computers because of the nature of these business entities. They make it possible to put all pertinent paperwork in one place to handle disputes, audits, the transition of power, and so on.

As the name of the book implies, it’s a record holder of your registration, licenses and permits, minutes of meetings, and other important documents. Grab one at a nearby office supply store, order online through Amazon, or get a professional Corporate Kit which let you brand the book/slip case, provide blank certificates, and more for as little as $99.

Step 7) Conduct Initial Meeting

Hold a Meeting with Your Board of DirectorsFor your first meeting assemble incorporators/directors and get ready to establish the foundation of your non-profit. Be sure to record “minutes” of the meeting and all attendees and have it signed by directors for your records book. Topics you’ll cover will vary but should include:

  • Voting on the appointment of critical officers;
  • Voting on and approving/amending bylaws;
  • Establishing a tax year as well as an accounting period;
  • Approving initial transactions, committees, and more.

If you found the bylaws template useful, check out a similar Corporate Minutes Template you can also customize and use to provide initial structure until you and your board get the hang of things should it be necessary.

Step 8) Get An EIN For Your Organization

Get an EIN for Your LLC

An EIN is a federal “Employer” Identification Number but your non-profit is required to have one even if you don’t plan on hiring any official employees. The 9-digit number, similar to a social security number, is used to track your non-profits financial activity once you use it to set up a bank account in Step 10.

Because it’s needed by every legal business entity in America, they’re not hard to get. The quickest and easiest way is by submitting a request directly through the IRS Website.

Step 9) Handle Licensing & Exemptions

Small Business Taxes

Now’s the point to ensure your non-profit is 100% compliant in terms of not only licenses/permits, but state and federal taxes. You should be able to apply for tax exempt status now that the corporation is established.

  • Download IRS FORM 1023 – Application for the Recognition of Exemption under Section 501(c)(3).
  • Or Form 1023-EZ – streamlined form but must be under $50k annual gross receipts and $250k in assets.
  • Bookmark the TN Dept. of Revenue and the CNM in Nashville to get more specific information.
  • If you need help, check out Business License Research packages that can handle some of the legwork.

Two other important resources would be the Nashville district office of the Small Business Administration and the state’s Business Enterprise Resources page because they’re going to have tons of valuable information and connections to get you off the ground.

Step 10) Setup A Business Bank Account

Best Business Bank Account

Once you have your EIN and have discussed it with your members/board, setup a dedicated bank account at a great banking institution/credit union. Don’t be hasty here! If you have a professional account or CFO handling it, that’s one thing. If not, do some shopping around to see which institutions have the most to offer in terms of overall services, lowered fees, etc.

Another important point is to ensure that no other accounts (business or personal) mix with your non-profits account. It should be completely separate for appropriate record keeping, getting through tax season, and then synced with your accounting software of choice.

Need Help?

How To Form a 501(c)(3) NonprofitIf you’d like help forming a 501(c)(3) Nonprofit In Tennessee, we highly recommend looking into Harbor Compliance for personalized top-to-bottom nonprofit formation and obtaining IRS 501(c)(3) status.

They handle everything on your behalf and be on-call for questions you have. If you’d like more info, visit their website or read our review.