How to Form a Nonprofit in Arizona

Two people forming a nonprofit in Arizona

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Before You Begin

Consider Forming a 501(c)(3)

To form a nonprofit corporation in Arizona, follow the steps below. It is also advisable for your Arizona nonprofit to obtain a 501(c)(3) status from the IRS, as this will enable federal tax exemption for your Arizona nonprofit corporation. Learn more about 501(c)(3) nonprofits here.

To start a 501(c)(3) nonprofit corporation in Arizona you must:.

  1. Form a nonprofit corporation according to the rules of the state.
  2. Apply for 501(c)(3) tax-exempt status with the IRS.

You will need the following documents:

  • Form CFCVLR - Cover Sheet (Form)
  • Form C011 - Articles of Incorporation (Instructions) (Form)
  • Form C082 - Director Attachment, if applicable (Form)
  • Form C084 - Incorporator Attachment, if applicable (Form)
  • Form M002 - Statutory Agent Acceptance (Form)
  • Form CF0001 - Certificate of Disclosure (Form)
  • Notice of Incorporation (Instructions)
  • Bylaws and Conflict of Interest Policy (Instructions) (Templates)
  • IRS Form SS-4 - EIN Application (Form)
  • IRS Form 1023 - 501(c) Application (Instructions) (Form)

Forming a Nonprofit in Arizona is easy, just follow these 4 steps:

Step 1: Name Your Arizona Nonprofit

The name you select for your nonprofit will establish its brand. It is the first thing most people will learn about your organization. It is important to pick a name that both aligns with your mission and follows the rules of naming in Arizona.

To learn more, read our How to Name a Nonprofit in Arizona guide.

Naming Guidelines

  • If the name of your organization includes any of the following words you must first get written approval from the Arizona Department of Financial Institutions:
    • Bank; Banker; Banking; Banc; Banco; Banque; Credit Union; Deposit; Savings Association; Building Association; Savings and Loan Association; Building and Loan Association; Savings Bank; Thrift; Trust; or Trust Company
  • You can read the official guidelines for the complete rules on naming an Arizona based organization.

Is the Name Available?

The name of your nonprofit must be distinct from that of any other corporation in Arizona. Use the Business Entity Search to make sure the name you have selected has not already been taken.

Is the Website Domain Name Available?

If you plan to have a website, make sure a suitable URL is currently available. You can check at GoDaddy.

You may want to buy any URLs you are interested in right now to ensure their availability when you are ready to create your website.

Find a Domain Now

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After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free

Step 2: Appoint An Arizona Registered Agent

A nonprofit corporation in Arizona is required to have a statutory agent (called a registered agent in most other states) with an Arizona address.

What is a Statutory Agent? A statutory agent is an individual or business entity responsible for receiving important legal documents on behalf of your business. Think of your registered agent as your business' point of contact with the state.

Who can be a Statutory Agent? A statutory agent must be a resident of Arizona or a corporation, such as a registered agent service, authorized to transact business in Arizona. You may elect an individual within the company including yourself.

Incfile provides the first year of registered agent service free with LLC formation ($49 + State Fees)

Step 3: Select Your Board Members and Officers

The directors of a nonprofit are responsible for overseeing the operations of the organization. The directors come together to form a board.

Features of directors:

  1. All the directors of an organization together form the board of directors.
  2. The power and influence of the directors over the organization is as the board of directors, the directors do not have authority as individuals.
  3. The board typically creates the policies that govern the nonprofit. The board of directors also oversee management-level hiring like that of the officers.

The officers of a nonprofit (such as the president or the secretary) are individuals with responsibilities, and the authority to execute based on their job descriptions.

Together, the officers and the board will come together to make up the organizational structure of your nonprofit.

An officer may also be on the board of directors and serve both roles if allowed to do so by the organizational bylaws created by your team.

The organization structure of your nonprofit in Arizona MUST include:

  1. At least 3 directors not related to each other
  2. At least 1 officer who is responsible for recording meeting minutes.

To learn more, read our guide on how to select board members for your nonprofit.

Step 4: File the Arizona Articles of Incorporation

To become a nonprofit corporation in Arizona you must file the Articles of Incorporation with the Arizona Corporation Commission.

Form M002, Certificate of Disclosure and Incorporator Attachment must be filed along with the Articles of Incorporation. You can read the complete instructions here.

Here are the sections you will need to fill in the Articles of Incorporation:

Section 1: Entity Name
Enter the name you selected in Step 1.

Section 2: Character of Affairs
Describe the purpose of your nonprofit organization.

In order to qualify for 501(c)(3) status, the organization’s purpose must explicitly be limited to one or more of the following:

  • Charitable
  • Religious
  • Educational
  • Scientific
  • Literary
  • Testing for public safety
  • Fostering national/international amateur sports competition
  • Preventing cruelty to animals/children

NOTE: You can read the IRS guidelines here.

Section 3: Members
Indicate whether your organization will have any people or corporations as its members.

Section 4: Known Place of Business
Indicate if your organization will have a business address other than that of the statutory agent.

Section 5: Directors
Enter the names and business addresses of the directors you selected in Step 3.

Section 6: Statutory Agent
Enter the name and address of the statutory agent you selected in Step 2.

NOTE: Along with the Articles of Incorporation you must also submit form M002 which ensures that a statutory agent has been assigned.

Section 7: Certificate of Disclosure
Along with the Articles of Incorporation, you must also submit a Certificate of Disclosure.

Section 8: Incorporators
An incorporator is any person filing the Articles of Incorporation for an organization. This may be you or a lawyer helping you with the process. Enter the name and address of each incorporator.

NOTE: Along with the Articles of Incorporation you must also submit an Incorporator Attachment.

ADDITIONAL SECTION
To be eligible for 501(c)(3) tax exemption you must attach an additional section to include provisions ensuring that in the event your organization is dissolved, the assets of the organization will be used towards tax-exempt purposes.

Section 5 of this sample document provides an example of these provisions required for 501(c)(3) eligibility.

Submit the following:

You can submit to the Arizona Corporation Commission one of two ways: online or by mail.

The filing fee is $40.

  • Accepted credit cards include Visa, MasterCard, and American Express
  • Paper checks must be made payable to "Arizona Corporation Commission" (by mail / in-person only)
  • Money orders (by mail / in-person only)
  • Cash (in-person only)

File the Articles of Incorporation through the Corporation Commissions online portal.

Arizona Corporation Commission
Corporations Division
1300 W. Washington St.
Phoenix, Arizona 85007

Nonprofit Formation FAQ

How long does it take to process the Articles of Incorporation?

Processing should take about 2 months. An additional expedite fee of $35 will ensure that your paperwork is processed within 2-3 weeks.

How do I contact the Secretary of State for more information?

You can call for information at (602) 542-3026 or visit them at their website.

Nonprofit Operating Procedures & Housekeeping

Publish Notice of Incorporation

No later than 60 days after formation you must publish a notification of formation in a local newspaper for 3 consecutive publications.

The only exception is if your organization is located in Pima or Maricopa County.

If your organization does not have a physical office then you do not need to publish if your statutory agent is located in Pima or Maricopa County

Draft Bylaws And Conflict Of Interest Policy

There are two documents that will be central to the running of your nonprofit:

Bylaws: These are the rules that determine how your organization will be governed and run.

You can think about it as a constitution for your nonprofit. It makes the rules and priorities clear for everyone involved.

In your bylaws be sure to include:

  • How the nonprofit will be governed – the role of directors and officers
  • How meetings are held, voting procedures, electing officers or directors.
  • How records will be kept and managed
  • How disputes will be handled
  • How bylaws will be added amended in the future

NOTE: Keep in mind that the bylaws will supplement any rules set forth by the federal government or the state.

Ready to get started? Check out these bylaws templates which you can customize to suit the needs of your organization.

The Conflict of Interest Policy: These are the rules set to ensure that decisions being made for the nonprofit are based on what is best for the organization, and not being motivated by what is best for individuals.

Under Appendix A the IRS provides a sample Conflict of Interest Policy.

NOTE: You will want to have both these documents drafted before for your first organizational meeting

Conduct An Organizational Meeting

An organizational meeting is the first official meeting of your nonprofit! Some of the things that are discussed in a typical organizational meeting:

  • Taking attendance to show you have a quorum (minimum number needed)
  • Appointing temporary officers, chairmen, secretary, etc.
  • Adoption of the bylaws
  • Adoption of conflict of interest policy

Don’t forget to record “minutes” of the meeting and have it signed by all attending directors. Here are some corporate minutes templates to help you get the ball rolling.

NOTE: This meeting must occur before your organization can apply for 501(c)(3) federal tax exempt status.

Get An EIN

An EIN or Employment Identification Number (also called a Federal Tax Identification Number or Federal Employment Identification Number), is used to uniquely identify a business entity. You can think of the EIN as a social security number for your nonprofit.

The EIN is required for your organization whether or not it will have any employees.

The EIN will be used for things like:

  • Filing for 501(c)3 status
  • Opening a bank account
  • Applying for tax-exempt status
  • Submitting tax returns

Once your nonprofit is formed (Step 4), you can easily apply for an EIN for your nonprofit via Form SS-4.

NOTE: If you use a nonprofit formation service, EIN assistance might already be included in the package.

Open A Business Bank Account

You will typically need to take with you the following items to open a bank account for your nonprofit:

  1. The EIN for the nonprofit
  2. A copy of the nonprofit’s bylaws
  3. A copy of the Articles of Incorporation

If your nonprofit has several directors or officers, some banks may also ask for proof that you are authorized to open the account on behalf of the nonprofit.

There are many great options when it comes to picking a bank. Here are the reviews of the top 5 business bank accounts we recommend.

NOTE: It is always best to call ahead. Your bank may require some additional documents.

Start a Corporate Records Book (Optional)

As a nonprofit corporation, your organization will need to keep track of many important documents. This includes documents such as:

  • Articles of Incorporation
  • EIN
  • Tax forms
  • Nonprofit bylaws
  • Meeting minutes

We recommend starting a dedicated corporate records book early so that as you start receiving these critical legal documents, they can be kept organized from the very beginning.

While you can keep track of everything using supplies from any office store, it may be easier to use a pre-assembled kit that has the things you need in one place. Blumberg and Bindertek have some options specifically designed to meet the needs of nonprofit corporations.

How to Apply for Tax Exemptions

Applying for Exemption from Federal Taxes - 501(c)(3) Status

Once your nonprofit has received the 501(c)(3) letter of determination from the IRS, that letter will also allow your organization to be exempt from paying income tax to the state of Arizona.

Before your nonprofit can apply for 501(c)(3) status it must:

  1. File the Articles of Incorporation with the required provisions (As covered in Step 4, Section 2 & Additional Section)
  2. Adopt the bylaws and the conflict of interest policy
  3. Have an EIN number

In order to file for tax-exempt status most organizations will need to file Form 1023 online or by mail (fee: $600).

There are two exceptions:

  1. If your organization’s annual gross receipts are below $50,000 then you may be able to file Form 1023-EZ (fee: $275). Check your eligibility here.
  2. If your organization is a religious institution or has annual gross receipts in each taxable year of no more than $5,000 you may be considered tax-exempt without filing Form 1023. Religious institutions and organizations with gross receipts under $5,000 can still choose to file Form 1023. This would give them a determination letter that specifies that contributions to the organization are tax-deductible.

Applying for Exemption from State Taxes

If your nonprofit has received a Letter of Determination from the IRS declaring it as a 501(c) organization, it is automatically exempt from corporate income taxes in Arizona. You can read more about it here.

For more information, you can call the Department of Revenue at (602) 255-2060, visit them at their website, or visit their office at the address found below:

Arizona Department of Revenue
Corporate Income Tax Audit
1600 W. Monroe
Phoenix, Arizona 85007-2650

Nonprofit Tax FAQ

When should an organization apply for federal tax exemption?

Form 1023/1023-EZ must be filed within 27 months from the end of the first month your organization was created.

How long will it take for the IRS to process Form 1023/1023-EZ?

Soon after sending your application you should receive an acknowledgment of receipt of your application.

If your application is simple and complete, IRS will send your determination letter within:

  • 90 days for Form 1023-EZ
  • 180 days for Form 1023

If you have not heard from them by that time you can call 877-829-5500 to enquire about your application.

Protect Your Nonprofit

Get Business Insurance

As with any other business, there may be risks involved in running the nonprofit. Getting insurance for your nonprofit allows you to focus on your passion while minimizing your liability.

Here are some of the common types of insurance you may want to consider for your organization:

  • General Liability Coverage
  • Directors and Officers Coverage
  • Social Service Professional Coverage

Your coverage needs will vary based on your organization and the work you do.

Properly Sign Legal Documents

There will be times when you will be signing a document on behalf of your nonprofit. It is important that these times are easily distinguishable from when you are signing a document as an individual. If a document isn’t properly signed, you might suddenly find yourself personally responsible for something the organization should have been liable for.

To avoid such confusion we recommend you and all the members of your organization follow the following format:

  • Official Name of your nonprofit
  • Your Signature
  • Your full legal name
  • Your position in the organization

How To Keep Your Nonprofit Compliant

Determine Arizona Business Permits And Licenses

Business licenses in the state of Arizona are regulated by individual counties and cities. Contact your local authorities to find the requirements for your organization in your area.

You can also use the Small Business Administration’s Business License & Permit Lookup Tool.

Fundraising

Most charities in Arizona asking the public for donations do not have to register with the Arizona Secretary of State’s office. The only exceptions are Veteran’s Charitable Organizations.

For more information, you can call the Secretary of State at (602) 542-6187, visit them at their website, or visit their office at the address found below:

Secretary of State
Charities Division
1700 W. Washington, 7th Floor
Phoenix, AZ 85007

File Required Periodic Reports

All Arizona nonprofits must file an annual report each year with the Arizona Corporation Commission so the information on file about your organization is kept up to date. You can file online or by mail, due by the anniversary of your organization’s incorporation. There is a filing fee of $10.00.

Employees

If your organization will have employees you must register with the Arizona Department of Revenue. You can do this filing online.

For withholding information, you can call (602) 542-4576; for unemployment insurance tax information, you can call (602) 771-6602.

Public Inspection Rules for 501(c)(3) Organizations

Organizations that have been granted the 501(c)(3) status are required to disclose the following documents to the public when requested:

  • Annual returns for 3 years after the due date (this includes returns like Form 990, 990-EZ, 990-PF, and any Forms 990-T)
  • All Form 990 Schedules (except portions of Schedule B), attachments and supporting documents.
  • Application of exemption and all supporting documents such as Form 1023
  • The official paperwork from the IRS that shows that your organization has tax-exempt status.

The following do NOT need to be shared with the public

  • Portions of schedule B of Form 990/990-EZ that identify the contributors. ( You only need to disclose the amount contributed and the nature of the contributions)
  • Any unfavorable rulings such as an earlier denial of tax-exempt status.
  • Any information the IRS has said you can withhold. This may include things like sensitive patents and trade secrets.

FAQ:

How long do I have to produce these documents if requested?
Ideally within the same day. If your organization doesn’t have an office or maintains limited hours during parts of the year, the information should be made available within two weeks.

Do I need to provide copies of the documents?
If someone asks for copies in person or in writing you must provide them with copies.

Can I charge for copies?
You can charge a reasonable amount for making copies of the documents requested.

NOTE: It may be easiest to have the documents available on your website so that anyone who requests copies can be sent to the site. This allows you to stay compliant without having to spend a lot of time dealing with document requests.

Annual Returns for Tax-Exempt Organizations

Most tax-exempt nonprofit organizations are required to file an annual return with the IRS (Click here for a list of exceptions).

Which form you should use to file the annual returns depend on the annual gross receipt amounts for your organization.

‘Gross receipt’ is defined by the IRS as “the total amounts the organization received from all sources during its annual accounting period, without subtracting any costs or expenses”

  • For gross receipts < $50,000 --- File 990-N
  • Gross receipts <$200,000 and total assets <$500,000 --- File 990-EZ
  • Gross receipts > $200,000 or Total assets > $500,00 --- File 990

For any questions, you can call the IRS at

  1. (800) 829-3676 (Form-related questions)
  2. (800) 829-1040 (General information)

When is form 990 due?

You have a little over 4 months after your taxable year comes to an end to file Form 990. It is due on the 15th day of the 5th month. So if your taxable year ends on Dec 31st, your form 990 is due on May 15th.

NOTE: If your organization fails to file form 990 for 3 consecutive years, it will automatically lose its tax-exempt status.

Report Unrelated Business Income

If your organization has a gross income of >$1000 from a trade or business that is not related to the stated purpose of the organization, then it must file Form 990-T to pay tax on that income.

If you expect to pay $500 or more for the year in taxes on unrelated business income, your organization must pay a quarterly estimated tax on the unrelated business income using Form 990-W.

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