Starting a 501(c)(3) nonprofit in California is easy, just follow these easy steps:
If you’ve been thinking about starting a 501(c)(3) nonprofit in California, you have come to the right place. We have developed this comprehensive guide to help you not only start a nonprofit in California but also make it successful.
Step 1: Name Your California 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 for naming in your state.
California Nonprofit Naming Guidelines
The name you pick for your organization must:
- Not include words related to the United States Olympic Committee such as: ‘Olympic’, ‘Olympiad’, or ‘Citius Altius Fortius’.
- Not include terms associated with a financial institution such as: ‘Bank’, ‘bank and trust’, ‘trust’ or ‘trust company’ unless prior approval is obtained from the Commissioner of Financial Institutions.
- Not be deceptively similar to another business operating in the state of California unless consent and approval is obtained.
- Not mislead the public in any way.
You can read the Secretary of State's official guidelines for the complete rules on naming a California-based organization.
To learn more, read our How to Name a Nonprofit in California guide.
Is the Website Domain Name Available?
You may want to buy any URLs you are interested in, to make sure they are available when you are ready to finalize and create your website.
Step 2: Appoint a California Registered Agent
A nonprofit corporation in California is required to have a registered agent with a California address.
What is a Registered Agent? A registered 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.
To learn more, read our How To Pick a California Registered Agent guide.
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.
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.
The organization structure of your 501(c)(3) nonprofit in California MUST include:
- At least 3 directors not related to each other
- A president
- A secretary
- A treasurer or chief financial officer
NOTE: The president may not also hold the office of secretary or treasurer.
To learn more, read our guide on How to Select Board Members for Your California Nonprofit
Step 4: California Articles of Incorporation
To become a nonprofit corporation in California you must file Form ARTS-PB-501(c)(3): the articles of incorporation for a nonprofit public benefit corporation.
In order to qualify for 501(c)(3) status, the organization’s purpose must explicitly be limited to one or more of the following:
- Testing for public safety
- Fostering national/international amateur sports competition
- Preventing cruelty to animals/children
The filing fee is $30, with a $15 counter service fee for in-person filings.
- Checks and money orders for mailed forms must be made payable to the "Secretary of State"
- Accepted credit cards for online filing include Visa and Mastercard
- Cash payments are accepted for in-person filings
To learn more, read our California Articles of Incorporation guide.
Step 5: File Statement of Information
Secretary of State
Statement of Information Unit
P.O. Box 944230
Sacramento, CA 94244-2300
Filing Fee: $20
For more information, you can call the Secretary of State at (916) 657-5448 or visit them at their website.
Step 6: 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.
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.
Step 7: 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, secretaries, 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.
Step 8: 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.
To learn more, read our guide on how to get your EIN.
Step 9: Applying for Exemption from Federal (501(c)(3) status) and State Taxes
Applying for Exemption from Federal Taxes:
A nonprofit may be eligible for 501(c)(3) status only if its purpose is limited to one or more of the following:
Charitable, Religious, Scientific, Educational, Literary, Fostering national/international amateur sports competition, Preventing cruelty to animals/children, Testing for public safety
Before a nonprofit can apply for 501(c)(3) status it must:
- Elect at least 3 directors not related to each other
- Register as a nonprofit with the state
- Adopt the bylaws and conflict of interest policy
- Have an EIN number
Once these four conditions have been met your nonprofit can apply for 501(c)(3) tax-exempt status by filing Form-1023 online.
If your application is approved, the IRS will send you a determination letter stating that your organization is exempt from federal taxes under section 501(c)(3).
To learn more, read our guide on How to File Form 1023-EZ.
Applying for Exemption from State Taxes:
State Franchise or Income Tax Exemption
Once you have received your 501(c)(3) determination letter from the IRS, you can file for state franchise or income tax exemption using form FTB-3500A.
You can access more information about franchise and income tax exemptions and requirements Franchise Tax Board’s guidance.
Sales and Use Tax
The majority of nonprofits in California are required to pay sales and use tax. To learn more about the nonprofits that are eligible for an exemption, access the California Department of Tax and Fee Administration’s Exemptions and Exclusions document.
Once you have formed your California nonprofit, we recommend you read our guide on How To Protect your California Nonprofit and Keep It Compliant.