How To Form a 501(c)(3) Nonprofit In Colorado

How to Use this Guide

Use the guide below to form a 501(c)(3) nonprofit in Colorado. Keep in mind that the process requires forming a nonprofit 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 nonprofit formation and obtaining IRS 501(c)(3) status.

Step 1) Secure Your Nonprofit Name

Choose a Business Name

To secure and register your nonprofit name in it should be unique, not too similar to another registered entity name, and shouldn’t contain any restricted wording as defined by Colorado law. To check for naming conflicts, first conduct a Business Entity Search through the state and be sure to check with section 7-124-101 in the state code (subject to change).

If needed, you can also file a Statement of Reservation of Name form online to reserve an available name for 120 days.

Filing Fee: $25

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 AgentA Colorado Registered Agent is required of your nonprofit for compliance purposes. This registered, or statutory agent, can be an individual registered citizen or a corporation authorized to conduct business in the state. They’ll also need to provide a street address, for your registered office and hold regular M-F business hours.

That said, you can hire an outside professional service and expect to pay up to $160/year, or get a certified agent free when you incorporate your nonprofit with a service like Harbor Compliance (see details). They handle this and more depending on your startup package.

Step 3) Select Incorporators & Directors

Choose the Initial DirectorsIn Colorado you’re going to need to select at least one incorporator (7-122-101), and yes you can have more (often recommended), who are responsible for executing the Articles of Incorporation with the state. They just need to be human and over the age of 18. Directors, on the other hand, are a bit more complex and come with a lot more corporate formalities (7-122-105).

Colorado requires you to set the min/max number in the bylaws in our next step, and also to use the bylaws to establish whether they must be a CO resident or from within the nonprofit itself. This is quite different to most other states, so if you have any questions working with an attorney or incorporation service helps.

Step 4) Draft Nonprofit Bylaws

Register an LLCThis is somewhat complex subject, but here are two primary notes in state law concerning nonprofit bylaws (7-122-106):

  • (1) The board of directors or, if no directors have been named or elected, the incorporators may adopt initial bylaws. If neither the incorporators nor the board of directors have adopted initial bylaws, the members may do so.
  • (2) The bylaws of a nonprofit corporation may contain any provision for managing and regulating the affairs of the nonprofit corporation that is not inconsistent with law or with the articles of incorporation.

So in essence your nonprofit bylaws are the rules with which your organization is governed and managed. You can’t incorporate without them and it wouldn’t make sense if you could! If it’ll be helpful, check out a savvy Corporate Bylaws Template with an example that you can customize yourself as well.

Step 5) File Articles Of Incorporation

Business Licenses

Once you and your board believe everything’s in order and you’re ready to form the nonprofit in the eyes of the law/public record, you’ll have your incorporators sign and file Articles of Incorporation (section 7-122-102) with Colorado State. Please, do not try to take this step prematurely as it will only end up costing more time and resources.

The form is going to require original signatures and ask you to declare some of the basics of your nonprofit: name, registered agent info, directors info, mission/purpose statement, etc.

Filing Fee: $50

Step 6) Start A Corporate Records Book

File Annual Reports & Publication RequirementsWhat we’re referring to here is a physical, often very nice looking book, folder or binder where copies of critical pieces of paperwork are kept and managed. And yes, that’s along with the many modern ways of tracking and compiling information on your nonprofit. They’re somewhat of a corporate formality, but extremely common and highly-advised.

You can pick one up at pretty much any office supply store or online through Amazon of course, but we’re huge fans of savvy-sleek Corporate Kits which include gorgeous records books, binders, blank certificates and more which you can brand for as little as $99.

Step 7) Conduct An Initial Meeting

Hold a Meeting with Your Board of Directors

For your first meeting assemble incorporators/directors and get ready to establish the foundation of your nonprofit. 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:

  • 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

Get an EIN for Your LLC

An EIN is very straightforward. It’s a 9-digit identifying number like a social security number but for business entities including nonprofits. You’ll use it to setup a bank account and hire paid employees if needed, then the appropriate agencies will use it to track your financial activity.

The quickest and easiest way to get one 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 nonprofit 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.

Two other great resources we think it would behoove you to bookmark are the Denver Small Business Administration office and Colorado Business Express because there’s no end to the possibilities when it comes to the marriage between business and nonprofit communities.

Step 10) Setup A Business Bank Account

Best Business Bank Account

First of all, make absolutely sure that no other accounts of any kind or any other income/expense steams of data get mixed in! This is a costly and completely avoidable mistake for too many nonprofits stumble into. Secondly, do some homework and research different options between local, state, and federal banks along with credit unions.

Don’t be too quick to decide here! The amount of costs/savings per year from one bank to the next, relative to their other services, is a critical consideration. If needed, check out this brief breakdown of Nonprofit Accounts to gain a better understanding of what’s involved.

Need Help?

How To Form a 501(c)(3) NonprofitIf you’d like help forming a 501(c)(3) Nonprofit In Colorado, 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.