How to Form a Nonprofit in Connecticut

Two people forming a nonprofit in Connecticut

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OVERVIEW

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

To start a 501(c)(3) nonprofit corporation in Connecticut 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:

In addition, most 501(c)(3) charities in Connecticut will also want to apply for applicable state tax exemptions using the information found here: Exemption Certificates.

Connecticut Nonprofit Formation

Select and Seure Your Nonprofit's Name


Step 1) Select and Secure Your Nonprofit's Name

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 Connecticut.

 

1. Naming Guidelines

  • The name of you pick for your organization must be distinguishable from other businesses operating in Connecticut.
  • The name must include an organizational designation, such as “Inc.”, “Ltd.”, “Incorporated”, or “Company”
  • You can read the Connecticut General Assembly’s naming guidance for domestic nonstock corporations here

 

2. Is the name available?

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

 

3. Is the website available? 

If you plan to have a website for your organization, you will want to make sure that a suitable URL is currently available on GoDaddy.

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.

Find a Domain Now

Service provided by GoDaddy.com

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

Appoint a Registered Agent

Step 2) Appoint a Registered Agent

A nonprofit corporation in Connecticut is required to have a registered agent with a Connecticut 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.

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

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

 

Decide how your organization will be managed

Step 3) Select Your Board Members and Officers

The directors of a nonprofit are responsible for overseeing the operations of the organization. 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 Connecticut MUST include:

  1. At least 3 directors not related to each other
  2. A president
  3. A secretary

 

File Article of Formation

Step 4) File the Nonstock Certificate of Incorporation

To become a nonprofit corporation in Connecticut you must file Form CIN-1-1.0, the certificate of incorporation for nonprofit corporations.

Here are the sections that you will need to complete.

Filing Party
Enter the name and address of the person who should receive confirmation of the filing.

Section 1) Name of Corporation
Enter the name you selected in Step 1.

Section 2) Membership
Select the appropriate box depending on which statement accurately reflects your organization. If you select Option D, include an attachment that clearly explains how each class is designated.

Section 3) Registered Agent & Registered Office
The registered agent can be any entity registered to do business in Connecticut or any person who is a resident of the state. Your organization cannot act as its own registered agent.

Any person or business you designate as the registered agent must explicitly consent to act as the registered agent for your organization and verify their consent by signing Form CIN-1-1.0

Enter the information of the registered agent you selected in Step 2 in either Section A or B.

Section 4) Purpose
Describe the purpose of your nonprofit organization and additional provisions. Attach an additional sheet of paper if necessary.

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
  • 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 5) Other Information
Use this section of the articles of formation to formally state what the assets of the organization will be used for, and what will happen to the assets if the organization is dissolved.

To be eligible for 501(c)(3) status,  you must convince the IRS that the organization’s assets will always only be used for the purposes approved under 501(c)(3) rules. To this end, you must 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.

Section 6) Corporation Email Address
Provide an email address for your nonprofit. This email will be used to send you a reminder to file your Annual Report. If your nonprofit does not have an email address, write NONE on the form.

Section 7) Execution
When the incorporators sign and date the form they are affirming everything written in the form. They are also affirming that the registered agent listed has already consented to be the registered agent for this nonprofit organization.

The incorporators are the people who complete, sign, and submit the articles of incorporation. These people do not need to be a part of your organization.

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There are two ways to submit your Nonstock Certificate of Incorporation: online or by mail.

File the Nonstock Certificate of Incorporation through the Secretary of State's online portal.

Submit 2 copies of the Nonstock Certificate of Incorporation (the original plus a copy) to the mailing address found below.

 

Commercial Recording Division
Connecticut Secretary of the State
P.O. Box 150470
Hartford, CT 06115-0470

The filing fee is $50.

  • Personal checks or money orders must be made out to "Secretary of the State"
  • Accepted credit cards for online filing include Visa and MasterCard

FAQ:

How long does it take to process Form CIN-1-1.0?
If you file online or by mail it typically takes about 3-5 business days.

You can choose to pay an optional expedite fee of $50 to cut down on the processing time.

 

How do I contact the Secretary of State for more information? 
You can call for information at (860) 509-6003 or visit them at their website.

Operating Procedures & Housekeeping

1) 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

2) 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

3) 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, you can 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.

 

4) Get a Connecticut State Tax ID Number

The State of Connecticut allows businesses to submit one application to register for all state-level taxes.

You can fill out form REG-1 online or print a PDF copy to mail in. 

To learn more about what taxes might apply to your business, the State of Connecticut's Department of Revenue published this guidance.

Start a Business Bank Account

5) Start 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 Nonstock Certificate 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.

 

6) 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:

  • Nonstock Certificate 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

Your nonprofit organization must file for exemptions by:

  1. Applying to the IRS to be exempt from federal taxes, and
  2. Filing your IRS determination letter with the Connecticut Department of Revenue for exemption from state taxes.

 

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

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

  1. File the Articles of Formation with the required provisions (As covered in Step 4, Sections 4 & 5)
  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.

 

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.

 

Applying for Exemption from State Taxes

Once you have received your 501(c) determination letter from the IRS, you can submit a copy of this letter with your REG-1 form to be automatically exempt from state income tax.

Department of Revenue Services
P.O. Box 2937
Hartford, CT 06104-2937

Information: (860) 297-5962
Forms: (860) 297-4753
Website: www.ct.gov/DRS/

Filing Fee: $0

In addition, nonprofit corporations in Connecticut are exempt from state sales tax as long as they adhere to the guidelines set forth in Guide SN 95(10), including providing CERT-119 to sellers. Read more about Connecticut taxes and how they apply to nonprofits here.

Protect Your Nonprofit

Get Insurance Coverage

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 Signing 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:

  1. The official name of your nonprofit
  2. Your signature
  3. Your full legal name
  4. Your position in the organization

Keep Your Nonprofit Compliant

Registered Agent

Nonprofits that have incorporated are required to maintain a registered agent with an office address in Connecticut. If the agent or the office address changes, you must file Form AC-1-1.0 with the Secretary of State to effect a change to the certificate of formation. You may also complete this form online.

Failure to do so may result in termination of the corporation.

 

Annual Reports

You must file an annual report every year with the secretary of state.

The report is due each year by the anniversary of the registration date of your organization. You must file online and pay the $50 filing fee.

NOTE: Failure to file a requested report may result in termination of the corporation.

 

Connecticut Business Permits & Licenses

As a nonprofit in the state of Connecticut, your organization may need business permits and/or licenses depending on the type of services you offer.

Access the Connecticut Economic Resource Center (CERC) to access their New Business Checklist and their License Search. In addition, the Connecticut State Department of Consumer Protection also provides a list of license quicklinks.

If you have additional questions about licensing, contact CERC at 1-800-392-2122.

 

Fundraising

If your nonprofit will be soliciting charitable contributions, it must register with the Department of Consumer Protection.

Keep in mind, there are separate regulations that govern charitable gaming (bingo, raffles, etc.). Access more information on the Department of Consumer Protection’s website.

 

Employees

If your organization will have employees you must register with the Connecticut Department of Labor. 

You can easily apply online or find the contact information for your local workforce commission here.

 

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)

 

FAQ:

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.

 

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.