Step 1) Secure Your Nonprofit Name
There’s a handful of things you need to know as you start tackling your nonprofit organization’s name. First, it must be unlike any other registered name with the state – conduct a Business Entity Search to see if there are any naming conflicts. Also, the name can’t be deceptive and imply your nonprofit does anything other than what you’ll state in your Articles of Incorporation in Step 5.
Secondly, you'll need to include either the full words, "corporation," "incorporated," or "limited," or their abbreviations. To look through the exact laws on the books, see Mass. Gen. Laws ch. 156B, § 11. If needed/available, you can file an Application for Reservation of Name to reserve for 60 days.
Filing Fee: $30Quick 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
All business/nonprofit entities need to have a registered agent for essentially one reason – so they can’t say, “We never received that document.” to any state or federal agency. It will be your Massachusetts Registered Agent that officially receives and provides “Service of Process” to all state filings, tax documents, legal notices, and so on.
This is why they must have a MA address, be registered/certified with the state, and hold regular M-F business hours.
That said, you can hire an outside professional and spend up to $160/yr, or get a registered agent free of charge for the first year when you incorporate with IncFile (see details). It’s a service we highly recommend to new nonprofits that need help but can’t afford legal assistance.
Step 3) Select Incorporators & Directors
Massachusetts requires a minimum of 1 incorporator – the individual(s) responsible for signing/filing the Articles of Incorporation with the state. Pretty straightforward. However, if your nonprofit will be governed by a Board of Directors vs. members things can get more interesting.
Initial Directors are recruited to oversee the nonprofit while it’s being formed, then when you conduct your initial meeting in Step 7 directors are voted on/in. While the state only requires one director, more are advised - treasurer, president, secretary, etc. If possible it’s a good idea to either hire the best nonprofit lawyer you can afford or partner with professional incorporation services who can provide expert assistance in terms of incorporators and directors.
Step 4) Draft Nonprofit Bylaws
Your nonprofit bylaws are your rules. They determine how your organization is governed and structured. All incorporated nonprofits need them because if they aren’t in place the default state rules take over which may not be helpful. Common bylaws cover topics like:
- 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 nonprofit organization formalities in the state of Massachusetts.
Step 5) File
Once all the previous steps are covered, and you and your board/members are ready, incorporators should sign and file Articles of Incorporation (here's a link to the PDF Form) with the Sec. of State. Information you’ll need includes:
- The name, type, duration of existence, and statement of purpose (provisions for nonprofit 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.
Filing Fee: $35
Step 6) Start A Nonprofit Records Books
If you’re audited, a corporate or nonprofit records book/binder is what you’ll need to show the IRS. In fact, if there are any kind of disputes it is the records book which should contain documents covering the matter either through contracts, bylaws, minutes of meeting, tax forms, legal notices, receipts of major transactions, and so on.
As the name of the book implies, it’s a record holder of your MA registration, licenses and permits, and other critical paperwork. They’re very common in conjunction with modern “cloud-based” storage. You can pick one up at nearby office supply stores, online through Amazon, or for $99 get a professional Corporate Kit which you can brand and customize.
Step 7) Conduct Initial Meeting
Also called the organizational meeting, the first meeting of the board of directors marks the beginning of your nonprofit. In this meeting, you must decide on important matters including:
- Nonprofit bylaws approval,
- Designation of officers and committees,
- Nonprofit accounting and tax period,
- Approval of initial transactions and establishing a corporate bank account (Step 10).
Step 8) Get An EIN
What’s an EIN? For all legally registered business entities, as well as nonprofit entities, they are a 9-digit federal “Employer Identification Number.” It’s used to track your business activity to ensure compliance, allow you to set up an official bank account, legally hire team members/employees, and so on.
While in the past it used to be a bit of a pain, these days you can get one quick, free, and easy by submitting an application online directly through the IRS Website.