Last Updated 06 September 2017 | By:

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

How to Use this Guide

Use the guide below to form a 501(c)(3) nonprofit in Massachusetts. 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

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: $30

Step 2) Appoint A Registered Agent

Choose 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 Harbor Compliance (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

Choose the Initial 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

Register an LLCYour 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.

Be sure to read through Section 17 in the statutes pertaining to bylaws, and if this is all new to you, use a savvy Corporate Bylaws Template which you can customize for your nonprofit and get an idea of the paperwork-side of bylaws.

Step 5) File

Business Licenses

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

File Annual Reports & Publication RequirementsIf 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

Hold a Meeting with Your Board of DirectorsAlso 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).

Make sure that you prepare the minutes of the meeting; your attending board of directors will need to sign the document. If needed, check out a great Corporate Minutes Template which you can customize.

Step 8) Get An EIN

Get an EIN for Your LLC

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.

Step 9) Handle Licensing & Taxation

Small Business TaxesAfter all the big steps above your nonprofit should be ready to obtain the proper licensing/permits as well as tax-exempt status to become 100% compliant on the local, state, and federal levels.

  1. File a Form 1023 federal tax exemption application with the IRS.
  2. Get your MA tax exemptions after obtaining IRS 501(c)(3) exemption – visit the Dept. of Revenue page.
  3. Depending on your operation, you may need to register for fundraising through the Attorney General.
  4. If you need help, check out Business License Research packages that take care of some legwork.

Because of how well nonprofits and startups work together, you might also consider bookmarking the Boston district office of the Small Business Administration and Mass.gov’s Business Services portal.

Step 10) Setup A Business Bank Account

Best Business Bank Account

When you form a nonprofit, it’s very important to keep all personal and business assets/accounts completely separate. So don’t take this lightly. Where should you start building the financial persona of your project/initiative? Who is offering the best overall services to corporate/nonprofit clients, relative to location and other conveniences?

If you think it’ll be helpful, look into this short breakdown of Business Checking Accounts to start brushing up if all this is unfamiliar territory. Where your nonprofit banks is a critical move, which is why it should be discussed at length in your initial meeting.

Need Help?

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