How to Form a Nonprofit in New Jersey

Two people forming a nonprofit in New Jersey

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OVERVIEW

For-profit organizations are started with the goal of financial gains. Nonprofit corporations are started with the intent for social change.

Most nonprofit organizations apply for federal 501(c)(3) status because getting the 501(c)(3) status has many advantages such as tax exemptions, special rates on bulk mailings, and tax-deductible donations.

NOTE: A 501(c)(3) nonprofit is an organization that has been designated as a ‘nonprofit’ by the state government and as a ‘501(c)(3)’ organization at the federal level.

This guide will show you how to form a 501(c)(3) Nonprofit Public Charity in New Jersey. Read our detailed guide, or if you want to get started right away, you can download the required paperwork.

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

Formation & Regulations

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 New Jersey.

 

1. Naming Guidelines

  • The name that you pick for your organization must include "a New Jersey Nonprofit Corporation", "incorporated”, "corporation”, or “corp”.
  • You can read the official guidelines for the complete rules on naming a New Jersey based organization.

 

2. Is the name available?

The name of your nonprofit must be distinct from that of any other corporation in New Jersey. Use the New Jersey Department of Treasury’s Business Records Service 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 New Jersey is required to have a registered agent with a New Jersey 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 New Jersey or a corporation, such as a registered agent service, authorized to transact business in New Jersey. You may elect an individual within the company including yourself.

Need Help?

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 New Jersey MUST include:

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

NOTE: One person may hold two or more officer positions, however, if a document requires signatures of two officers, it must be signed by two different people.

 

File Article of Formation

Step 4) Public Records Filing for New Business Entity

To become a nonprofit corporation in New Jersey, you must file a Public Records Filing for New Business Entity with the state's Department of the Treasury.

Here are the sections that you will need to complete:

Section 1) Entity Name and Type
Enter the name you selected in Step 1.

Section 2) Type of Business Entity
Put in the state code for your type of organization.

The code for domestic nonprofits is ‘NP’.

Section 3) Business Purpose
Describe the purpose of your nonprofit organization.

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 4) Stock
Leave this section blank for your nonprofit.

Section 5) Duration
If your organization is planning to be in existence for a fixed amount of time put the end date here.

Most organizations are not started with an end date in mind. If this is the case for your nonprofit, leave this space blank.

Sections 6 & 7) Leave Blank
If you are starting a domestic nonprofit, you can leave these sections blank.

Section 8) Contact Information
Write in the name and address of the registered agent you selected for your organization in Step 3. All official correspondence will be sent to this address.

Section 9) Management
Write the Names and Addresses of at least three of your trustees from Step 3.

Section 10) Incorporator
The incorporator can be any person helping the nonprofit incorporate. This can be you or your attorney. The incorporator does not need to be a part of the nonprofit.

Section 11A) Domestic Nonprofit Corporations
You can select “As set forth in the by-laws” for 1a, 1b and 2.

For 3, 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.

 

You can file online or submit the completed form along with a cover letter and a self-addressed stamped envelope to:

Secretary of State Address

New Jersey Dept. of the Treasury
Division of Revenue/Corporate Filing Unit
PO Box 308
Trenton, NJ 08646-0308

 

Information: (609) 292-9292
Fax: (609) 984-6849
Website: www.state.nj.us/njbgs/

There is a $75 processing fee with an additional $3.50 convenience fee if you apply online and pay by credit card.

FAQ:

How long does it take to process the paperwork?
If you file online it typically takes about 1-2 business days. If you file by mail expect it to take multiple weeks. If you are willing to fax or have the documents hand-delivered, you can get them processed in 1 hour for $1000, or in 2 hours for $500.

Operating Procedures & Housekeeping

1) Get a New Jersey State Tax Identification Number

Within 60 days of filing as a new business entity, your organization will need to apply for a New Jersey Taxpayer Identification Number using Form NJ-REG Business Registration Application.

You can file online or submit the application to

New Jersey Department of Revenue
Client Registration
P.O. Box 252
Trenton, NJ 08646-0252

Information: (609) 292-9292
Fax: (609) 292-4291
Website:
www.state.nj.us/njbgs/ 

Filing Fee: $0

 

2) 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

3) 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

4) 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 with the Secretary of State (Step 4), you can easily apply for an EIN for your nonprofit via the IRS online application. This is the fastest method as you’ll get your EIN as soon as you complete the application.

NOTE: If you use a nonprofit formation service, EIN assistance might already be included in the package.

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 Public Records Filing

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:

  • The Public Records Filing
  • 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 will need to apply to the IRS to be exempt from taxes federal taxes (501c3 status). In New Jersey, a registered incorporated nonprofit is automatically exempt from the state’s corporate business tax.

 

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 Public Records Filing for New Business Entity with the required provisions (As covered in Step 4, Sections 3 & 11A)
  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

As a registered incorporated nonprofit, your organization is automatically exempt from the New Jersey Corporation Business Tax. You may request an official confirmation of this from the NJ Department of Treasury Division of Taxation

Regulatory Services Branch
New Jersey Division of Taxation
PO Box 269
Trenton, NJ 08695

Information: (609) 292-5994
Website:
http://www.state.nj.us/treasury/taxation/exemptcbt.shtml

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. Official Name of your nonprofit
  2. Your Signature
  3. Your full legal name
  4. Your position in the organization

Keep Your Nonprofit Compliant

New Jersey Business Licenses

Business licenses in the state of New Jersey are regulated by individual counties and cities. Contact your local city clerk’s office to find the requirements for your organization in your area.

You can also use the Small Business Administration’s Business License & Permit Lookup tool.

 

Rules for Soliciting for Donations

If your organization will be collecting more than $10,000 in charity, you must register as a charity using the CRI-200 Short. Your registration must be renewed every year, 6 months after the close of your fiscal year. 

 

Employees

If your organization will have employees you must register with the New Jersey Department of Revenue.

You can easily apply online or contact the Department of Revenue at:

New Jersey Department of Revenue
P.O. Box 252
Trenton, New Jersey 08646-0252

Information: (609) 292-9292

Division of Taxation - Withholding Information: www.state.nj.us/treasury/taxation/freqqite.shtml

Department of Labor and Workforce Development: lwd.dol.state.nj.us/labor/ea/empinfo/eainfoindex.html

NOTE: This registration may also be completed in paper form using Form NJ-REG

You can refer to the Department of Labor and Workforce Development's Employer Handbook for additional information.

 

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.