STEP 1) SECURE YOUR NON-PROFIT NAME

Choose a Business Name

To secure and register your brand name it must be unique, not too similar to another registered Vermont name, and shouldn’t contain any restricted wording. To check for naming conflicts, conduct a Business Entity Search through the state.

Please note that in VT the name of your non-profit should contain the word or abbreviations “corporation” (Corp), “incorporated” (Inc), “company” (Co), or “limited” (Ltd). Also, note that your non-profit name cannot contain the word “cooperative” or “coop” unless duly registered with the Sec. of State as a “cooperative corporation.” If needed, you can file an Application to Reserve Specified Business Name form to protect it that’s good for 120 days.

Filing Fee: $20

STEP 2) APPOINT A REGISTERED AGENT

Choose a Registered Agent

A registered agent can be an individual resident of the state or a legally registered business entity with a physical street address and regular M-F business hours. On behalf of your non-profit they receive and help process important business documents like state filings, tax forms, legal notices and so on. They’re essential and required by law in many cases.

That said, you can hire an outside professional and need to invest up to $160/yr, or get a registered agent free of charge for the first year when you incorporate with IncFile or BizFilings. It’s a service we highly recommend to new non-profits that need help but can’t afford legal assistance.

STEP 3) SELECT INITIAL OFFICERS & DIRECTORS

Choose the Initial Directors

Incorporators are the individuals responsible for executing the Articles of Incorporation (Step 6) with the state which officially declares the entity. Vermont only requires one. Then you’ll need to appoint a number of directors depending on your specific entity:

  • Public or Mutual Benefit Corporations (at least 3)
  • Marketing Co-Op (at least 5)
  • Worker, Housing, Consumer or Railroad co-op (at least 3)

This part can be complex because of the legal/tax nature of non-profits which is why it’s a good idea to either hire the best non-profit lawyer you can afford or work with professional service providers. They can help you understand the ins and outs of choosing initial directors and so much more.

STEP 4) DRAFT NON-PROFIT BYLAWS

Register an LLCIn order to become an incorporated not-for-profit business entity (vs. unincorporated and zero legal protection), your brand will need official bylaws which not only govern the way it’s run but also provides a path to where it’s headed!

  • How exactly the non-profit is governed – by board or membership.
  • How meetings are held, voting procedures, electing officers or directors.
  • Keeping and managing your records.
  • Adding/Amending bylaws and handling disputes.
  • Keep in mind that any changes to these bylaws will need to be reported to the IRS.

To get started, check out this savvy Bylaws Template so you can get an idea for how they’re structured and how you can begin customizing the default corporate form to suit your non-profit.

STEP 5) FILE ARTICLES OF INCORPORATION

Business Licenses

Once all the previous steps are covered, and you and your board/members are ready, file Articles of Incorporation (specific links to PDF forms at the bottom of the page) with the Sec. of State. Information you’ll need includes:

  • The name, type, duration of existence, and statement of purpose (provisions for non-profit 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: $125

STEP 6) START A CORPORATE RECORDS BOOK

File Annual Reports & Publication Requirements

Where will your non-profit keep a record of all it’s critical paperwork so it can quickly show state or federal agencies that it’s organized and being run in a legal way? For example, if there was an audit. Along with “the cloud” and conventional filing cabinet folders, we advise having a physical records book as well.

This is where to keep copies of your Vermont registration documents, major transactions, licenses and permits, minutes of meetings, important contracts, etc. You can find them at nearby office supply stores, grab one online through Amazon, or get sleek beautiful Corporate Kits which include records books/binders you can brand for as little as $99.

STEP 7) CONDUCT INITIAL MEETING

Hold a Meeting with Your Board of Directors

Now it’s time to conduct your first non-profit meeting which is going to be very organizational/foundational in nature. Don’t forget to record “minutes” of the meeting and have it signed by all attending directors. Here’s a Corporate Minutes Template to get the ball rolling. The Agenda should look something like this:

  • Take attendance and show you have a quorum (minimum number needed).
  • Appoint temporary officers, chairmen, secretary, etc.
  • Adoption of the bylaws set down in Step 4.
  • Where to set up a bank account (Step 10), file state reports, etc.

Those are the basics, but depending on the nature of your non-profit and how many members/directors are at the meeting there could be a lot more to discuss. It’s a huge move in the right direction though, so celebrate afterwards!

STEP 8) GET AN EIN

Get an EIN for Your LLC

What’s an EIN? For all legally registered business entities, as well as non-profit 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 & EXEMPTION

Small Business Taxes

Now’s the point to ensure your non-profit 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 amazing resources to bookmark or get involved with would be the Montpelier district office of the Small Business Administration and the state’s chapter of the SBDC because they’re connected to every kind of service you can imagine, including tons of charitable organizations.

STEP 10) OPEN A BUSINESS BANK ACCOUNT

Best Business Bank Account

When you form a non-profit, 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/non-profit 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 non-profit banks is a critical move, which is why it should be discussed at length in your initial meeting.

OPTIONAL) WORK ON A FUND-READY PLAN

Write a Business Plan

What’s the first thing VC-types, angel investment funds, fellow non-profit organizations, banks, and CrowdFunders want to see when you approach them for a serious partnership or funding? That’s right, your plan. They want to know you’re a serious operation. They want to see your marketing approach, executive summary, pitch, statement of purpose, outreach goals, etc. They want to see your numbers!

Will you need it on day 1? Perhaps, some non-profits have partnerships waiting for when they become a business entity. Most will need their plan polished and funding/presentation-ready within the first 6 months or so. Thankfully these days software is making the process simpler and less expensive.

QUICK LINKS TO NON-PROFIT PLANNING

OPTIONAL) PUBLISH A RESPONSIVE WEBSITE

Build a Business Website

If there’s already a web designer on your team and your project/initiative’s site is already published, great! For those new non-profits who have done everything above but don’t have one, we understand it can be daunting. Should you outsource? Yes, probably. Look for a passionate volunteer with skills!

It’s worth it to find someone who understands website-builder platforms like WordPress, Wix, or SquareSpace that’s also aligned with your impact goals. These days you don’t need to spend as much or hire full-time developers to get a basic landing page or agency-style site. Check out Trey Gardner’s How to Make A Website tutorial to see what we mean.

Need Help Forming Your Organization?

Have a reliable incorporation service like IncFile or LegalZoom do the work for you. Just answer a few questions about your organization and they’ll take care of the paperwork.

Visit IncFile Or Visit LegalZoom

Note that this article on how to form a Vermont non-profit organization isn’t a legal document or legal advice. It’s for informational purposes and the information above is subject to change. For specific legal questions regarding how to form a Vermont non-profit organization or business in general, please consult with a non-profit/corporate lawyer or other accredited professional.