Step 1) Secure Your Non-Profit Name

Choose a Business NameFirst, let’s verify and secure your non-profit organization’s brand name. Use the Alabama Business Entity Search system to check for any naming conflicts, then for trademark searches you’ll want to check on both state and federal levels.

After that, conduct a Trademark Search through the state and USPTO (federal).

Once you’ve verified and secured your name (a suffix isn’t required), you must file a Name Reservation Request form with the Secretary of State of Alabama before filing your Certificate of Formation in Step 4.

Filing Fee: $10 Standard, $25 Expedited, or $28 Online

Step 2) Appoint A Registered Agent

Choose a Registered Agent

A registered agent is either an individual Alabama state resident or registered business entity that officially receives very important documents on your non-profit’s behalf – state filing, tax forms, legal notices, etc.

The other two important requirements are:

  1. Your agent will need a physical Alabama street address.
  2. They should be available during all regular business days/hours.

That said, you can hire an outside professional service and pay up to $160/year, or get an agent free of charge when you incorporate with IncFile or BizFilings. They handle this and much more depending on your startup package.

Step 3) Select Incorporators & Directors

Choose the Initial Directors

Incorporators are the individuals responsible for executing the Certificate of Formation with the state which officially declares the entity. Alabama only requires one. Then you’ll need to appoint at least 3 directors who among other things will oversee the non-profit until the first meeting where official directors can be voted on.

This part can be somewhat 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 a professional service. They can help you understand the ins and outs of choosing initial directors and so much more. Neither are required, but are highly recommended.

Step 4) Draft Corporate Bylaws

Register an LLC

These are the operations and procedures that will govern your non-profit organization, some of which will be stated in your Certificate of Formation, for example how to handle assets upon dissolution. Think of these as your internal rule book, which are obviously very important. Some of the issues covered should include:

  • Holding meetings,
  • Electing officers and directors,
  • Keeping and managing your records (see Step 6),
  • Adding/Amending bylaws,
  • How to handle other corporate formalities required in Alabama.

To get started, use a savvy Corporate Bylaws Template with an example that you can customize yourself.

Step 5) File Certificate Of Formation

How to Choose a Business Structure

Filing a Certificate of Formation establishes your corporate entity. Some is basic information, but you must have other language that differentiates your non-profit from a for-profit corporation as well:

  • 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: $100 or $200 for Expedited Service

Step 6) Start A Corporate Records Book

File Annual Reports & Publication Requirements

While not mandatory, this is very common practice among corporations/non-profits because of the nature of these business entities. It’s in this book you should keep all critical paperwork to ensure you’re well-organized, to protect your status legally, and come across professionally.

As the name of the book implies, it’s a record holder of your Alabama registration documents, licenses and permits, minutes of meetings, and other important documents. You can find them at nearby office supply stores or on Amazon, but we’re huge fans of Corporate Kits which include gorgeous records books/binders you can brand for as little as $99.

Step 7) Conduct Initial Meeting

Hold a Meeting with Your Board of Directors

Your first meeting with the initial directors will be an organizational meeting where the agenda covers specific rules and guidelines that you’ll use to keep things running smoothly including:

  • Appointing Officers and Directors;
  • Approving/Amending Bylaws;
  • Setting a tax year as well as an accounting period;
  • Approve initial transactions and more.

You’ll need to record “minutes” of the meeting and have it signed by all attending directors. Here’s a list of Corporate Minutes Templates you can customize and use to get the ball rolling.

Step 8) Get an EIN

Get an EIN for Your LLC

An EIN is a federal Employer Identification Number, which for non-profits is used primarily for processing taxes and tracking your financial activity to ensure it’s legal on both federal and state levels.

It’s similar to a social security number but for business entities, that among other things allows you to legally hire employees and set up a bank account in the next step. You can get one free and easy by submitting an online request through the IRS Website.

Step 9) Handle Licensing & Tax Exemptions

Small Business TaxesAt this point you should be able to cover these two bases at once – requesting exemptions for your non-profit on the federal level and taking care of any state licensing/permit issues. To get started:

  • Download IRS FORM 1023: Application for the Recognition of Exemption under Section 501(c)(3).
  • Or Form 1023-EZ: streamlined form but must be under $50k annual gross receipts and $250k in assets.
  • Bookmark the AL Non-Profit Assoc. and the Dept. of Revenue to get more specific information.
  • Contact the Attorney General and review polices for fundraising activities and registration requirements.

You might also consider bookmarking the Birmingham Small Business Admin office and the Dept. of Revenue’s Business Licensing section because they’re going to have plenty of valuable resources and information. If you need more help and can’t afford a legal team, look into professional Business License Research packages that can quickly get all needed documents for you and provide helping filing instructions.

Step 10) Setup A Business Bank Account

Best Business Bank Account

Ideally, during your first shareholder meeting you spent some serious time going over where to bank and set up your non-profit’s financial foundation. With so many different banks and credit unions (local, state, national) with tons of different fee structures, incentives, kickbacks, and other business services this shouldn’t be taken lightly.

The other issue is to make sure non-profit (corporate) accounts aren’t connected or mixed with any accounts of any other kinds (business or personal). It should be a dedicated and separate account for easy financial tracking and tax purposes synced with your accounting software.

Need Help Forming Your Organization?

If you’d like help forming a nonprofit, here are two great options:

Swyft Filings ($49 + state fees) is ideal if you’re on a budget but refuse to sacrifice quality. However if you’d like to have access to an attorney past nonprofit formation, Rocket Lawyer ($99 + state fees) is the best option.

Visit Swyft Filings Or Visit Rocket Lawyer

Note that this article on how to start a non-profit organization in Alabama 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 start a non-profit organization in Alabama or business in general, please consult with a non-profit/corporate lawyer or other accredited professional.