Last Updated 16 August 2017 | By:

How To Form a 501(c)(3) Nonprofit In North Carolina

How to Use this Guide

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

It is essential that you secure the name for your nonprofit. The name provides a glimpse into what your organize is about. The name will reflect your mission statement vs. giving the wrong idea or coming off as deceptive.

Action Steps:

  1. Secure a great “brand name” for your nonprofit that’s unlike any other entity registered with the state.
  2. Conduct a Business Entity Search through the Secretary of State to ensure there aren’t any naming conflicts.

There are a fair amount of other state-specific stipulations that you should take the time to understand. The issue is that if the name isn’t right and accepted, your Articles of Incorporation (Step 5) will be rejected. Please bookmark Article 3 in the NC statutes to get complete information on naming your nonprofit organization.

TIP: If needed, you can file an Application to Reserve a Business Entity Name that’s good for a decade as well.

Step 2) Appoint A Registered Agent

Choose a Registered Agent

All incorporated nonprofits, along with business entities, must have a “statutory agent” or registered agent to officially receive critical paperwork on their behalf. This is so that you’ll always get them on time and there won’t be any hiccups with state filings or legal notices.

  • Must be a citizen of the state of North Carolina,
  • Must have a non-P.O. Box street or office address in North Carolina,
  • Must be available during business hours (9am to 5pm) Monday to Friday.

Action Step: Appoint or find a registered agent

So you can hire a 3rd party professional and expect to pay up to $160/year, or get a NC Registered Agent free of charge when you incorporate through Harbor Compliance (see details). They handle this along with much more depending on your startup package.

Step 3) Select Incorporators & Directors

Choose the Initial Directors

An incorporator, and there can be more than one, is responsible for “executing” the Articles of Incorporation with the state in Step 5.

Pretty simple and the only real requirement is that they be over 18 year of age. Directors on the other hand bare far more responsibility. For now you’ll be recruiting at least one temporary director (more are recommended) to oversee the organization until in Step 7, you vote in the official directors of the board.

This is where the process can get complex, legal-heavy with corporate formalities, so it’s a good idea to work with either a nonprofit lawyer or an incorporation service who can help guide you and your team through this part of the process. If it’ll be helpful, here’s a link to the Guidebook for Boards of Directors of North Carolina Nonprofit Corporations.

Step 4) Draft Nonprofit Bylaws

Register an LLC

Bylaws are the rules/stipulations/regulations you write for how your nonprofit will be governed and managed along with the many other formalities that come along with having a board of directors vs a nonprofit that’s run expressly by members or volunteers. Common bylaws cover topics like:

  • How meetings are to be conducted and how often (monthly, by-monthly, yearly, etc.)
  • How new officers and directors are elected and their responsibilities.
  • How voting takes place, how disputes are handled, and how records are kept.
  • Adding/Amending bylaws (any changes must be reported to the IRS after incorporation).

Action Step: 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 Articles Of Incorporation

Business Licenses

If you’re ready to officially form your nonprofit corporation, be sure everything is correct with your Articles of Incorporation and have your incorporators sign/file them with the state. There’s instructions on the document itself, but feel free to bookmark the entire Chapter 55a of the North Carolina Nonprofit Corporation Act because it outlines all the finer details.

At the link above it takes you to the Secretary of State site where you’ll be able to download a PDF file. Print it out and make sure you have a copy for your brand new corporate records book we’ll touch on in the next step.

Action Step: File the Articles of Incorporation with the North Carolina Secretary of State’s Office.

Filing Fee: $60

Step 6) Start A Corporate Records Book

File Annual Reports & Publication Requirements

While there are a variety of modern ways to track and compile your nonprofit’s data (contracts, financials, important documents, etc.), what we’re talking about here is a physical records book where you keep copies of this paperwork should it become necessary.

They’re very common. As common in the nonprofit/corporate world as brand logos. Are they required by the state? No, they’re not required.

Action Step: Find or create a corporate records book. You can pick one up at pretty much any office supply store or online through Amazon of course, but we’re huge fans of savvy-sleek Corporate Kits which include gorgeous records books, binders, blank certificates and more which you can brand for as little as $99.

Step 7) Conduct Initial Meeting

Hold a Meeting with Your Board of Directors

Like the Articles of Incorporation, this part of nonprofit work can get very formal and complex for beginners trying to navigate the semi-corporate structure of conducting meetings, electing directors, discussing bylaws, and going through the motions so to speak. Your first meeting however should cover topics like:

  • Approving or Amending the bylaws written down in Step 4, and establishing this process for future meetings.
  • Appointment of officers like secretary, treasurer, CEO, etc., as well as committee management.
  • Setting a nonprofit accounting and tax period and appointing a CFO,
  • Approval of initial transactions and approval of setting up a corporate bank account.

Don’t forget to record “minute of meeting” take roll call, record everyone’s name, and have it signed by all attending directors then add this to your new records book.

Step 8) Get An EIN

Get an EIN for Your LLC

Getting an EIN, or Employer Identification Number, is one of the easiest parts of this entire process.

It’s a 9-digit number that’s used to keep track of your financial activity to ensure legality and compliance. Once you have one you can hire paid employees if needed, or a part of your organization, and set up an official bank account.

Action Step: Almost every transaction your nonprofit engages in will require an EIN. That said, you can get one quickly and free of charge by applying online through the IRS Website.

Step 9) Handle Licensing & Exemptions

Small Business Taxes

At this point your nonprofit corporation should be established, so now it’s time to handle any licensing/permit requirements and apply for tax exempt status. While we advise consulting a lawyer, here are some steps you can take to get the ball rolling:

  • 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.

Two other great resources it might be worth it to add to your bookmarks are the Charlotte district office of the Small Business Administration and the state’s Small Biz Development Center because they’ve got plenty of helpful information and connection to not only resources but the people of NC as well.

Action Steps:

  1. Check on and comply with licensing and permit requirements.
  2. Apply for tax exempt status

If there are legal questions, consult your attorney.

Step 10) Setup A Business Bank Account

Best Business Bank Account

At first glance this might seem like a trivial step, but it isn’t. Far from it actually, because the differences from one bank to another, from one credit union to another, can be huge when you consider their impact (along with other financial services they offer nonprofits) over the first three years.

Consider fees, interest levels, charges for using this and that service, and everything else that happens with the money your nonprofit deals with.

If this will be your first time setting up shop, a) check out this quick breakdown of Nonprofit Accounts, and b) make sure to keep this account completely separate from all other accounts.

Don’t muddy the pristine water of your financials and put everything at risk of causing an audit by the IRS or wasting precious resources.