State Incorporation Is Not Tax-Exempt Status — Do Both, In Order
This plan walks through the two-step process most new founders get backwards: filing articles of incorporation with your state creates a nonprofit corporation, but it does not make donations tax-deductible — that requires a separate federal application, either the $275 Form 1023-EZ or the $600 full Form 1023, decided by an IRS eligibility worksheet based on your projected receipts and assets. It also covers the nondistribution constraint that defines a nonprofit — no owner, ever — and the three fiduciary duties your board of directors is legally required to carry out.
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Built From Real Numbers
The plan lays out the formation sequence in order — name search, board recruitment, state articles, EIN, bylaws and a conflict-of-interest policy, the 1023-EZ eligibility screen, state charitable-solicitation registration, and a separate nonprofit bank account — with real IRS processing-time data (about 22 days for a straightforward 1023-EZ, up to 191 days for a full 1023).
It also covers the mistake that ends nonprofits with no warning: missing the annual Form 990-series filing three years running triggers automatic revocation of tax-exempt status, with no grace period and no hearing.
What's Inside
- Formation Sequence Checklist from name search through bank account
- 1023-EZ Eligibility Screen worksheet (receipts, assets, and disqualifying categories)
- Board of directors fiduciary-duty explainer: care, loyalty, and obedience
- Funding Mix Tracker to avoid single-source dependency
- Unrelated Business Income Tax (UBIT) explainer for earned-income programs
- Annual Compliance Calendar for Form 990, state reports, and solicitation renewals
- Common first-year mistakes: informal founder pay, missed filings, single-source funding
- The smallest legitimately operating nonprofit this guide describes, and how to start there
