How to Start a nonprofit corporation in North Dakota

Now that you have decided to start a nonprofit, you need to determine the charitable mission and purpose for the business. In order to comply with IRS regulations, it's important that your business is organized for an exempt purpose. Your business may not engage in political activities and must not overcompensate its members.

The next step will be to decide on a name for your business. Choose a name that is memorable and unique, easy to understand and pronounce, and accurately represents your business. You'll want to search your name choices online to quickly find out if they are already taken. It's also best to jot down one or two alternatives, in case the name you settle on is not available for registration in North Dakota.

There are a few rules that North Dakota Nonprofit Corporations must follow in order to register a name. The name you choose must be unique and not "confusingly similar" to the name of any other North Dakota business. This is to prevent fraud or misrepresentation and is a common rule in all 50 states.

You can find out whether a name is available in North Dakota by utilizing the North Dakota Secretary of State's Business Records Search Opens in a new window function. Enter the first few words of a business name, or any significant word in a business name to begin your search and see if there are any possible conflicts.

Most states require that you designate a registered agent for your business, and North Dakota is no exception. A registered agent acts as the state's means to communicate with a business and is responsible for receiving legal and official documents related to the business.

Did you know North Dakota was the first state to adopt the Model Registered Agents Act? In the state of North Dakota, it is required that all entities registered with the Secretary of State must maintain a commercial or noncommercial registered agent and address in North Dakota. A P.O. Box is not accepted as a registered agent address. A member of the LLC can act as the registered agent if desired, or you may also use a third-party registered agent service like MyCorporation.

Why designate a third party to act as my registered agent?

It should be noted that registered agent information is made publicly available. This can cause privacy concerns for business owners who do not wish to list their personal contact information on the internet for everyone to see. It is also common for the registered agent to become a target of spam or robocalls since this private information is relatively easy to obtain.

Another issue that may arise is that in the case of a lawsuit, these documents would be hand delivered directly to the registered agent. In the case that you used your business location for this purpose, this could occur in front of your customers. This is why many business owners opt for a third-party registered agent service such as MyCorporation to act as a registered agent on behalf of their business.

The state of North Dakota requires you to file Articles of Incorporation to form a nonprofit corporation.

What information should be included in the Articles of Incorporation?

This document includes basic information about the North Dakota nonprofit corporation such as:

• Name of the nonprofit corporation
• Address of principal executive office
• Name of commercial registered agent in North Dakota
• Address of noncommercial registered agent in North Dakota
• Purpose for which corporation is organized
• Name and address of each incorporator
• Signature and date for each incorporator

A filing fee of $40 is also required when submitting the Articles of Incorporation. Payments must be made payable using checks or credit cards and submitted to the Business Registration Unit at the Secretary of State - State of North Dakota.

Bylaws are the detailed set of rules agreed upon and adopted by the board of directors of the nonprofit. Think of these as an instruction manual to run the business. They include rules and procedures related to meetings you will hold, and notes on the ways you will elect officers and directors of the business. While bylaws are not required for nonprofit corporations in the state of North Dakota, it is recommended that nonprofit corporations still maintain and keep a record handy.

If you are not sure how to create corporate bylaws, you can purchase MyCorporation's customized Minutes and Bylaws package. Inside our package you will find internal documents required to fulfill your corporate formalities and properly operate your business after it has been incorporated.

The first board meeting for your business is often referred to as the organizational meeting of the board. During this meeting, the initial directors of the business will adopt the corporate bylaws, set the fiscal year, and appoint corporate officers.

This meeting and all future meetings of the board of directors must be recorded in corporate minutes. Minutes are documents that detail what was discussed and any decisions the business makes during meetings. They are kept with the corporate records.

Corporate minutes are required for all North Dakota nonprofit corporations by law. Falling behind on this critical task can cause your business to fall out of good standing, and even jeopardize its tax-exempt status. It is important to maintain a corporate minute book. Inside you may keep originals or copies of all the signed and approved minutes or Actions by Unanimous Consent from any special or annual meetings of the corporation's shareholders and directors.

An EIN (also referred to as a Federal Tax ID) is a nine-digit number that is issued by the IRS and used to uniquely identify your business for tax purposes. Think of it as a Social Security Number (SSN) for your business, except an EIN is less sensitive. Like an SSN, an EIN allows you to:

• Open business checking, savings, or investment accounts
• File taxes for the business
• Complete payroll for employees if applicable
• Obtain lines of credit and credit cards, and build credit for your business
• Apply for applicable business licenses when required
• File for tax exempt status

You will only need a few pieces of information to file, including your mailing address and legal business name. You can apply online Opens in a new window with the IRS by downloading IRS IRS Form SS-4 (PDF)(116 KB), or work alongside a third party organization like MyCorporation to complete an EIN application.

Your nonprofit corporation is not automatically tax exempt. In order to become tax exempt, you will need to take certain steps to obtain this status. First, you will need to file for exempt status with the Internal Revenue Service using either Form 1023 (PDF)(866 KB) Opens in a new window or Form 1024 (PDF)(360 KB), depending on the classification of your organization.

In some cases, you may be eligible to file Form 1023-EZ Opens in a new window, a streamlined version of the application for recognition of tax exemption. You can avoid a $25 fee if you file for federal tax exemption before filing with the state.

Once your filing with the IRS is complete, they will send you a Determination Letter that officially recognizes your nonprofit's tax exempt status. To gain the same exemptions at the state level, fill out Form CT-247 (PDF)(191 KB): Application for Exemption from Corporation Franchise Taxes by a Not-for-Profit Organization with the New York State Department of Taxation and Finance. There is no fee for this form.

You can learn more about the process directly from Publication 557 from the IRS (PDF)(2.1 MB).

It is advised that your nonprofit corporation checks in with the North Dakota Secretary of State for this section. The state will further detail if your nonprofit corporation needs a solicitation permit and the charitable solicitation laws set throughout the United States.

Which licenses and permits are required to operate a business in North Dakota? You may refer to the Licensing Information page of the North Dakota State Government for a full list of business licenses necessary to run a small business.

All businesses are required to file for a general business license (sometimes referred to as a business tax certificate) in the state of North Dakota. If you plan on operating your nonprofit in multiple cities, you will need to apply for a business license in each location.

Additional permits may be required along with a general business license and are to be filed with the county or state. You can find out about the specific licenses applicable to your business by checking with the city offices where you will conduct business, or by using MyCorporation's business license compliance package. Our team of skilled professionals will identify the licenses required by your nonprofit and provide you with all the information you need to file.