Starting a Nonprofit Corporation in Arizona 2024: Your Step-by-Step Guide

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How to Start a Nonprofit Corporation in Arizona

Are you passionate about making a difference in your community? Starting a nonprofit organization in Arizona can be a fantastic way to create lasting change and positively impact the lives of those around you. However, navigating the legal and regulatory requirements of starting a Nonprofit Corporation can be daunting, especially if you are new to the process.

This guide aims to simplify the process of forming a Nonprofit Corporation in Arizona by providing a step-by-step approach to ensure that your organization is set up for success from the start. At LLCBase, we understand that forming a nonprofit corporation can be an overwhelming experience, so we are here to help you achieve your goals every step of the way.

Start a Nonprofit Corporation

What is a Nonprofit Corporation

A Nonprofit Corporation is a legal entity organized and operated for purposes other than profit-making. The primary goal of a Nonprofit Corporation is to serve the public interest, promote a specific social cause, or support a charitable, religious, educational, scientific, or artistic mission. Unlike traditional for-profit corporations in Arizona, Nonprofit Corporations do not distribute profits to shareholders or owners. Instead, surplus funds are reinvested into the organization to further its mission and objectives. When starting a nonprofit corporation, consult the best formation service in Arizona to assist you.

Nonprofit Corporations are granted special tax-exempt status under Section 501(c) of the Internal Revenue Code in the United States, which exempts them from federal income taxes. Nonprofit Corporations may also be eligible for state and local tax exemptions. This tax-exempt status allows Nonprofits to receive tax-deductible donations and grants, making it easier for them to raise funds for their cause.

Some common types of Nonprofit Corporations include charities, foundations, social welfare organizations, trade associations, and religious institutions. These organizations play a vital role in society by addressing various social, environmental, and cultural issues, providing essential services, and enhancing the overall quality of life for communities.

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Steps to Form a Arizona Nonprofit Corporation

Below is an extensive overview of the steps to initiate a nonprofit corporation in Arizona:

Step 1. Choose a Name

The first step in starting a Nonprofit Corporation in Arizona is choosing an appropriate name for your organization. The name must be unique and distinguishable from other businesses registered in the state. You can conduct a preliminary name search on the Arizona Secretary of State‘s website to check the availability of your desired name. Additionally, the name should not include any prohibited words or phrases, such as “bank” or “insurance.”

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Step 2. Appoint Arizona Statutory Agent

When forming a Nonprofit Corporation in Arizona, you must appoint Statutory Agent in Arizona. The Statutory Agent is responsible for receiving legal documents and correspondence on behalf of your organization. They must have a physical address in Arizona and be available during regular business hours. You can choose an individual or a professional Statutory Agent service to serve in this role.

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Step 3. Appoint Board Members and Officers

In Arizona, a Nonprofit Corporation must have at least three board members responsible for overseeing the management and operations of the organization. The board must also elect officers, such as a president, secretary, and treasurer. It is important to choose individuals who are passionate about your organization’s mission and have the skills to carry out their duties effectively.

Step 4. File Articles of Incorporation

To officially form a Nonprofit Corporation in Arizona, you must file the Articles of Incorporation with the Arizona Secretary of State. The filing fee is $60 for filing in-person and by mail. Your Articles of Incorporation must include the following required provisions:

  • Name of the Nonprofit Corporation
  • Purpose of the organization
  • A statement that the organization is a Nonprofit Public Benefit Corporation
  • Name and address of the Statutory Agent
  • Statement of how the organization’s assets will be distributed upon dissolution

Optional provisions that can be included in the Articles of Incorporation are specific limitations or restrictions on the organization’s activities, indemnification of directors and officers, and any additional information that may be relevant to the organization.

Step 5. Apply for EIN

After filing your Articles of Incorporation, you must obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). This nine-digit number is used to identify your organization for tax purposes and is required when applying for tax-exempt status or opening a bank account. You can apply for an EIN online, by fax, or by mail.

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Step 6. Draft Bylaws and Policy

Bylaws are the internal rules and procedures that govern the operation of your Nonprofit Corporation. They should outline the roles and responsibilities of board members and officers and the process for holding meetings and making decisions. Additionally, your organization should adopt a conflict of interest policy to properly address potential conflicts involving board members or officers.

Step 7. Hold an Organizational Meeting

Once you have drafted your bylaws and conflict of interest policy, you should hold an organizational meeting with your board members and officers. During this meeting, you will adopt the bylaws and conflict of interest policy, elect officers, and make any other initial decisions necessary for the operation of your Nonprofit Corporation.

Step 8. Obtain Licenses and Permits

Depending on the nature of your organization, you may be required to obtain business licenses and permits in Arizona to operate legally. This can include local business licenses, zoning permits, and any specific licenses required for your organization’s activities. Consult your Arizona Department of Revenue for more information.

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Step 9. Register for Arizona State Taxation

While many Nonprofit Corporations are exempt from federal income tax, they may still be subject to Arizona state taxes. You must register with the Arizona Department of Revenue and may be required to file annual tax returns.

Step 10. Register for Charitable Solicitation

If your Nonprofit Corporation plans to solicit donations from the public, you must register with the Arizona Attorney General’s Office. This registration is required before legally soliciting charitable contributions in Arizona.

Fee Schedule for Starting a Arizona Nonprofit Corporation

Here are the fees associated when starting a corporation in Arizona:

  • Articles of Incorporation Filing Fee: $60 for filing in-person and by mail
  • Employer Identification Number (EIN) Application: Free
  • Form 1023 (Application for Recognition of Exemption) User Fee: $600 (for most organizations)
  • Form 1023-EZ (Streamlined Application for Recognition of Exemption) User Fee: $275
  • Statement of Information Filing Fee: $10 if domestic, $175 if foreign

Please note that these fees are subject to change, and additional fees may be applicable depending on the specific requirements of your nonprofit organization, such as obtaining licenses and permits. Always consult the respective agency websites and experts for the most up-to-date information.

Apply for 501(c)(3) Tax-Exempt Status

Once you have successfully formed your Arizona Nonprofit Corporation, the next crucial step is to apply for tax-exempt status under Section 501(c)(3) of the Internal Revenue Code. This status allows your organization to be exempt from federal income taxes and is essential for receiving tax-deductible donations and grants.

  1. Prepare IRS Form 1023 or 1023-EZ: The first step in applying for 501(c)(3) tax-exempt status is selecting the correct application form. Most organizations will use IRS Form 1023, the Application for Recognition of Exemption. However, smaller organizations may be eligible to use the shorter Form 1023-EZ. This streamlined application is only available to organizations with annual gross receipts of $50,000 or less and total assets of $250,000 or less. Review the eligibility requirements on the IRS website to determine which form is most appropriate for your Nonprofit Corporation in Arizona.
  2. Submit the Application: After completing the appropriate application form, submit it with the required user fee to the IRS. The fee will depend on your organization’s size and financial status, so consult the IRS website for the most up-to-date information.Keep in mind that the IRS review process can take several months. During this time, maintain good records and continue to operate your Arizona Nonprofit Corporation in compliance with state and federal regulations. If your application is approved, you will receive a Determination Letter from the IRS confirming your tax-exempt status.
Arizona State Tax Exemption

In addition to federal tax exemption, your Arizona Nonprofit Corporation may also qualify for state tax exemption. To apply, submit Form Form 3500A, Exemption Application, to the Arizona Department of Revenue and the required supporting documentation. If approved, your organization will be exempt from Arizona state income tax and may qualify for exemption from other state taxes.

Ongoing Compliance

After successfully forming your Arizona Nonprofit Corporation and obtaining tax-exempt status, it’s essential to maintain compliance with state and federal regulations. This includes filing annual reports, paying state and federal taxes, and maintaining good records.

  • File Annual Reports: Your Arizona Nonprofit Corporation must file an annual report with the Arizona Secretary of State each year. This report, known as the Statement of Information, is due yearly within a specific time frame based on your organization’s registration date. Failure to file the report on time may result in penalties and suspending your organization’s corporate status.
  • State Taxes: Even with tax-exempt status, your Arizona Nonprofit Corporation may still be responsible for certain state taxes, such as sales tax permits on goods and services sold by your organization. Consult the Arizona Department of Revenue’s website for more information on state tax requirements.
  • Federal Taxes: While your organization may be exempt from federal income tax, you must still file an annual information return with the IRS. This is typically Form 990, 990-EZ, or 990-N, depending on your organization’s size and financial activity. Consult the IRS website for more information on which form your Arizona Nonprofit Corporation should file.
  • Maintain Good Records: Keeping accurate and up-to-date records is essential for maintaining your Nonprofit Corporation’s compliance with state and federal regulations. This includes financial records, meeting minutes, and other organizational documents. Strong recordkeeping practices will help you stay compliant and provide a solid foundation for your organization’s growth and success.

FAQs

What are the steps of starting a nonprofit corporation in Arizona?
The steps for starting a nonprofit corporation in Arizona include selecting a name, appointing a statutory agent, filing Articles of Incorporation, creating bylaws, drafting a Conflict of Interest Policy, filing the Application for an Employer Identification Number, applying for tax-exempt status, and registering for charitable solicitation.
Can I start a nonprofit corporation with only one member?
Yes, Arizona law allows for a nonprofit corporation to have only one member.
What is a statutory agent?
A statutory agent is a point of contact for a corporation who can accept legal papers on behalf of the nonprofit corporation. They must be located in Arizona.
How do I find a statutory agent for my nonprofit corporation?
You may have a member serve as the statutory agent or hire a professional registered agent service to fulfill statutory agent requirements.
Are there any restrictions on naming my nonprofit corporation in Arizona?
Yes, your corporation name must not be already taken or used in Arizona. You can check availability on the Arizona Corporation Commission database.
What should be included in the bylaws for an Arizona nonprofit corporation?
Bylaws for an Arizona nonprofit corporation should include the rules and procedures for things like meetings, officer positions, voting, and decision-making.
Does the bylaws of a nonprofit corporation need to be filed with the state of Arizona?
No, the bylaws do not need to be filed with the Arizona Corporation Commission but should be kept with the corporation’s other official documents.
What is a Conflict of Interest Policy?
A Conflict of Interest Policy is a written statement that addresses how the nonprofit corporation will handle any potential conflicts of interest that may arise.
How do I file Articles of Incorporation for an Arizona nonprofit corporation?
You can file online via the Arizona Corporation Commission website or by mailing in the completed form along with the appropriate filing fee.
How much does it cost to file Articles of Incorporation for an Arizona nonprofit corporation?
The filing fee for Articles of Incorporation is $40 for online submission and $60 for mail-in submission.
How do I obtain an Employer Identification Number for my Arizona nonprofit corporation?
You can obtain an EIN from the Internal Revenue Service by completing the required application on the IRS website or by mailing in Form SS-4.
Are Arizona nonprofit corporations required to apply for tax-exempt status?
No, it is not mandatory to apply for tax-exempt status, but it may be beneficial for tax relief purposes and donor contributions.
How does an Arizona nonprofit corporation apply for tax-exempt status?
An Arizona nonprofit corporation must file IRS Form 1023 with the Internal Revenue Service.
What are the relevant laws and regulations in Arizona governing nonprofit corporations?
The Arizona Nonprofit Corporation Act governs nonprofit corporations in Arizona.
Are there any unique benefits to incorporating a nonprofit corporation in Arizona?
Arizona offers a warm climate, active communities, generous residents and opportunities for vast and varied expansion.
What are the main reasons to start a nonprofit corporation in Arizona?
Some reasons you may want to start a nonprofit corporation in Arizona include serving the community, fulfilling a personal mission, and gaining access to government funding and grants.
How long does it typically take to get approval of a nonprofit corporation’s application for tax-exempt status?
It can take anywhere from a few weeks to several months to get approval for a nonprofit corporation’s application for tax-exempt status, depending on the complexity of the application.
Who should I contact for more information about starting a nonprofit corporation in Arizona?
The Arizona Corporation Commission is in charge of nonprofit corporations in Arizona. Additional information may be found on their website.
Is there a required minimum number of members needed to form a nonprofit corporation in Arizona?
No, there is no legal requirement for a minimum number of members to form a nonprofit corporation in Arizona.
Do nonprofit corporations in Arizona need to file annual reports?
Yes, nonprofit corporations in Arizona need to file annual reports to maintain proper standing and avoid penalties and fines.
How are Arizona nonprofit corporations taxed?
Arizona nonprofit corporations may still be responsible for some state and local taxes like property tax or sales tax, although they may qualify for exemption from federal income tax if they acquire it from IRS.
Does the Arizona Corporation Commission offer any resources or support for nonprofit corporations?
Yes, the Arizona Corporation Commission offers various resources and support services for nonprofit corporations, including education and guidance on filing and paperwork.
Are there any restrictions on the activities of a nonprofit corporation in Arizona?
Yes, nonprofit corporations in Arizona are subject to limitations and regulations on their activities, especially pertaining to lobbying and political activity.
Are nonprofit corporations in Arizona allowed to make political contributions or endorsements?
Nonprofit corporations in Arizona are prohibited from making political contributions or endorsements of any candidate or political party.
How do existing Arizona nonprofit corporations make changes to their corporate information or structure?
Existing nonprofit corporations in Arizona must file amended documents or submit different applications to make changes or compliant Govt. bodies or even update their activities and changing with IRS.
Is volunteering needed in Arizona Nonprofit Corporations?
Volunteers can be an important aspect of a nonprofit corporation in Arizona as lots of humanitarian support is needed.
Can an individual volunteer also be a board member of an Arizona Nonprofit Corporation?
Yes, an individual volunteer can also be a board member of an Arizona nonprofit corporation.
Does the Arizona Corporation Commission offer any special support or protections for individuals who are not well-versed in nonprofit corporations or their documentation?
The Arizona Corporation Commission offers support and informational resources for all nonprofit corporation boards and necessary filings but requires documentation compliance from corporations irrespective of related informationsupport.
How do I incorporate a nonprofit organization in Arizona?
To incorporate a nonprofit organization in Arizona, you need to file articles of incorporation with the Arizona Corporation Commission.
What’s the minimum number of board members required for a nonprofit corporation in Arizona?
A nonprofit corporation in Arizona should have at least one board member.
Can I reserve a name for my Arizona nonprofit?
Yes, you can reserve a name for your Arizona nonprofit by filing with the Arizona Corporation Commission.
What is the cost of filing articles of incorporation for a nonprofit corporation in Arizona?
The cost of filing articles of incorporation for a nonprofit corporation in Arizona is $60.
What documents do I need to prepare before incorporating a nonprofit in Arizona?
You will need to prepare the articles of incorporation, bylaws, and a conflict of interest policy.
Is it necessary to have a conflict of interest policy in Arizona?
Yes, it is necessary for all Arizona nonprofit corporations to have a conflict of interest policy.
Do I need to write my own bylaws, or are there standard bylaws for Arizona nonprofits?
You can write your own bylaws, but the Arizona Corporation Commission offers standard bylaws that you can use.
Can I change my nonprofit’s articles of incorporation or bylaws after filing?
Yes, you can amend your nonprofit’s articles of incorporation or bylaws by filing the appropriate paperwork with the Arizona Corporation Commission.
What is the waiting period before my nonprofit corporation becomes official in Arizona?
It takes about two weeks for the Arizona Corporation Commission to review your nonprofit’s articles of incorporation.
Do Arizona nonprofits need to register with the Arizona Attorney General’s office?
Yes, if your nonprofit will raise funds in Arizona, you need to register with the Arizona Attorney General’s office.
What is a Fiscal Sponsorship in Arizona for Non-Profit Organizations?
A Fiscal Sponsorship is when a 501(c)(3) nonprofit corporation sponsors another emerging or non-exempt community group or activity.
Can an organization lose its 501(c)(3) status?
Yes, the IRS can revoke a nonprofit organization’s 501(c)(3) status in Arizona if the organization violates the proper rules or fails to file the annual report Form 990 for three consecutive years.
What is a certified copy and how can a nonprofit get one in Arizona?
A certified copy is a copy of your nonprofit’s filings with the Arizona Corporation Commission that is verified to be true and correct. You can get a certified copy by contacting the Arizona Corporation Commission.
Does the Arizona Corporation Commission provide guidance about incorporating a nonprofit corporation?
Yes, the Arizona Corporation Commission offers information and guidance on its website to help organizations navigate the process of incorporating.
How much does it cost to reserve a name for an Arizona nonprofit?
The cost of reserving a name for an Arizona nonprofit is $10.
Can I receive a federal tax exemption for my Arizona nonprofit?
Yes, if you meet the requirements under Section 501(c)(3) of the Internal Revenue Code, you can receive a federal tax exemption for your Arizona nonprofit.
Can an Arizona nonprofit make a profit?
Yes, an Arizona nonprofit can make a profit, but it cannot be distributed to its members.
Can a nonprofit corporation in Arizona have “Inc.” in its name?
Yes, a nonprofit corporation in Arizona can have “Inc.” in its name.
What is a “qualified charity” in Arizona?
A “qualified charity” in Arizona refers to an organization that is recognized by the IRS as a 501(c)(3) organization, and is described as a public charity in the organization’s application.
Do we have to register our nonprofit with a city government in Arizona?
It depends on the city’s regulation. In certain cities, like Avondale, Chandler, and Prescott, only firefighters, police, and recognized labor organizations operating with a presence established inside the city limits may need to be registered.
Are there any ongoing reporting requirements for an Arizona nonprofit corporation?
Yes, an Arizona nonprofit corporation is required to file an annual report with the Arizona Corporation Commission and a federal tax return with the IRS.
Are there any fees associated with filing reports for an Arizona nonprofit corporation?
Yes, both the annual report and federal tax return are subject to fees.
What taxes does an Arizona nonprofit corporation need to pay?
Arizona nonprofit corporations are not usually subject to state income taxes, however, they do need to pay some limited business-related taxes, including employment taxes.
Does an Arizona nonprofit board need to hold regular meetings?
Yes, an Arizona nonprofit board should hold regular meetings e.g. at least annually, to ensure compliance and keep operations steady.
Do the directors of an Arizona nonprofit corporation receive compensation?
It is not strictly prohibited for nonprofit directors to receive compensation, however, prudent and normal relationships are authorized. If a director’s dealings seem inappropriate or partial, then it may compromise tax-exempt status.
What is a “Registered Agent” and why is it required for nonprofit in Arizona?
A “Registered Agent” is the person who gives the relationship between organizations and a particular state-based wisdom, serves as an important function as notices and website transmissions get delivered and problems are attended when they occur. All Arizona nonprofits must designate and maintain a registered agent.
What is the potential liability for a nonprofit director in Arizona?
Board association defined by AZ Rev. Stat. § 10-3853 would cooperate with standards set forth in common law. As a rule, nonprofit directors ought to serve dutifully and properly-because almost all have defense rights under RFRA (Religious Freedom Restoration Act)-but careless volunteers/directors below Arizona charitable group liability laws could be alleged in cases when there is suspected misconduct.
Can a nonprofit distribute assets in Arizona?
Depending on the articles and bylaws of the organization, in closing, an Arizona nonprofit can explain stipulations on how residual assets will be distributed if the organization winds up.
Is there a deadline for Arizona nonprofits to file their annual reports?
Yes, Arizona nonprofit corporations must file their annual reports by the 15th day of the fourth month after their fiscal years end.
How do I get tax-exempt status for my Arizona nonprofit corporation?
To get tax-exempt status for your Arizona nonprofit corporation, you must file IRS Form 1023 or 1023-EZ.

Also Read

Why You Should Start Arizona Nonprofit

One of the primary reasons why starting an Arizona nonprofit is a worthy endeavor is the opportunity to make a significant difference in the lives of others. Nonprofit organizations often serve marginalized communities, address pressing social issues, and provide much-needed assistance to those in need. By establishing a nonprofit, individuals can actively contribute to positive change and create lasting impact in their community.

Additionally, starting a nonprofit allows individuals to bring awareness to important social issues and mobilize resources to address them. Many nonprofits focus on advocacy, education, and outreach efforts, helping shed light on overlooked problems and empowering others to take action. By starting a nonprofit, individuals can amplify the voices of underrepresented groups, promote social justice, and drive meaningful change in their community.

Another compelling reason to start a nonprofit in Arizona is the opportunity to foster a sense of connection and community. Nonprofit organizations have the power to bring people together, unite individuals around a common cause, and create a sense of belonging and camaraderie. By establishing a nonprofit, individuals can build a network of like-minded individuals, forge new relationships, and create a supportive and inclusive community.

Moreover, starting a nonprofit can be a personally rewarding experience that allows individuals to grow, learn, and develop new skills. Running a nonprofit requires strong leadership, effective communication, and strategic planning, all of which are essential skills that can be honed through the process of building and managing an organization. By starting a nonprofit, individuals can challenge themselves, expand their capabilities, and make a positive impact on their personal development.

In addition, starting a nonprofit can be a fulfilling way to leave a lasting legacy and create a positive impact that endures beyond one’s lifetime. By establishing a nonprofit, individuals can lay the groundwork for a sustainable, long-term initiative that continues to benefit others for years to come. Nonprofit organizations have the potential to create enduring change, leave a lasting mark on society, and inspire future generations to carry on the mission.

Overall, there are numerous reasons why individuals should consider starting a nonprofit organization in Arizona. From making a difference in the lives of others to fostering connection and community to personal growth and development, the benefits of starting a nonprofit are vast and far-reaching. By taking the leap and initiating a nonprofit dedicated to a cause they are passionate about, individuals can contribute to positive change, create lasting impact, and drive meaningful progress in their community and beyond.

Conclusion

Forming a Arizona Nonprofit Corporation and maintaining compliance with state and federal regulations are crucial to creating a successful organization. By ensuring your organization remains compliant, you can focus on fulfilling your mission and serving your community without worrying about legal or financial setbacks.

While this guide provides an overview of forming a Nonprofit Corporation in Arizona, it’s important to remember that each organization’s situation is unique. The process of starting a for-profit corporation is different from a nonprofit corporation. Seek the advice of experienced professionals, such as attorneys, accountants, or nonprofit consultants, to ensure your organization is set up for success from the start. Check LLCBase for more guides and resources for starting your business.

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