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

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How to Start a Nonprofit Corporation in Delaware

Are you passionate about making a difference in your community? Starting a nonprofit organization in Delaware 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 Delaware 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 Delaware, 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 Delaware 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 Delaware Nonprofit Corporation

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

Step 1. Choose a Name

The first step in starting a Nonprofit Corporation in Delaware 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 Delaware 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 Delaware Registered Agent

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

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Step 3. Appoint Board Members and Officers

In Delaware, 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 Certificate of Incorporation

To officially form a Nonprofit Corporation in Delaware, you must file the Certificate of Incorporation with the Delaware Secretary of State. The filing fee is $89 for filing online, fax and by mail. Your Certificate 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 Registered Agent
  • Statement of how the organization’s assets will be distributed upon dissolution

Optional provisions that can be included in the Certificate 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 Certificate 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 Delaware to operate legally. This can include local business licenses, zoning permits, and any specific licenses required for your organization’s activities. Consult your Delaware Division of Corporations for more information.

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Step 9. Register for Delaware State Taxation

While many Nonprofit Corporations are exempt from federal income tax, they may still be subject to Delaware state taxes. You must register with the Delaware Division 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 Delaware Department of Justice. This registration is required before legally soliciting charitable contributions in Delaware.

Fee Schedule for Starting a Delaware Nonprofit Corporation

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

  • Certificate of Incorporation Filing Fee: $89 for filing online, fax 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: $25 if domestic, $125 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 Delaware 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 Delaware.
  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 Delaware 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.
Delaware State Tax Exemption

In addition to federal tax exemption, your Delaware Nonprofit Corporation may also qualify for state tax exemption. To apply, submit Form Form CRA-6, Exemption Application, to the Delaware Division of Revenue and the required supporting documentation. If approved, your organization will be exempt from Delaware state income tax and may qualify for exemption from other state taxes.

Ongoing Compliance

After successfully forming your Delaware 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 Delaware Nonprofit Corporation must file an annual report with the Delaware 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 Delaware 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 Delaware Division 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 Delaware 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

Why would I want to start a nonprofit corporation in Delaware?
Delaware is known for having a strong business environment and a well-established legal system, making it an attractive choice for starting a nonprofit corporation.
What are the filing requirements for starting a nonprofit corporation in Delaware?
To start a nonprofit corporation in Delaware, you will need to file articles of incorporation with the Division of Corporations.
How much will it cost to file for incorporation in Delaware?
The fee for filing articles of incorporation in Delaware is $89.
How long does the incorporation process take in Delaware?
The incorporation process in Delaware can take up to two weeks.
What types of nonprofit corporations can I form in Delaware?
Delaware allows the formation of several types of nonprofit corporations, including public benefit corporations and charitable corporations.
What are the benefits of forming a public benefit corporation in Delaware?
A public benefit corporation in Delaware must serve a specific public purpose, such as increasing access to healthcare or promoting education. These corporations may be able to receive tax-exempt status.
How do I apply for tax-exempt status in Delaware?
To apply for tax-exempt status in Delaware, you will need to file Form 1023 with the IRS.
What is required to include in the articles of incorporation in Delaware?
The articles of incorporation in Delaware must include the name of the corporation, the purpose of the corporation, the names and addresses of the initial directors, and the name and address of the registered agent.
Do I need to have a registered agent in Delaware to form a nonprofit corporation?
Yes, Delaware requires all corporations, including nonprofit corporations, to have a registered agent in the state.
Can I serve as the registered agent for my nonprofit corporation in Delaware?
Yes, Delaware allows an individual or another corporation to act as a registered agent for a nonprofit corporation formed in the state.
What is the role of a registered agent in Delaware?
The registered agent receives official correspondence and legal documents on behalf of the nonprofit corporation in Delaware.
What is the Annual Report requirement for Delaware nonprofit corporations?
Delaware nonprofit corporations are required to file an Annual Report with the Division of Corporations on or before March 1st each year.
What is the fee for the Annual Report for Delaware nonprofit corporations?
The fee for filing an Annual Report for a nonprofit corporation in Delaware is $25.
What happens if I do not file an Annual Report for my nonprofit corporation in Delaware?
If you do not file an Annual Report for your nonprofit corporation in Delaware by the due date, your corporation will lose its good standing with the state.
Can Delaware nonprofit corporations conduct business outside of the state?
Yes, Delaware nonprofit corporations can conduct business outside of the state as long as they comply with all applicable laws in the other states.
What is the tax situation for Delaware nonprofit corporations?
Delaware nonprofit corporations are typically exempt from federal income tax and may be exempt from state income tax as well.
Can I run a nonprofit corporation out of my home in Delaware?
Yes, you can certainly start and run a nonprofit corporation out of your home in Delaware.
Do I need to obtain any special permits or licenses to operate a nonprofit corporation in Delaware?
Depending on the nature of your nonprofit corporation’s activities, you may need to obtain special permits or licenses from federal, state, or local authorities.
What is required to qualify as a nonprofit corporation in Delaware?
To qualify as a nonprofit corporation in Delaware, your corporation must be formed for a charitable, educational, religious, scientific, literary, or other non-profitable purpose.
What is the difference between a nonprofit corporation and a for-profit corporation in Delaware?
A nonprofit corporation in Delaware is formed to operate for a charitable or other non-profit purpose and does not have shareholders. A for-profit corporation is formed to operate for a profit and does have shareholders.
Can a nonprofit corporation in Delaware have paid employees?
Yes, a nonprofit corporation in Delaware can employ paid workers, but they must adhere to all employment laws in the state.
How do I dissolve a Delaware nonprofit corporation?
To dissolve a Delaware nonprofit corporation, you will need to file a Certificate of Dissolution with the Division of Corporations.
What happens to the assets of a dissolved Delaware nonprofit corporation?
Any remaining assets of a dissolved Delaware nonprofit corporation must be distributed to another nonprofit corporation or for a public purpose.
Can Delaware nonprofit corporations participate in political activities?
Delaware nonprofit corporations cannot participate in political activities or endorse political candidates.
How can I change the name of my Delaware nonprofit corporation?
To change the name of your Delaware nonprofit corporation, you will need to file an appropriate amendment with the Division of Corporations.
How can I change the purpose of my Delaware nonprofit corporation?
To change the purpose of your Delaware nonprofit corporation, you will need to file an appropriate amendment with the Division of Corporations and obtain approval from the internal revenue service.
Can I manage my Delaware nonprofit corporation from outside the United States?
Yes, you can manage your Delaware nonprofit corporation from outside the United States, but you must be compliant with all state and federal laws and regulations.
Where can I get help starting a nonprofit corporation in Delaware?
You can obtain help starting a nonprofit corporation in Delaware by consulting an attorney, accountant, or with the Corporation Office of Delaware which is completely digitized through their official online portal for fast and efficient registration.
What is a nonprofit corporation?
A nonprofit corporation is a type of legal entity that aims to achieve a specific purpose and operate in a manner that promotes the public benefit.
What are the benefits of incorporating a nonprofit in Delaware?
Delaware has several key benefits for incorporating a nonprofit, including tax exemptions, strong legal protections, and support programs for nonprofit organizations.
How do I form a nonprofit corporation in Delaware?
To form a nonprofit corporation in Delaware, you must file articles of incorporation with the Delaware Division of Corporations and obtain tax-exempt status from the IRS.
What are the requirements for articles of incorporation in Delaware?
Articles of incorporation for a Delaware nonprofit must include several key pieces of information, including the purpose of the organization, the names of the founders, and the overall governance structure.
How much does it cost to incorporate a nonprofit in Delaware?
The fees for incorporating a nonprofit in Delaware can vary depending on several factors, including the size of the organization and its tax-exempt status.
Can a nonprofit file for tax-exempt status in Delaware?
Yes, nonprofits can file for tax-exempt status with the IRS in Delaware to gain tax advantages and other benefits.
What is the process for filing for tax-exempt status in Delaware?
To file for tax-exempt status in Delaware, nonprofits must submit a completed Form 1023, along with supporting documentation and a filing fee.
How long does it take to receive tax-exempt status in Delaware?
It can take several months for a nonprofit to receive tax-exempt status in Delaware, depending on the complexity of the organization and its application.
What are the reporting requirements for Delaware nonprofits?
Delaware nonprofits must file annual reports with the state, including financial statements and updates on organizational activities.
What kind of activities are prohibited for Delaware nonprofits?
Delaware nonprofits are prohibited from engaging in certain political activities and must operate primarily for charitable or educational purposes.
What are the advantages of operating a nonprofit in Delaware?
Delaware has a favorable legal and tax environment for nonprofits, including strong legal protections and supportive resources for nonprofit organizations.
Can I convert my existing business to a nonprofit in Delaware?
Yes, it is possible to convert an existing business to a nonprofit in Delaware, but it can be a complex and time-consuming process.
How are operations governed in Delaware nonprofits?
Delaware nonprofits are governed by a board of directors and must comply with state and federal laws related to nonprofit operations.
What kind of insurance do nonprofits need in Delaware?
Nonprofits in Delaware typically need liability insurance and property insurance to protect against lawsuits and property damage.
How can I find funding for my Delaware nonprofit?
Delaware has several resources for nonprofits to find funding, including grants and loans from government agencies and private foundations.
What are the annual fees for nonprofits in Delaware?
Annual fees for Delaware nonprofits are based on the size and nature of the organization and can vary significantly from year to year.
Can I have a paid staff for my Delaware nonprofit?
Yes, Delaware nonprofits can have paid staff as long as they comply with state and federal labor laws.
What are the restrictions on fundraising for Delaware nonprofits?
Delaware nonprofits are required to comply with state and federal fundraising regulations and may face restrictions on soliciting donations through certain channels or methods.
How can I set up a board of directors for my Delaware nonprofit?
Nonprofits in Delaware can establish a board of directors by recruiting qualified candidates and formalizing their roles and responsibilities in the governance documents.
Can I operate a nonprofit from my home in Delaware?
Yes, Delaware nonprofits can operate from a home office as long as they comply with local zoning ordinances and other regulations.
What suspension or penalties can Delaware impose on noncompliant nonprofits?
Delaware can revoke a nonprofit’s corporate status, impose fines, or take legal action against noncompliant organizations.
Can I set up a Delaware nonprofit if I’m not a US citizen or permanent resident?
Yes, non-US citizens and non-permanent residents can set up a Delaware nonprofit corporation, but they may face additional tax and legal challenges.
Can a Delaware nonprofit pay its board members?
Delaware nonprofits can pay board members for their services as long as the compensation is reasonable and approved through proper governance procedures.
How can I dissolve a Delaware nonprofit corporation?
Nonprofits in Delaware can dissolve by completing a formal dissolution process, including filing articles of dissolution and settling any outstanding debts or obligations.
How can I amend the governing documents of my Delaware nonprofit corporation?
To amend a nonprofit’s governing documents in Delaware, the board must pass a resolution and file an amendment with the state government.
What are the requirements for holding nonprofit meetings in Delaware?
Delaware nonprofits must hold regular board meetings, follow legal requirements for public meetings, and keep detailed records of meetings and proceedings.
Can I register my Delaware nonprofit corporation online?
Yes, Delaware allows nonprofits to register and complete many other foundational activities online.
How can I find resources for Delaware nonprofits?
Delaware has several resources for nonprofits in the state, including a Nonprofit Support Center and regional associations for nonprofits.

Also Read

Why You Should Start Delaware Nonprofit

First and foremost, Delaware has a reputation for being a business-friendly state with a strong legal framework for nonprofits. The state offers clear regulations and guidelines for establishing and operating a nonprofit organization, making the process smoother and more straightforward. This can be a huge benefit for those who are new to the world of nonprofits and need guidance on how to navigate the legal requirements.

Additionally, Delaware has a long history of supporting nonprofit organizations and providing resources to help them succeed. There are many funding opportunities available for nonprofits in Delaware, including grants and tax incentives. The state also has a supportive network of nonprofit organizations and professionals who are dedicated to helping new nonprofits get off the ground and thrive. This can be invaluable to nonprofit leaders who are looking for guidance and support as they embark on their journey.

Another advantage of starting a nonprofit in Delaware is the state’s favorable tax laws for nonprofit organizations. Delaware does not have a state sales tax, which can save nonprofits money on purchases and expenses. Additionally, Delaware offers tax exemptions for certain types of nonprofit organizations, further reducing the financial burden on new nonprofits.

Beyond the legal and financial benefits, there are also practical reasons to consider starting a nonprofit in Delaware. The state is centrally located on the East Coast, making it easily accessible to major cities and populations. This can be advantageous for nonprofits looking to reach a diverse audience or expand their reach beyond state lines.

Moreover, Delaware is home to a diverse and vibrant community that is supportive of nonprofits and their missions. There are many opportunities for collaboration and partnerships with other organizations in Delaware, as well as potential volunteers and supporters who are passionate about giving back to their community.

Overall, starting a nonprofit in Delaware can be a rewarding experience for those looking to make a difference in the world. The state’s business-friendly environment, supportive network of nonprofits, favorable tax laws, and vibrant community make it an ideal location for aspiring nonprofit leaders to pursue their passion and create positive change. If you are considering starting a nonprofit, Delaware may be the perfect place to turn your vision into reality.

Conclusion

Forming a Delaware 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 Delaware, 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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