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

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How to Start a Nonprofit Corporation in Montana

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

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

Step 1. Choose a Name

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

When forming a Nonprofit Corporation in Montana, you must appoint Registered Agent in Montana. The Registered Agent is responsible for receiving legal documents and correspondence on behalf of your organization. They must have a physical address in Montana 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 Montana, 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 Montana, you must file the Articles of Incorporation with the Montana Secretary of State. The filing fee is $70 for filing online.. 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 Registered 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 Montana to operate legally. This can include local business licenses, zoning permits, and any specific licenses required for your organization’s activities. Consult your Montana Secretary of State for more information.

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Step 9. Register for Montana State Taxation

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

Fee Schedule for Starting a Montana Nonprofit Corporation

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

  • Articles of Incorporation Filing Fee: $70 for filing online.
  • 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: $20 if domestic, $25 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 Montana 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 Montana.
  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 Montana 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.
Montana State Tax Exemption

In addition to federal tax exemption, your Montana Nonprofit Corporation may also qualify for state tax exemption. To apply, submit Form Form AB-30, Exemption Application, to the Montana Department of Revenue and the required supporting documentation. If approved, your organization will be exempt from Montana state income tax and may qualify for exemption from other state taxes.

Ongoing Compliance

After successfully forming your Montana 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 Montana Nonprofit Corporation must file an annual report with the Montana 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 Montana 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 Montana 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 Montana 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 is a nonprofit corporation in Montana?
A nonprofit corporation in Montana is an entity organized for a charitable, religious, educational, scientific, or literary purpose.
How do I start a nonprofit corporation in Montana?
To start a nonprofit corporation in Montana, you need to file articles of incorporation with the Montana Secretary of State, and include specific language required by Montana law.
What is the cost to file articles of incorporation for a nonprofit corporation in Montana?
The cost to file articles of incorporation for a nonprofit corporation in Montana is $20.
What else do I need to do after filing articles of incorporation for a nonprofit corporation in Montana?
After filing articles of incorporation, you need to apply for federal tax exemption, register with the Montana Attorney General’s Office, and comply with other applicable laws and regulations.
How do I apply for federal tax exemption for a nonprofit corporation in Montana?
To apply for federal tax exemption, you need to file Form 1023 or Form 1023-EZ with the IRS, and provide detailed information about your organization’s mission, activities, finances, and governance.
How long does it take to get federal tax exemption for a nonprofit corporation in Montana?
The timeline for getting federal tax exemption for a nonprofit corporation in Montana can vary depending on various factors, but it usually takes several months.
What is Registering with Montana Attorney General’s Office when starting a nonprofit corporation in Montana?
Nonprofit corporations in Montana are required to register with the Montana Attorney General’s Office within 30 days of incorporation, and provide details about their purpose, finances, and activities.
What other laws and regulations do nonprofit corporations in Montana need to comply with?
Nonprofit corporations in Montana need to comply with various laws and regulations related to fundraising, financial reporting, disclosure, governance, and other matters.
Can a nonprofit corporation in Montana pay its board members?
Nonprofit corporations in Montana can compensate their board members for reasonable expenses and services, as long as the compensation is not excessive and does not compromise the organization’s charitable purpose.
What is a registered agent and do I need one for a nonprofit corporation in Montana?
A registered agent is a person or entity who receives legal and administrative documents on behalf of a business entity, such as a nonprofit corporation. Nonprofit corporations in Montana are required to have a registered agent with a physical address in Montana.
How do I choose a name for a nonprofit corporation in Montana?
To choose a name for a nonprofit corporation in Montana, you need to ensure that the name is available and complies with Montana laws regarding name requirements for business entities.
Can a nonprofit corporation in Montana engage in political activities?
Nonprofit corporations in Montana can engage in some types of political activities, such as issue advocacy and nonpartisan voter education, but they cannot endorse or support political candidates or parties.
What is required to dissolve a nonprofit corporation in Montana?
To dissolve a nonprofit corporation in Montana, you need to follow a specific legal process, which includes adopting a resolution to dissolve, distributing assets and property, paying off debts and liabilities, and complying with other legal requirements.
Do nonprofit corporations in Montana have to file an annual report?
Nonprofit corporations in Montana are required to file an annual report with the Montana Secretary of State, which includes details about the organization’s activities, finances, and information about directors, officers, and members.
Can I change the purpose or mission of a nonprofit corporation in Montana?
Yes, nonprofit corporations in Montana can amend their articles of incorporation to change their purpose, mission, or other provisions, but the change must be approved by the board of directors and comply with Montana laws regarding amendments.
What is a fiscal sponsor and how does it relate to starting a nonprofit corporation in Montana?
A fiscal sponsor is a nonprofit organization that provides administrative, financial, and other support to smaller or emerging nonprofit organizations that do not yet have their own 501(c)(3) status. While fiscal sponsorship can be an alternative to starting a nonprofit corporation in Montana, it requires a different set of steps and considerations.
Can a nonprofit corporation in Montana engage in international or foreign activities?
Yes, nonprofit corporations in Montana can engage in international or foreign activities, as long as they comply with applicable laws and regulations, including those related to tax, trade, and other matters.
Are there any tax incentives or benefits for nonprofit corporations in Montana?
Nonprofit corporations in Montana may be eligible for various tax incentives or benefits, such as exemptions from state sales tax, property tax, or income tax, depending on their activities and mission.
What is the Montana Nonprofit Association and how can it assist with starting a nonprofit corporation in Montana?
The Montana Nonprofit Association is a statewide organization that provides resources, training, and support for nonprofit organizations in Montana, including those that are starting out.
Can a nonprofit corporation in Montana raise money through crowdfunding?
Yes, nonprofit corporations in Montana can use crowdfunding platforms to raise funds for their mission or activities, but they must comply with applicable laws, regulations, and best practices related to fundraising and financial reporting.
What is a 501(c)(3) organization and how does it relate to nonprofit corporations in Montana?
A 501(c)(3) organization is a specific type of nonprofit organization that is recognized by the IRS as exempt from federal income tax, and is eligible for various other tax-related benefits and privileges. Many nonprofit corporations in Montana seek to obtain 501(c)(3) status.
What is Montana Code Annotated Title 35, Chapter 2, Part 2 and how does it relate to nonprofit corporations?
Montana Code Annotated Title 35, Chapter 2, Part 2 is a section of Montana law that spells out the requirements and procedures for organizing a nonprofit corporation in the state, as well as many other aspects of nonprofit corporate governance, operations, and accountability.
What is a charitable solicitation registration and does a nonprofit corporation in Montana need to register?
A charitable solicitation registration is a requirement in many states, including Montana, for nonprofit organizations engaging in fundraising activities in the state. Nonprofit corporations in Montana need to register with the Montana Department of Justice in order to solicit donations from Montana residents.
Is forming a nonprofit corporation in Montana better than forming a different business entity?
Forming a nonprofit corporation in Montana may be better than forming a different business entity, depending on your organization’s goals, mission, and activities, as well as various legal and financial factors.
Can I start a nonprofit corporation in Montana by myself, or do I need other people to help?
While one person can technically start a nonprofit corporation in Montana, it is generally advisable to have at least a small group of dedicated individuals who can serve as directors and/or officers, as well as contribute to the organization’s mission and activities.
What are the benefits or disadvantages of starting a nonprofit corporation in Montana versus other states?
The benefits or disadvantages of starting a nonprofit corporation in Montana versus other states depend on various factors, such as state-specific laws and regulations, tax structures, workforces, local culture, and more.
What are the most common mistakes or pitfalls to avoid when starting a nonprofit corporation in Montana?
Some common mistakes or pitfalls to avoid when starting a nonprofit corporation in Montana include inadequate planning and research, incomplete or erroneous paperwork, poor governance, conflicts of interest, noncompliance with laws and regulations, unrealistic expectations, and more.
How can I find more information or resources about starting a nonprofit corporation in Montana?
There are many resources available to individuals and organizations seeking to start a nonprofit corporation in Montana, including government agencies, nonprofit associations, legal professionals, support groups, and more.
What is the first step to start a nonprofit corporation in Montana?
The first step is to file articles of incorporation with the Montana Secretary of State.
Are there any specific requirements for naming a Montana nonprofit corporation?
Yes, the name must include “corporation,” “company,” or “incorporated” or an abbreviation thereof, and can’t imply purposes other than those allowed for nonprofits under Montana law.
Do I need to obtain any licenses or permits to start a Montana nonprofit?
Depending on the nature of your nonprofit’s activities, you may need to obtain licenses or permits from the state of Montana or local municipalities.
Is there a minimum number of directors required for a Montana nonprofit corporation?
Yes, a Montana nonprofit corporation must have at least three directors.
How do I choose the initial board of directors for my nonprofit in Montana?
You can choose the initial board of directors by inviting people with skills or expertise that align with your nonprofit’s mission, or by selecting individuals who have shown support for your cause.
Do I need to file for 501(c)(3) tax-exempt status right away when starting a nonprofit in Montana?
No, you can wait until later to file for 501(c)(3) tax-exempt status, but it’s a good idea to do so as soon as possible because it can take several months for approval.
How do I obtain a Montana state tax ID number for my nonprofit corporation?
You can obtain a state tax ID number by completing an application with the Montana Department of Revenue.
Can I hire employees for my Montana nonprofit corporation?
Yes, you can hire employees, but you will need to comply with Montana employment laws.
Is there a fee to file articles of incorporation with the Montana Secretary of State?
Yes, there is a fee, which varies based on the value of the nonprofit’s assets.
Can I form a Montana nonprofit corporation if I am not a resident of Montana?
Yes, non-residents can form Montana nonprofit corporations as long as they comply with Montana law.
Can I convert an existing Montana for-profit corporation into a nonprofit corporation?
Yes, it is possible to convert an existing for-profit corporation into a nonprofit corporation in Montana.
What is the annual renewal fee for a Montana nonprofit corporation?
The annual renewal fee is $15 as of 2021.
Can my Montana nonprofit corporation participate in political campaigns or support candidates for office?
No, 501(c)(3) nonprofit corporations are prohibited from participating in political campaigns or supporting candidates for office under federal law.
How long does it take to process the articles of incorporation for a Montana nonprofit corporation?
It generally takes around 10 business days for the Montana Secretary of State’s office to process articles of incorporation.
How much money should I have in reserve when starting a Montana nonprofit corporation?
It is recommended to have enough money to cover operating expenses for at least six months, but this will vary depending on the nature of your nonprofit and its goals.
Can I pay myself a salary as the founder of a Montana nonprofit corporation?
Yes, you can pay yourself a salary, but it must be reasonable and approved by the board of directors.
Do I need to create bylaws for my Montana nonprofit corporation?
Yes, bylaws are required for all Montana nonprofit corporations.
Can Montana nonprofit corporations make a profit?
Nonprofit corporations can generate a surplus, but any income must be reinvested back into the nonprofit’s mission and cannot be distributed to shareholders.
Can I operate a Montana nonprofit corporation out of my home?
Yes, you can operate a Montana nonprofit corporation out of your home if it complies with local zoning laws.
Who can legally serve as an incorporator for a Montana nonprofit corporation?
Any person who is at least 18 years old can serve as an incorporator.
Can I bring a lawsuit as a representative of my Montana nonprofit corporation?
Yes, a Montana nonprofit corporation can sue or be sued under state law.
Can I hold a fundraiser event for my Montana nonprofit corporation before it is officially incorporated?
No, fundraising should not occur before the nonprofit is officially incorporated and has obtained any necessary licenses or registrations.
Do I need to obtain liability insurance for my Montana nonprofit corporation?
While it’s not required by law, obtaining liability insurance is a good idea to protect your nonprofit and its members.
Can Montana nonprofit corporations own property?
Yes, nonprofit corporations can own real estate, personal property, and other assets.
Do I need to hold regular board meetings for my Montana nonprofit corporation?
Yes, regular board meetings are required to make important decisions and keep the nonprofit running smoothly.
Can I dissolve my Montana nonprofit corporation if it is no longer necessary?
Yes, it is possible to dissolve a Montana nonprofit corporation by filing articles of dissolution with the Montana Secretary of State.
What are the consequences of noncompliance with Montana nonprofit corporation laws?
Noncompliance with Montana nonprofit laws can result in fines, penalties, or even revocation of the corporation’s legal status.
Can a Montana nonprofit corporation receive donations from out of state?
Yes, Montana nonprofit corporations can accept donations from out of state, but should check whether there are any registration requirements for soliciting donations in other states.

Also Read

Why You Should Start Montana Nonprofit

One of the primary benefits of starting a nonprofit in Montana is the opportunity to give back to your local community. By addressing specific needs or issues in your area, you can make a tangible difference in the lives of those around you and create a lasting legacy of impact. Nonprofits have the flexibility to design programs and services that are tailored to the unique needs of their community, allowing for greater effectiveness and success in achieving their goals.

Additionally, starting a nonprofit can provide a sense of purpose and fulfillment for individuals who are looking to make a difference in the world. By dedicating your time, energy, and resources to a cause you are passionate about, you can find true fulfillment in knowing that you are working towards a greater good and making a positive impact in the world.

Furthermore, starting a nonprofit can also be a great way to build new skills and expand your professional network. As a founder of a nonprofit organization, you will have the opportunity to develop a wide range of skills, from fundraising and budgeting to marketing and leadership. Additionally, you will have the chance to collaborate with like-minded individuals, organizations, and stakeholders who share your passion for social change and community empowerment.

Another key benefit of starting a nonprofit in Montana is the potential for tax-exempt status, which can provide significant financial advantages for both the organization and its donors. Nonprofit organizations are exempt from paying federal income taxes on donations and revenue generated from their charitable activities, allowing them to allocate more resources towards their mission and programs.

Moreover, starting a nonprofit can be a powerful tool for advocacy and social change. By raising awareness about important issues, mobilizing supporters, and advocating for policy changes, nonprofits can play a crucial role in shaping public opinion and influencing decision-makers to create positive change in society.

In conclusion, starting a nonprofit organization in Montana can be a transformative and impactful experience for individuals who are passionate about creating positive change in their community and beyond. By dedicating your time, talents, and resources to a cause you believe in, you can make a lasting impact and leave a legacy of positive change that will benefit generations to come. So, if you have a passion for social justice, environmental conservation, animal welfare, or any other cause, consider starting a nonprofit in Montana and join the ranks of those who are making a difference in the world.

Conclusion

Forming a Montana 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 Montana, 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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