Forming a nonprofit corporation is a noble goal. But if you’re just starting out, the process can feel incredibly confusing. Compared to other entity types like LLCs or even standard corporations, a nonprofit has detailed start-up requirements and complicated maintenance procedures.
In this guide, we’ll walk you through the ins and outs of forming a nonprofit in Georgia so you can get back to what truly matters: your cause.
What is a Nonprofit Corporation?
A nonprofit and for-profit corporation both have similar “nuts and bolts,” so to speak. Both businesses have a board of directors, CEOs, bylaws, annual board meetings, and the like.
But what makes a nonprofit stand out is its purpose. A business corporation typically organizes for financial gain; a nonprofit exists not to make money but to further a cause or reach a goal. Additionally, a business corporation gains investors by offering stock, which has the incentive of dividends and financial gain. Nonprofit corporations solicit contributions that don’t generate any income for those investors.
Well-known nonprofits include groups like Doctors Without Borders, Alcoholics Anonymous, and even your local YMCA.
It’s important not to confuse “nonprofit” with “no income.” Most nonprofits generate income from donations or day-to-day services. The distinction is that nonprofits use 100% of their income to pay expenses and reinvest in their cause. For example, the YMCA uses member dues and community donations for exercise programs, youth sport development, and maintaining their equipment and facilities. They also pay their employees.
Because of this, nonprofit corporations may apply for and receive a tax-exempt status (typically a 501(c)(3) designation), eliminating the corporation’s responsibility for income taxes at the federal and state levels.
Should you form one?
Before you dive into the rest of this guide, you should do a little soul-searching: should you even form a nonprofit in Georgia? The goal is a noble one, but it certainly isn’t for everyone. And some concepts simply aren’t right for the nonprofit sector.
Here are some questions to ask:
- Will I be able to convince others to buy into this cause? How hard will it be to attract donors?
- Are there other existing nonprofits with the same goal?
- If so, do they operate in Georgia? Nationwide? Should I form a local chapter of their nonprofit instead?
- Can I further this cause better or differently than they are?
- Can I hire employees for this cause, or will I rely on volunteers? How will I successfully recruit their help?
If you find yourself stumped by any of those questions, you may want to step back and get some help…or simply do some more thinking before diving in. But if you have answers to most of those questions, then you’re well on your way to starting a Georgia nonprofit organization.
Starting a Georgia Nonprofit: Step by Step
Technically, the process for creating a Georgia nonprofit entity is pretty simple. It’s really just a matter of picking a few people and filing some paperwork (it’s the requirements immediately after forming the nonprofit that get complicated).
1. Pick & Claim a Name
Choosing a name is one of the most crucial decisions for starting your business. You want to pick a name that’s memorable, likable, and most importantly, compliant with Georgia state law.
Georgia has pretty simple laws for nonprofit names:
- Your name must include one of the following words: “corporation,” “incorporated,” “company,” or “limited” (or one of those abbreviations)
- Your name may not imply that you’re conducting activities that run contrary to state law or the purpose stated in your Articles of Incorporation
- Obscene language is prohibited in names of any kind
- Your name cannot exceed 80 characters
- Your name must be “distinguishable upon the records,” or distinct from the names of other entities in the state
If you want more information on Georgia nonprofit names, check out the Corporate Name Section of the Georgia Nonprofit Corporations Code.
As a result, you have a lot of leeway to pick a name that will resonate with your target audience, potential donors, and of course, with you. The ideal Georgia nonprofit name describes what the organization does, sounds good when said out loud, and just “sticks” in the minds of people who see it.
Whenever you pick a potential name, you should check whether it’s available with a Business Name Search. Typically, if you type in your desired name and no exact matches show up, your name is available to use. This seems like a very basic step, but it’s crucial to streamlining your filings.
Once you nail down an available name that you like, you can reserve it using a Name Reservation Request. It’s cheaper to file this form online; there’s a $10 surcharge to the $25 base filing fee if you file a paper form. Once your filing is approved, your chosen name will be protected for your exclusive use for 30 days. That gives you some extra time to prepare other business documents without losing your name to another business or nonprofit.
You can learn more through our guide on how to reserve a Georgia business name.
2. Assemble your initial board
A nonprofit corporation is only as impactful as the people leading it. That’s why your initial board of directors is extremely important; you’ll want to pick a team of people that are just as passionate about your cause as you are.
More importantly, it’s helpful to choose a group with complementary strengths. For example, a medical outreach group might have a board of directors with three doctors, a nurse, a financial expert, a creative visionary, and a lawyer. The right board of directors will help your nonprofit thrive.
Georgia doesn’t have a bunch of rules about who can serve on the board. There are only two explicit requirements, actually: every board member must be 18 years or older, and you must have at least one director on your initial board. Aside from that, your bylaws can dictate the terms for your board. For example, you’ll set the exact number of directors you’ll have and their qualifications, how a board member can be elected, how they can resign, and more.
3. Appoint a registered agent
Every Georgia entity—nonprofits, corporations, and LLCs alike—must appoint a registered agent. This individual accepts “service of process” from the state on your behalf. Basically, if the state ever needs to notify you regarding a lawsuit or an upcoming annual report due date, they’ll contact your registered agent. The agent forwards that notice to you.
Georgia has pretty lenient criteria for a nonprofit’s registered agent, as found in the Registered Office and Registered Agent Article of the Georgia Nonprofit Corporations Code:
- Every entity that files with the Secretary of State (both domestic and foreign) must appoint a registered agent
- The agent’s business address must match the address of the registered office
- The agent must be an individual resident of Georgia OR a business with the authority to do business in the state
- An agent must be continuously maintained
So you might ask, “Can I serve as my nonprofit’s registered agent?” Technically, you can. But we don’t recommend it. That puts your personal details (and often private details like your address and primary email) on the public record. You’ll also be busy running your nonprofit and pursuing your goals; you won’t want to tie yourself down to a registered address (especially for a tedious thing like service of process). We recommend appointing an individual you trust.
Or, if you prefer, you can hire a registered agent service instead. For a small annual fee, these services will act as your agent. That frees you up to focus on running your nonprofit.
4. File your Articles of Incorporation
Up until now, your nonprofit has just been an idea; it’s not recognized by the state government. Technically, businesses don’t “exist” until they file the appropriate paperwork. For Georgia nonprofits, that means filing the Articles of Incorporation.
Technically, the state does not provide a fill-in form; instead, the instructions list everything you must include or exclude for your Articles (and aside from that, you can write it yourself; we recommend getting assistance from a lawyer).
This document requires some foundational information about your nonprofit. Here’s the data you’ll need to have on hand:
- The name of the corporation
- The name and office of the registered agent
- Legal name and address of each incorporator
- Mailing address for the business
- A statement acknowledging that your nonprofit is organized in compliance with the nonprofit corporation act
- Whether or not your nonprofit will have members
The filing process itself is frankly pretty simple; but be sure that after you file, be sure to file the Initial report within 90 days. In this report, you’ll list at least three initial directors for your board. Both documents can be filed with the Georgia Online Business Services portal. The filing fee for the Articles is $100, and the initial report costs $30. There is a $10 convenience fee charged for mail-order documents.
Processing speed: 5-7 business days for online filings; up to 15 business days for mail-order filings
Expedited processing: a lot of options, including $100 for two-day turnaround up to $1,000 for one-hour turnaround
Congratulations! Your nonprofit is now a recognized entity in Georgia!
Prepare for & Hold Your First Board Meeting
After your Articles of Incorporation form is complete, it’s time to truly get your nonprofit’s activities underway. And that means it’s time for the first board meeting.
No two board meetings will look exactly the same; after all, every nonprofit has different tasks to accomplish. Georgia law does require that you meet at least once every year (you can dictate more meetings in your bylaws, if desired). You can dictate other meetings in your bylaws.
For example, you might require your president and CFO to report on the recent accomplishments and financial standing of the nonprofit. For more information on your regular (and special) board meetings, please consult the Annual Meeting section of the Georgia Nonprofits Corporations Act.
Your very first board meeting, however, will look a bit different. Here’s what you’ll need to accomplish:
- Draft and approve the nonprofit’s bylaws: The bylaws dictate exactly how your nonprofit will be run. This includes a detailed rundown of your corporate purpose, how your board will be selected and replaced, how you’ll raise funds, how you’ll hire employees or solicit volunteers, and much more (including a provision for how to amend the bylaws). To save time, you may choose to write a draft before the meeting and revise it when your full board is present. The important thing is that the board approves the final bylaws, making them the governing document for your nonprofit.
- Draft and approve a conflict of interest policy: Occasionally, one of your nonprofit’s contributors will have personal affairs that intersect with the activities of your nonprofit. A conflict of interest policy dictates exactly what happens in those situations, protecting both the nonprofit and the individual contributor.
- Appoint someone to take minutes at each meeting: Every Georgia nonprofit corporation must establish and maintain a corporate record. That’s why every board should appoint someone to take minutes, or a summary of every board meeting, documenting what was said and what decisions were made.
- Finalize responsibilities for each board member: If one board member will be responsible for fundraising while another raises awareness for the cause, you should assign those roles at the initial board meeting.
- Appoint officers for the nonprofit (if needed): Some corporations choose to have their officers, such as the CEO or CFO, be members of the board. Others appoint non-board members to fill these roles, creating a division between the governance and day-to-day operations. Either choice is fine, but these vital roles should be filled.
This initial meeting will be a very full, technical day (or even series of days!), but nailing down these aspects will help you establish a nonprofit that’s compliant with Georgia state law and efficiently run.
Take Care of Taxes
Taxes as a nonprofit are a tricky beast; frankly, we recommend getting advice from a tax lawyer, accountant, or similar consultant to make sure you cover all your bases! But let’s take a quick look at the basics for nonprofit taxes.
First, apply for tax-exempt status on the federal level
If you don’t file for tax-exempt status, you’ll technically be liable for corporate income taxes. And that’s the last thing a non-profit wants. That’s why you’ll need to start out by filing Form 1023 or Form 1024, which are the applications for charitable, religious, or educational groups and other nonprofits respectively. After that application is completed, you’ll play the waiting game. The IRS can take up to 180 days to approve or reject your application, so we highly recommend completing the application correctly the first time.
Once your application is approved, you’ll receive a letter of tax-exempt status from the IRS. That designation will also give you exemption from state income taxes. In most states, you can also use this letter to apply for exemption from the state’s sales tax. However, Georgia does not offer that exemption; you’ll still be responsible for state sales taxes.
Obtain an EIN
An EIN, or an Employer Identification Number, is an important identifier to get; it acts a bit like a Social Security Number, but for a business entity. Unfortunately, you aren’t assigned one automatically.
Thankfully, it’s free to apply for an EIN online with the IRS. Even if you don’t plan to have employees right away, it’s a good idea to have this number from the get-go. Miscellaneous forms, such as license applications or even bank accounts, may request this number.
Account for employment & miscellaneous taxes
No two businesses are alike, so each nonprofit will have slightly different taxes. That said, Georgia nonprofits with employees will still need to account for withholding and unemployment insurance taxes on the federal level.
There are also miscellaneous industry-specific taxes in Georgia, such as motor fuel, fireworks, and more. In most cases, these taxes won’t apply to your nonprofit, but it’s still a good idea to double-check with the Georgia Department of Revenue just to be sure you’ve covered all your responsibilities.
That’s the basic gist of nonprofit taxes in Georgia. We still recommend consulting with a tax professional, as they’ll be able to give you specialized advice for your unique situation.
Register for Licenses and Permits
Licenses and permits are especially important for nonprofits. And there are three major categories of potential permits and licenses: fundraising, lobbying, and licensing. Let’s walk through Georgia’s requirements for each of those three areas.
1. Fundraising
A lot of states require you to register in order to solicit charitable contributions, and Georgia is no exception; every nonprofit that asks for donations or runs fundraisers of any kind needs to register with the Secretary of State. This registration costs $35.
You’ll also have to renew this registration ($20) every other year. The renewal is due on or before the expiration date (the date of the original filing), but you cannot renew it earlier than 90 days before it expires. For more information on charitable registrations, check out the state’s How-To Guide: Charities page.
2. Lobbying
If your nonprofit will be lobbying for its cause in a formal capacity, then you’ll need to ensure that each person lobbying has the appropriate registration. This registration can be completed with the Campaign Finance Commission. Here, you’ll also find information for your reporting and renewal requirements, too. Technically, the registration does not cost anything, but each lobbyist has to pay a total of $30 for each organization they need a badge for. For more information, consult the Government Transparency & Campaign Finance Commission.
3. General licensing
Nonprofits are tax-exempt, but they aren’t exempt from licensure requirements, whether that’s for an industry-specific license or a state general business license. So you’ll need to get the licenses that apply to your unique organization.
Georgia does have a general business license that applies to all entities in the state; however, instead of administering this license on the state level, Georgia administers these on the city and county levels instead. You’ll want to check with your local government to apply for this license.
There are also industry licenses to consider. Georgia upholds all federally regulated industry licenses, and the state’s Licensing page is a great place to check out the state-level license requirements. It’s up to you to learn if there are any licenses for your industry, so be sure to complete this step!
Whenever you apply for a license or permit, we recommend inquiring about the requirements for renewing your licenses. That way you’ll know exactly how often you’ll need to renew your licenses (if applicable).
Meet Insurance Requirements
We highly recommend that every business entity maintain at least some sort of general liability policy — even nonprofit entities. There’s always a chance that something can go wrong (no matter how careful you are).
A natural disaster can happen, a break-in might cost you some important equipment, or an accident during day-to-day operations might cause a broken bone and damaged property. A general liability policy will protect your business if something like that happens.
Georgia state law also requires you to get a workers’ compensation insurance policy if you have three or more employees (and you and other incorporators count as employees). You can learn more about this requirement with the State Board of Workers’ Compensation.
Top Resources for Georgia Nonprofits
Nonprofit work isn’t always easy, but you never have to go it alone! There are dozens, if not hundreds of nonprofit resources available to Georgia organizations.
On the national level, there’s the National Council of Nonprofits. They exist to advocate for and strengthen nonprofits throughout the country by providing nearly comprehensive resources, teaming up with each state’s nonprofit network, and keeping you aware of the trends in policy and public opinion. It’s also a great place to peruse the latest reports and data about charitable giving and advocacy in the U.S.
On the state level, you can always turn to the Georgia Center for Nonprofits. In their own words, the GCN “provides nonprofits, board members and donors with the tools they need to strengthen organizations that make a difference on important causes throughout Georgia.” The GCN does require membership, but joining grants you several advantages, including priority posting on job sites, learning and networking events, and more, so joining will be worth your while.