Are you looking to start a nonprofit corporation in Tennessee, but you’re not entirely familiar with how the formation process works?
Forming a nonprofit organization can have some tricky compliance requirements, and you don’t want to risk making any mistakes during this process. In this guide, we’ll discuss all the relevant details of forming a nonprofit corporation in Tennessee.
To get started, please reference our 11-step guide below or hire a professional online incorporation service to get started.
Guru Tip: To see how some of the top online nonprofit incorporation services stack up, here are two of our most popular comparisons - Incfile vs LegalZoom & Northwest Registered Agent vs LegalZoom.
How to Form a Tennessee Nonprofit Corporation (in 11 Steps)
1) Name Your Nonprofit
The first step for forming a nonprofit organization in any state is to come up with a strong name for it. Remember that the name of your nonprofit is often your best opportunity to make a good first impression with people, and you should clearly describe your organization’s mission in your name.
Before you become too attached to one name idea, you should run a Business Name Availability Search on the Tennessee Secretary of State website. This will tell you if someone else is already using your desired name, or if it’s available for your nonprofit to use.
Get Your Nonprofit URL
To solidify your brand and to fully lean into your nonprofit name, register the URL. Through GoDaddy you can easily register it and build a professional website so that nobody else can use or claim it.
2) Designate an Incorporator and an Initial Board of Directors
The incorporator is the person who is responsible for preparing, signing, and filing your nonprofit’s Articles of Incorporation. This document is the form that officially creates your organization with the state of Tennessee.
At this time, you should also choose your initial board of directors.
In Tennessee, you are required to have at least three people on your initial board.
3) Designate a Registered Agent
Tennessee nonprofit corporations must designate a person or business to receive legal notices on behalf of the company. This important point of contact is known as the registered agent. You will be required to list the registered agent’s name and address when filing the Articles of Incorporation.
Who Can Be My Registered Agent? A registered agent must have a physical address within the state of Tennessee where mail and legal notices can be served during regular business hours. You can hire a service to act as your registered agent, serve as your own registered agent, or even use an accountant or other business professional’s address – with their consent, of course.
The Tennessee Secretary of State says that,
A corporation transacting business in Tennessee is required to have a person or legal entity located in this State designated to receive documents on its behalf, and this function is served by the registered agent. The registered agent’s name and street address in Tennessee must be on file with the Division of Business Services at all times.”
Our Recommendation
We recommend hiring a professional registered agent service to act as your registered agent. Doing so will help eliminate junk mail and more importantly, keep your personal and/or corporate or personal address off the public record.
Guru Tip: You can get a free registered agent service when hiring an incorporation service to form a nonprofit corporation. See our review of Incfile and review of Northwest Registered Agent to learn more.
4) File Nonprofit Corporation Charter
The official document required to form your nonprofit corporation with the state of Tennessee is the Nonprofit Corporation Charter.
This two-page document includes all of the vital information describing the organizational structure of your nonprofit, including the following information:
- Name of your nonprofit corporation
- Consent for use of entity name (if indistinguishable from a pre-existing one)
- Name and address of your registered agent
- Month that will close your fiscal year
- Duration of your corporation (if not perpetual)
- Effective date of your nonprofit (if different from filing date)
- Address of the principal executive office
- Name and address of each incorporator
- Provisions for distribution of assets in the event that your corporation dissolves
- Name and signature of your incorporator
Once you’ve finished filling out this form, you’ll need to write a check for $100 and mail it along with your charter to the following address:
Business Services Division
Tre Hargett, Secretary of State
State of Tennessee
312 Rosa L. Parks AVE, 6th Fl.
Nashville, TN 37243-1102
The Tennessee Secretary of State typically processes nonprofit corporation formations within 4-5 business days of receiving your charter. This processing time assumes that all of your information has been filed correctly.
5) Acquire an EIN
According to the IRS, every nonprofit corporation should obtain a federal tax ID number, otherwise known as an employer identification number (EIN).
The EIN enables your nonprofit to hire employees, open business bank accounts, and file for 501(c)(3) tax exempt status. The process to acquire an EIN is quite simple, and includes the preparation and filing of one simple form. Obtaining an EIN is also free.
6) Establish Bylaws and a Conflict of Interest Policy
Think of the bylaws as a governing document for how your nonprofit corporation will be operated. Bylaws outline procedures for things like holding meetings, outlining your membership structure, defining your corporate purpose, describing the responsibilities of your board of directors, and other important details.
A conflict of interest arises when a contributor to your nonprofit has personal interests that compete with those of your corporation.
The conflict of interest policy protects your nonprofit in these situations. It includes a duty to disclose clause that says anyone involved with your nonprofit must disclose any financial interests and material facts to your directors. It also outlines procedures for addressing conflicts of interest if they ever arise.
7) Hold an Initial Meeting and Establish Your Corporate Record
At this point, you’re ready to hold an initial organizational meeting with your board of directors. At this important meeting, you need to elect directors and officers, approve the bylaws and conflict of interest policy, and adopt resolutions.
As with any meeting of your nonprofit corporation, you should take detailed notes of everything that takes place. This documentation can then become part of your corporate record, which is a permanent written record of all important organizational decisions.
8) File for Tennessee Tax Exemption
In Tennessee, nonprofit corporations are automatically exempt from the state’s franchise and excise tax. That said, you’ll still want to apply for federal tax exemption with the IRS; you’ll need it if you want exemption from the Tennessee’s sales and use taxes. This IRS designation, your bylaws, and a copy of your charter will have to accompany your application for sales tax exemption if you want your organization to avoid the sales fees. For more information on this important step, the Tennessee Department of Revenue can help.
9) Register for Charitable Fundraising
In Tennessee, nonprofit corporations are required to register with the Secretary of State in order to receive and solicit charitable contributions. To learn more, check out the state’s charitable organizations page. Then you’ll be ready to raise funds for your cause.
10) Obtain Business Licenses and Permits
While Tennessee does not have a general business license that applies to all companies operating in the state, there are hundreds of industry-specific permits and licenses that you may need to acquire for your organization.
For one, Tennessee upholds the licensing requirements of any federally-regulated industries. Check here to determine if your business must be licensed by a federal agency.
You’ll also want to take a look at the state’s databases of licenses and permits to determine if any of them will apply to your nonprofit corporation.
Your city or county may also require general business licenses. Here some of the largest cities or counties in Tennessee which require local licenses:
11) Acquire Insurance
Every business with employees located in the state of Tennessee is required by law to obtain two different kinds of insurance policies: workers’ compensation and unemployment insurance.
You can learn more about these insurance types and how they apply to Tennessee businesses by visiting the Tennessee Department of Labor and Workforce Development’s Bureau of Workers’ Compensation or the Unemployment Benefits pages. No matter what line of business your nonprofit is in, you need these policies.
In addition, you should also pursue general liability insurance and other more industry-specific types of insurance, but these are not legally required.
Where Can I Find Help for My Tennessee Nonprofit?
The process of forming and maintaining nonprofit corporations can be tricky, no matter which state you’re located. Fortunately, there are great resources in Tennessee to help you out in case you get stuck.
As for the state of Tennessee, if you require assistance, you can always turn to the Center for Nonprofit Management. In their own words, CNM “builds nonprofit capacity through consulting services, educational workshops and trainings, collective impact programming, networking opportunities, special events, member resources, and more.” CNM does require membership, but joining grants you several advantages, including both individual and organizational learning opportunities, resources, discounts, and more, so joining will be worth your while.
In addition, if you would rather hire a service to incorporate your nonprofit for you, that’s an option as well. There are plenty of services that can handle much of the formation process, leaving you more time to focus on the actual operation of your nonprofit corporation.
These service providers (like Northwest Registered Agent) also offer valuable and convenient bonus features, like the inclusion of a full year of registered agent service with the purchase of a nonprofit formation package. They can save you a considerable amount of hassle, and all without costing an arm and a leg.
Conclusion
As you can see, there are quite a few crucial steps that you’ll need to take if you want to form a compliant nonprofit corporation in the state of Tennessee. However, it’s important to remember that if you need help at any time, it is available to you ― you don’t need to DIY the entire process.
We hope this guide helped you understand the details of the Tennessee nonprofit corporation process, and we wish you the best of luck with your new charitable organization!