How to Start a 501c3 in Georgia: A Step-by-Step Guide for Nonprofit Organizations

Georgia is gladly recognized for being filled with southern hospitality, but most importantly, it's the birthplace of some of history's most influential individuals, such as Dr. Martin Luther King Jr. On the other hand, it is also one of the best states in which to start a nonprofit organization due to its very low cost of doing business, friendly environment, and well-structured infrastructure.

So, if you want to start a nonprofit in Georgia, you have finally made a very good decision. But what does it take? How can you raise money for your nonprofit? What nonprofit fundraising software will help to run your nonprofit efficiently? How about recruiting a board of directors? And how best can you make sure your nonprofit stays on the right track? These will be just a few of the questions we'll answer in our step-by-step guide on how to start a nonprofit organization in Georgia.

Introduction: Starting a Nonprofit in Georgia

If you're considering incorporating a nonprofit organization in Georgia, you probably have a vision for serving your community. However, setting up a successful, lawfully operating nonprofit also requires a lot of business planning. Due to their charitable nature, nonprofits have unique legal considerations, including filing for tax-exempt status and registration with the state as a charitable organization. This article will help you through the various steps of opening a nonprofit in Georgia. You can also check out our Nonprofit Blog for more specific information on starting and running a nonprofit organization.

What is a Nonprofit?

Nonprofits are entities organized to serve a charitable purpose. They differ from for-profit organizations in that they funnel profits back into the organization to further their mission—rather than to generate a profit. You can incorporate your nonprofit organization as an LLC or a corporation. 

Most founders choose to establish a nonprofit corporation. Limited liability companies and corporations are the two most common business structures that provide personal liability protection. What this ultimately means is that your personal assets- like your house or car- can't be touched if anyone files a lawsuit against your business for a debt or obligation.

As you consider whether you'd like to form a corporation, keep one consideration in mind: Most nonprofit founders seek to make their organization tax-exempt under Section 501 of the Internal Revenue Code. The IRS will consider your nonprofit for this federal tax exemption only if you organize your business as a trust, association, or corporation.

There are many varieties of nonprofits, but the most common is the 501(c)(3) charitable organization. The 501(c)(3) organizations are those that can qualify for tax exemption through the IRS. The following are types of organizations that are often classified as 501(c)(3) organizations:

• Youth Centres
• Animal welfare organizations
• Religious organizations

Other kinds of nonprofits include:

• Veterans' organizations
• Social or recreational clubs
• Trade associations
• Civic leagues
• Foundations

Nonprofits might be oriented in social, educational, literary, scientific, or other spheres.

What Is the Difference Between Unincorporated Nonprofits and Incorporated Nonprofits?

Unincorporated nonprofits are less formal than incorporated nonprofits. They generally consist of an informal group of individuals dedicated to the accomplishment of some purpose related to the nonprofit without having undergone the formal incorporation process. While unincorporated nonprofits have a mission and some type of charitable purpose, they lack the legal standing or structure of a corporation.

On the other hand, nonprofit corporations are legal entities with formal incorporation. The following are the advantages of this type of organization:

• Legal status and recognition
• Liability protection to the members thereof
• Ability of the organization to contract directly with third parties in its own right, rather than any individual person entering these contracts 

An incorporated nonprofit will provide a more defined organizational framework that will benefit 501(c)(3) governance.

Benefits of Starting a Nonprofit in Georgia

The Georgia state provides an ideal ground for starting a nonprofit organization based on its favorable business climate and the engaging atmosphere of nonprofits. Below are some of the key benefits of starting up a nonprofit in Georgia:

Low Cost of Business Incorporation

The most appealing quality of starting a nonprofit organization in Georgia is that it is relatively inexpensive to get started. The fees at the state level for forming a nonprofit corporation are among the most affordable in the nation. The state also provides a quick, streamlined online filing system for registering your organization with the Georgia Secretary of State, saving you both time and money in the formation process.

Tax Advantages

Georgia extends a number of tax benefits to nonprofit organizations. For example, it extends state income tax exemptions to nonprofit entities that are registered as 501(c)(3) organizations with the Internal Revenue Service. Besides this, Georgia extends sales tax exemption on purchases related to the organization's charitable purposes; thus, enabling the said organization to reduce its operating costs significantly. These fiscal incentives have remained so important in allowing nonprofit organizations to maximize benefits to their community.

Grant and Funding Opportunities

There are thousands of local, statewide, and national foundations that award grants to nonprofits for everything from education and health initiatives to arts and social justice causes. In addition, Georgia is one of the more philanthropic states in the country, so there are also options for major gifts from individual donors and corporate sponsorships. Nonprofits in Georgia can explore varied fundraising options integral to the sustainability of their programs.

Booming Nonprofit Community

There are thousands of nonprofits registered in the state, and thus, one can call this home for a very vibrant nonprofit community. A large community, generally speaking, provides ample opportunities for networking and collaboration. Associations for nonprofits, like the Georgia Center for Nonprofits, encourage resources, training, and advocacy that will help organizations be successful. The other beauty of the nonprofit landscape of Georgia is that it encourages collaboration to a level wherein new and old entities come forward to achieve what they cannot do individually: reach more people with their causes.

Supportive Ecosystem for Nonprofits

The state is a host to many resources tailor-made for nonprofit organizations, ranging from incubators and accelerators to a plethora of training programs. Programs, research, and support for nonprofits are regularly provided by local higher education institutions such as Emory University and Georgia State University. What's more, Georgia hosts several volunteer centers and community-based organizations that will help you recruit volunteers to help carry out your mission. A larger and more diverse population in the state also creates a broad pool of individuals who are interested and willing to connect with or support nonprofits.

Potential Donors and Volunteers Access

With a large and diverse population, nonprofits can tap into myriad types of donors, volunteers, and partners in Georgia. Whether your nonprofit serves urban communities in Atlanta or more rural areas throughout the rest of the state, you'll find a population willing to support causes with ease. Similarly, Georgia boasts a very focused tradition of community involvement, with many Georgians committed to volunteering and making a positive difference in their communities. In this way, nonprofits can find dedicated volunteers, donors, and board members aligned with their mission.

Strategic Location and Connectivity

With its central location in the southeastern United States, Georgia provides an ideal site for both national and international outreach. Its strong transportation infrastructure- particularly its airport, the world's busiest Hartsfield-Jackson Atlanta International Airport- allows easy access to and from it by traveling and connecting with prospective partners, funders, and volunteers throughout the nation and beyond.

Government Support to Nonprofits

The state of Georgia supports nonprofits through a host of sponsored programs and incentives, while also supporting nonprofit initiatives through the Georgia Department of Economic Development and through the state's local chambers of commerce. It is committed to developing a strong nonprofit sector as a partner to respond to social, economic, and community challenges.

Steps To Start A Nonprofit In Georgia

Step 1: Name Your Organization

First, you should start a nonprofit by choosing a name that is indicative of its purpose and mission. Naming your nonprofit within the state of Georgia requires uniqueness and should clearly state the focus of the organization. According to the requirements of the state, the name of the nonprofit has to include the term "corporation," "incorporated," "company," or "limited," or any abbreviations thereof. You can check if a name is available through a search of the Georgia Secretary of State's website. Once you have verified that your desired name is available, you can proceed to incorporate your organization.

Step 2: Naming the Incorporators and Directors

Next, you will want to identify incorporators and directors, which would provide the legal and functional structure of your nonprofit. Georgia requires only one incorporator to sign the Articles of Incorporation, but you can have more if you wish. These individuals should dedicate themselves to leading your nonprofit through its early stages and beyond.

The Directors are the persons who govern the nonprofit. Georgia law requires that a nonprofit have at least one director, but it is highly advisable that a nonprofit have at least three directors, at a minimum, if seeking federal tax-exempt status from the IRS. Directors need to be at least 18 years of age and may reside anywhere within the United States. The directors are responsible for determining the policy of the organization, overseeing its affairs, and making sure that the operations further the mission and goals of the organization.

Step 3: Registered Agent Appointment

All nonprofit organizations in Georgia require having a Registered Agent. The agent acts as the contact for your nonprofit to receive legal documents and official notices. This Registered Agent in Georgia should be a resident of the state of Georgia or a business entity that may do business in Georgia. In this context, if you choose a business entity, then the entity must have a physical address within the state.

Step 4: Fill out Georgia Articles of Incorporation

Once you have chosen your name, and appointed your directors and Registered Agent, you will be ready to file the Georgia Articles of Incorporation. This is the legal document that brings your nonprofit into existence. You can submit the paperwork online or by mail for a filing fee of $100. The Articles of Incorporation will require the name of your organization, address, the name and address of the Registered Agent, and the names of incorporators and directors. You're also required to provide the purpose of your nonprofit and if it will have members; this is also an extremely important part of your legal structure.

Step 5: Filing the Notice of Intention to Incorporate

Following your filing of the Articles of Incorporation, Georgia law requires you publish an Intent to Incorporate in a local newspaper. This is due within one business day after filing. The cost of publication usually runs about $40. Your intent to incorporate must include the name of your nonprofit and the purpose for which it's organized. You may want to contact the Georgia Superior Court Clerks for assistance in determining the appropriate publication outlets.

Step 6: Obtain a Federal Employer Identification Number (EIN)

Your nonprofit will require an Employer Identification Number to legally operate and manage finances. The EIN is issued by the IRS and is needed for most activities- for instance, applying for tax-exempt status and opening a bank account. You can apply for your EIN online through the website of the IRS by filling out Form SS-4.

Step 7: Organizational Meeting and Nonprofit Bylaws

Georgia law requires that nonprofit organizations hold their first organizational meeting after incorporation and formally adopt bylaws. Bylaws are the set of rules that govern the internal operations of your organization. They typically include:

• The Articles of Incorporation contain the mission and purposes of the nonprofit
• The manner of election and removal of directors
• The procedures for board meetings, including the requirements of quorum and voting.
• The various officers' roles and responsibilities, which include but are not limited to the president, secretary, and treasurer
• Policies related to conflict of interest, procedures for disputes resolution

How the bylaws may be changed Bylaws will be helpful in the operation of your organization and will be extremely important as you seek tax-exempt status from both the Internal Revenue Service and the state of Georgia.

Step 8: Application for Federal and Georgia State Tax Exemptions

The next step is going to be the application for tax-exempt status. The IRS classifies each nonprofit under Section 501(c)(3) of the tax code and grants federal tax exemption. You'll either complete IRS Form 1023 or 1023-EZ, depending on the size of your organization. The period taken by the IRS to process the application may take many months, but with the approval, you are given a determination letter stating that you have achieved a tax-exempt status.

Once you have received your federal tax-exempt status, you will still want to apply for Georgia state tax exemptions. Most nonprofits are also automatically exempt from Georgia state income taxes; however, some nonprofits may be required to pay state sales taxes, though there are specific exemptions for hospitals, schools, and charities.

Step 9: Get a Necessary Georgia State Business License

Some nonprofits require a business license, depending on the nature of activities conducted by your nonprofit. The licensing requirements can be different in your local jurisdiction, and you will have to get in touch with your local business licensing office to find out whether your nonprofit requires a license to operate.

Step 10: Charitable Fundraising Registration

If your nonprofit plans to solicit donations from the general public, you will be required to register with the Georgia Secretary of State's Charities Division. Your organization will have to do this because Georgia law requires that any organization soliciting the public for money be properly registered to ensure openness and accountability. The registration fee is $35, and renewal, which must be filed every year, costs $20.

Step 11: Open a Nonprofit Bank Account

To accept and process donations, as well as conduct other financial activities, your nonprofit will want to open a unique bank account. When you go in to meet with the bank, you'll need to bring in your Articles of Incorporation, Nonprofit Bylaws, and EIN.

Step 12: Filing Initial and Annual Reports Filing Initial Report

With the filing of the Articles of Incorporation, Georgia requires registered nonprofits to file an Initial Report. The Initial Report is due within 90 days of the date of filing of the Articles of Incorporation. This report will request very general information about your nonprofit, which will include the name of your organization, address, and directors. On the other hand, Georgia requires the filing of an Annual Report by nonprofits every year between January 1 and April 1 of each and every year. The filing fee is $30, which must be completed online for the Annual Report.

Ongoing Georgia Compliance Requirements for Nonprofits

In Georgia, nonprofit organizations must focus on maintaining compliance with the state and federal regulations. In fact, it is considerably important that your organization maintains those requirements for good standing and keeps its tax-exempt status to further the operations. Each year, under Georgia state and federal law, a few filing and reporting requirements are obligatory for nonprofits.

These include the filing of an Annual Report with the Georgia Secretary of State, IRS Form 990 for federal tax reporting, and a Charitable Solicitation Renewal. Depending on the local jurisdiction, there could be other local compliance requirements that would need to be satisfied. It is very important to keep informed about and attentive to these continuing requirements so as not to incur any legal or possible financial ramifications.

Corporate Annual Report

Filing an Annual Report is one of the basic ongoing compliance requirements for Georgia nonprofit organizations. It allows the state to capture some key information regarding changes to the structure of the organization and also contact information. Changes in a nonprofit name and address, or those affecting the names and addresses of board members and officers, should be filed with the Georgia Secretary of State. The Annual Report needs to be filed online and must be filed yearly, usually in the first quarter of the year.

The purpose of the Annual Report goes beyond just fulfilling State requirements; it is also a very effective avenue to communicate your nonprofit's successes and raise awareness about your cause. Many major donors and philanthropic foundations look for evidence of transparency, financial responsibility, and success when considering funding opportunities. A well-designed Annual Report has the potential to be a tremendously effective tool for garnering new support, volunteers, and funding.

IRS Form 990

The IRS requires each tax-exempt nonprofit organization to annually file a Form 990. Form 990 is an important tax form. Through it, the federal government is able to find out a lot of lengthy information about the revenues, expenses, activities, and operations of an organization. It provides enormous summaries of the income and expenses of the organization, descriptions of its mission and programs, and breakdowns of the governance structure. Filing the IRS Form 990 is necessary in order to retain your nonprofit status with the federal government.

Exempt Organizations pay the Form 990 on or before the 15th day of the fifth month after the close of the fiscal year. If your organization needs it, they can apply for an automatic extension of six months. Given the complexity of the form, it is very advisable that the preparation and timely filing service your organization obtains be done by an experienced accountant who specializes in nonprofits.

Failure to do so may result in penalties, loss of tax-exempt status, and/or other legal consequences. Filing this report on a regular basis proves that your nonprofit organization is concerned with transparency, financial stewardship, and responsible management. This document will serve to prove the impact your organization is creating within the community.

Renewal of Charitable Solicitation

In the state of Georgia, any nonprofit that solicits donations from the general public must register with the Georgia Secretary of State's Charities Division. The registration is effective for 24 months. To keep your nonprofit in compliance, it'll be required to renew this registration prior to the expiration date. A renewal notice will generally be sent to the organization one month before the registration expires, and a renewal must be filed with a fee of $20.

Along with the renewal notice, your organization will have to provide some detailed information about the charitable contributions received during the year earlier. The notice also calls for submission of your IRS Form 990 for the last two years, financial statements, and also a report from a CPA where the size and scope of your organization's fundraising activities may demand such a report.

This will keep your organization operating transparently and responsibly whenever you are in need of public donations. Ensuring that the public's trust is retained and all the contributions are used for their intended purpose is also one of the significant functions of this process. If your nonprofit relies on public donations, being on track with the Charitable Solicitation Renewal is essential with respect to further fundraising.

Additional Local Compliance Requirements

Aside from state and federal requirements, nonprofits may be further bound by local regulations depending on their city or county of residence. They can be very varied and range from additional business licenses, permits, or even registration requirements. For example, some local governments may require nonprofits to file annual reports or provide documentation concerning their activities within the community.

It's advisable also to get in touch with your local city council or county office for other requirements that need to be satisfied to put your organization into compliance. Failure to meet conditions at the local level may be subject to a fine, penalty, and suspension of operation. This way, you will remain updated with any licensing status and avoid problems further down the line.

Compliance after Obtaining Tax-Exempt Status

Upon approval of the tax-exempt status by the IRS for your nonprofit, the next step will be to file with the office of the Georgia Secretary of State to obtain a certificate of authorization to operate in the state.

It will enable your nonprofit organization to solicit donations and conduct activities within Georgia. You also have to file an annual report in their Secretary of State's office before April 1 of each calendar year. Therefore, you have to keep this information up-to-date and report changes within 30 days. 

Also, nonprofits have to maintain proper books and records with respect to donation receipts, expenses, and income. These should be made available if requested by the IRS or state authorities for inspection. Further, nonprofits whose annual gross receipts exceed $50,000 have to undertake filing of Form 990 with the IRS.

Understanding the Role of a Board of Directors in a Nonprofit

Some of the very important responsibilities of a nonprofit board of directors include:

• Oversee the effective operations of the nonprofit
• Ensure that the nonprofit is in compliance with legal requirements
• Establish the goals and objectives
• Provide sufficient financial oversight
• Improve the public standing of the nonprofit organization
• Employ, manage, retain, assess, and provide remuneration to the CEO or general manager
• Establish a policy-based governance system and adopt technologies that support frictionless board management

Your board of directors helps guide the nonprofit from day one, so don't wait to recruit board members.

Frequently Asked Questions About Starting a Nonprofit in Georgia

How much does it cost to incorporate a nonprofit in the state of Georgia?

One thing that gets in the way of a lot of things when trying to start and run a nonprofit is the cost. However, don't let the cost of starting your organization scare you away. The fees required to start a nonprofit organization are far less than what one might expect. Just to give you a better idea, here is a list of those fees:

• Federal Tax Exemption: $275 or $600
• Filing your Notice of Intent to Incorporate: $40
• Georgia Articles of Incorporation: $100 or $110
• Georgia Initial Annual Registration: $30 filing fee
• Georgia Charitable Registration: $35 filing fee

Many foundations will have funds allocated to assist new nonprofits. Grants are your best avenue for obtaining financial assistance when your organization is just starting out. Make sure you find a few people to help apply for grants and give them access to all the information they would need from you.

What if a Georgia nonprofit makes money?

If a Georgia nonprofit generates money in pursuit of its mission, those funds aren't considered income and are nontaxable. The generated funds can be reinvested to make the nonprofit better.

What kinds of businesses in Georgia qualify to be a nonprofit?

Nonprofit corporations in Georgia include, amongst others, educational, scientific, charitable, veterans, health care, and religious.

Can nonprofits sell products?

Non-profit organizations in Georgia can sell products or services if the sales enable the organization to reach its goals; however, any goods or services sold by the organization are liable to pay sales tax.

Can the founder of a nonprofit in Georgia receive a salary?

The IRS stipulates that no shareholder or person should benefit financially from a nonprofit. Nonprofit expenses may include rent or mortgage, necessary supplies, transportation, utilities, employee salaries, and compensation such as medical benefits and a bonus system. If the founder is an employee of the organization, then she or he may be paid a salary dependent upon their work - so long as it's not excessive. IRS Form 1023 describes the permissible compensation arrangements for directors, officers and employees. Foundations and major donors will review this compensation as part of their research into your organization.

How many board members is a nonprofit in the state of Georgia required to have?

The state of Georgia requires only one board member for a nonprofit organization; however, the IRS rarely grants tax-exempt status with less than three unrelated board members. It's recommended that the number be three to twenty-five board members depending on the size and purpose of the organization.

Bottom Line

Starting a nonprofit in Georgia is a very rewarding process because it offers you the chance to impact your community powerfully. By following these steps, you'll be well on your way to creating a compliant and effective nonprofit organization. Ultimately, day-to-day operations and fundraising could easily be managed with software designed for nonprofits, like Paybee.

Paybee's nonprofit fundraising platform helps organizations efficiently manage donations, plan fundraising events, and engage with supporters. By integrating technology like Paybee, you will be able to allocate more time to further your mission and less to administrative tasks, ultimately strengthening the impact of your nonprofit. Let's remember: with the right planning, resources, and dedication, your nonprofit can be an asset to Georgia's community.