ten steps
for starting a
Nonprofit, Tax-exempt Corporation in Connecticut

with hyperlinks to the necessary documents and filing instructions;
where there is no hyperlink there is no prescribed form - consult a formbook or seek legal advice (SEE DISCLAIMER)
NOTE:  SOME FORMS HAVE BEEN COPIED BY ME AND TURNED INTO FILLABLE FORMS; I RECOMMEND THAT YOU CHECK
THE OFFICIAL FORM ON THE APPLICABLE WEBSITE (DRS, IRS) TO MAKE SURE THE FORM IS CURRENT
(LAST UPDATED 1/28/2010; PLEASE NOTIFY ME if you find BAD LINKS or errors)

BEFORE YOU START -- SURE YOU WANT TO DO THIS?  Click for a list of factors you may wish to consider

Step 1. INCORPORATION DOCUMENTS; Action by Incorporators. Incorporators adopt a certificate of incorporation and bylaws, appoint directors and statutory agent for service. The incorporators may also appoint officers to serve until the directors' meeting, although it is more common to have the directors do this at their first meeting, or by consent.

Documents required for incorporators' meeting:

1. Certificate of Incorporation. This should contain appropriate language to permit qualification as tax exempt (be sure to read IRS Publication 557 BEFORE submitting -- not all purposes or activities qualify for examption), and is signed by (1) incorporators and (2) a Connecticut resident as "statutory agent for service," accepting appointment. You may file using the State form with attachments, or skip the state form if your document includes the same information as the state form requires. A Connecticut business address is also required.  Remember that this document trumps your bylaws.  In other states this may be known as the "articles" of incorporation.
   

2. Minutes of the meeting (signed by duly appointed secretary of the meeting) OR unanimous written consent (signed by all incorporators) stating that bylaws have been adopted, directors elected, and any other actions taken.  It is my view that incorporators may appoint initial officers rather than leaving this to the directors.
   

3. Bylaws (preferably signed by incorporators).  Make sure these are consistent with the certificate!

Step 2. Action by Directors. Directors meet and elect officers (if not already done), authorize application for tax exemption and select counsel to assist, and any other pertinent matters (e.g. authorize opening bank account).

Documents required for directors' meeting :

1. Minutes of meeting (signed by secretary) OR unanimous written consent (signed by all directors).
   

2. State form: Organization and First Annual Report (signed by an officer). Residential and business addresses required. No P.O. Boxes are acceptable.

Documents to be filed:

1. Certificate of Incorporation.  (State form or your substitute so long as it includes everything in the state form.)  SEE ABOVE regarding the required ingredients!
   

2. Organization and First Annual Report.  (State form required.)
   

Fees: EFFECTIVE 10/1/09:  $100 filing fees (previously, $65) consisting of $20 (certificate) + $30 (franchise tax)  + $50 (annual report) ; add $50 (was $25) for expedited service; add $50 (was $25) for certified copy of certificate of incorporation -- for a total of $200.  Click for Complete Fee Schedule.  (PDF)

NOTE:  The expediting fee applies to EACH thing you want expedited. 
Example:  You want to file expedited plus you want the certified copy expedited.  Add $100 ($50 each).

Timing: Can obtain confirmation within 48 hours of filing.

Step 4.  File with Public Charities Unit of Attorney General's Office. Before any fund-raising, either file an Exemption Certificate CPC-54 (for example, if anticipate fundraising gross revenues of under $50,000, if a church, or another exemption applies), or a Registration Certificate PCUREG-1. Each requires signature of two officers and $25 fee. You can postpone this if not fundraising.  REMEMBER, until the IRS has recognized the organization as exempt, it should not tell donor that donations are tax-deductible.  However, if IRS does grant recognition on an application that is timely filed (within 27 months of incorporation), deductions WILL BE deductible retroactive to teh date the organization was incorporated.

Step 5.  OBTAIN tax ID number FROM IRS (often needed to open a bank account; needed to complete exemption application): 

Documents:

1. If applying by mail or fax:  IRS Form SS-4 (application for employer identification number); may be applied for earlier. Read the instructions.   Must be signed by officer, preferably president, and must include social security number of filer. Since December, 2001, the form permits a third party to be named to whom the number, once assigned, may be given if the SS-4 is submitted by fax/internet.  However, this doesn't work if you use the same address for the organization and the "third party"; also, technically the IRS will require that the organization have executed  IRS Form 2848 (Power of Attorney) naming the "third party" as power of attorney.  (For a corporation, generally this means an accountant or attorney can be the "third party," not just an officer.)  If sending by fax:  see page 2 of instructions) - get number within a few days.

2. If applying online: NO FORM REQUIRED -- use the IRS interview format.  CLICK HERE.  The EIN is "provisional," and the IRS may fax with follow-up questions.
   
   
3. Officer can call directly and get a number over the phone. A third party cannot do this.

Documents to be prepared and filed with IRS (you can fill them in online, then print them out):

1. IRS Form 1023 Application (signed by President).  Read the instructions first!  Be detailed!  Answer "NO" to the question about political activity!  For help understanding the "public support" requirements, read "Remember Your Fractions."  NOTE:  the form "linked" on this page is the current form revised in 2006, with updated fees eff 10/1/2009..  Earlier versions are not accepted.
   

2. If an attorney or accountant is filing: IRS Form 2848 (Power of Attorney).
   

3. If organization is making an election under section 501(h) to have its lobbying measured by a specific set of numerical guidelines, IRS Form 5768.

4. BE SURE YOU HAVE CHECKED the list on "Office of Foreign Assets Control" to make sure your organization  includes no "specially designated nationals" or "blocked persons" who may be viewed as those who are or aid terrorists and make sure this any grant, etc. procedures address this issue.
   

Fee:
Postmarked after 1/3/2010:  $850 ($400 if expect income to be $10,000 or less annually)  (IRS is developing an online tool called "Cyberassistant" -- once developed fees will be $850 without, $200 with, notwithstanding size.
Send a bank check or certified check to speed up handling.

Timing: usually must be filed within 27 months of incorporation in order for tax exemption to apply retroactively to incorporation date. (Exceptions apply for very small organizations and in limited circumstances.)  However, obtaining a determination may take 3-6 months.  Often IRS will acknowledge receipt and promise to respond in 100 days.  At that point, may send a request for further information requiring response within a short period of time.  If reply is not received, IRS may inactivate request.  Application may be reactivated if requested within 90 days.

Step 7. REGISTER WITH CT DEPARTMENT OF REVENUE SERVICES.

Form: REG-1, application for tax registration number. (You may be able to register on-line -- but you will have to send the IRS letter separately so the old way may be just as good.)  Phone number and social security numbers of 3 officers required. Must attach IRS letter (or explain that it is pending, and then follow up later with the IRS letter.)

Fee: None, unless likely to engage in sales.

Timing issues: none.

Step 8. ct SALES tax exemption is automatically available for payments made by organization's check or credit card:  use Form CERT-119 and attach the IRS exemption letter.  For other exemptions, see the DRS page. 

STEP 9.  TOWN HALL:  CT PROPERTY TAX EXEMPTION is important if the organization owns real estate or any significant TANGIBLE PERSONAL PROPERTY including office equipment, computers, etc.  The organization must file Form M-3 by November 1st of the year it owns property in the town where it would otherwise be subject to tax and then quadriennially (computed with 1965 as the first year:  2009 was the most recent quadriennial filing, then 2013, and so on.)  In most towns, the property will not be exempt until the tax year following the filing. 

STEP 10.  KEEP IN GOOD STANDING AND RETAIN EXEMPTION. See the accompanying COMPLIANCE LIST.  In particular: the IRS will monitor filings of Form 990 / 990-EZ to see whether you continue to qualify as a "public charity."  This is determined using a rolling average of your sources of support over five years, the current year and four prior years, as reported on the 990.  This gets confusing, so read "Remember Your Fractions."  If you "fail" the test, the 501(c)(3) exemption is unaffected, but status as a private foundation may cause additional filing requirements and the imposition of an excise tax on net investment income, plus a fine of up to $20 / day for failure to file the informational return required of private foundations, Form 990-PF.  Therefore, it is very important to follow up.

Need help? If you are unable to afford an attorney (fees usually run $2,000 to $5,000+) you may be eligible for assistance from Yale Law School students at the Yale Law School Nonprofit Organization Law Clinic.  Contact Professor John Simon and explain your situation.  If you are an organization with a large budget and a big problem but no money for legal fees, contact the Pro Bono Partnership.  You may also be able to obtain help from an accountant volunteer with Community Accounting Aid & Services, Inc. (sponsored by the CT Society of Certified Public Accountants).