So you’re interested in starting your own nonprofit charity or foundation of some sort? First of all, kudos to you! Personally, I’m very passionate about helping people and if you’re reading this, you must be too, click for more info.

There are a few things to understand before you start out with your own nonprofit. Here’s what this article will tell you about the crash course:

It’s just that, a nonprofit business-a business.

What is it that takes to establish a business?

What distinguishes a non profit charity from a normal business?

Why do you need an Employer Identification Number (EIN), even if I don’t have staff?

Once I have founded my nonprofit, what’s next?

A nonprofit is still an enterprise:

There’s a notion out there that if you run a nonprofit, it will be easier than a regular business in some way. This is simply not true. People also believe that you cannot earn a living running a nonprofit, this is also very false indeed.

A nonprofit corporation is still a corporation. That implies, as an individual, it is treated by the government and the legal system as a distinct, working, moving, taxpaying person (if it’s not excluded, if it is-it always files a tax return). As a nonprofit you still need to have a budget, raise money to provide your services, employ a work force (maybe), and maintain accounting records amongst many other things.

Starting out you need a realistic expectation for how much work founding and running a nonprofit will be. If you incur expenses and can not raise funds to pay them, you may go bankrupt just like a real business!

If you fail to keep the proper accounting records and file the required annual report to the IRS you may forfeit your tax exempt status! Don’t let that you or scare you away, just begin with clear expectations. As I’ve outlined elsewhere, it’s very possible to start your nonprofit, have the corporation up and running, but not yet incur expenses or overhead because you don’t actually have an office or employees. That’s the great thing about our modern world-the personal computer and the home office!

How to Start Any Business:

As I eluded to above, businesses such as a Limited Liability Company or a Corporation are separate legal entities. They will have a separate Tax ID number, or Employer Identification Number (EIN) which is like a Social Security Number to the IRS.

This separate entity may have to pay tax, and may get into legal trouble. The advantage is that it can generate a profit for you, the lender, while holding you, the investor, nearly free from the responsibility. If the company gets sued, and you ran everything properly, then you won’t be personally liable. There are exceptions, as with everything, like when you don’t follow the proper good business practices which all businesses should follow, but that’s the basic principle.

You go to the state of your choosing to establish your own company and submit an Articles of Organisation, of Articles of Incorporation.

Typically this section of the procedure is very easy and quick, and can be completed at a low nominal cost. If you want to file outside of your home state, places such as Nevada and Delaware are among the Corporations’ most common.

They also have advantageous state tax laws for corporations, Nevada some would say that they have the best “corporate curtain” (the exposure cover I listed earlier), and Delaware has one of the country’s richest history of corporate case law.

You will need to hire a Registered Agent if you file in a state that is not your place of business or residence. A Licensed Agent acts as a front office in the state of incorporation (a civil requirement) and collects and transfers you all mail at a small charge.