Welcome to my guide on how to start a nonprofit organization in Colorado. I’ll take you through all the steps you need t consider when doing this on your own but my recommendation is to always start with a professional service that will include the Colorado registered agent service you’re going to need. That partner is Northwest Registered Agent.
Now let’s get started to make sure you’re setting up your Colorado nonprofit the right way and start focusing on helping those that you’re building this for.
Name Your Colorado Nonprofit Organization
When it comes to naming your nonprofit corporation there are rules that are involved you’re going to need to follow. The Colorado nonprofit naming guidelines are as follows:
- Your nonprofit name must include either “Corporation,” “Incorporated,” “Company,” “Limited,” or an abbreviation of one of these words.
- Your Colorado nonprofit name may not contain language stating or implying that the corporation is organized for profit.
- Your Colorado nonprofit name may not contain language that is misleading about the purpose of the corporation.
- Your Colorado nonprofit name may not be the same as or too similar to the name of another business entity already on file with the Colorado Secretary of State.
To check and see if your desired nonprofit name is available you can do that at the Colorado Secretary of State’s office here. It’s imperative that you do this before moving onto the next step. You’re going to be building an amazing nonprofit and the last thing you need is for the Colorado nonprofit register of names to tell you – you can’t use it. It will also be important later as you are working on setting up tax exempt status.
After you’ve figured out that your name is something you can use, I highly recommend you go to GoDaddy to secure your digital domain for the ‘.org’ if you can. It’s just as important for charitable organizations or those giving back to lock in the .org if they can. It’s the unspoken truth of having a nonprofit corporation that you should have a ‘.org’ but it’s not required.
Choose a Registered Agent
As I said earlier, I highly recommend just going with a registered agent like Northwest Registered Agent who has done this for many years and organizations to make sure you’re doing it the right way.
A registered agent is required for any Colorado business entity, including nonprofits. The role of the registered agent is to receive and forward important legal and tax documents on behalf of the nonprofit.
The registered agent must have a physical address in Colorado and be available during normal business hours to accept service of process if your nonprofit is ever sued. The registered agent may be an individual or a business entity but I recommend that you do not try and be your own registered agent. This registered agent is going to accept legal documents on your behalf and if you’re going to be running a charitable organization the last thing you need is someone showing up at your home because you registered it as the nonprofit corporation address for the registered agent.
Go get Northwest Registered Agent to help you.
Create your Nonprofit Board & Officers
This is by far one of the most important steps you’re going to have as you build out your Colorado Nonprofit. If you’re not strategically thinking about how your board members and officers are going to impact your Colorado nonprofit then you need to pause and think about this before moving on.
Colorado Nonprofits are some of the most important organizations in the state to give back to society. These will be voting members to help you maintain compliance and if you’re going to get a federal tax exemption you’re really going to need to understand your people. These members are key to becoming a tax exempt organization and renewing this for you every year.
I always recommend thinking about having individuals that have specific roles and that you’re deliberately splitting up roles and responsibilities.
Develop Bylaws & Conflict of Interest Policies
The bylaws of your Colorado nonprofit will serve as the rulebook for how your organization will be governed. It is important that the bylaws are drafted to comply with Colorado law and that they are approved by a majority vote of the directors.
The bylaws typically contain the following details:
- The name and registered office of the nonprofit
- The purposes of the nonprofit
- The number, names, and addresses of the initial directors
- The rules for electing future directors
- The roles and responsibilities of the officers
- The rules for holding board meetings
- The quorum requirements for board meetings
- The procedures for amending the bylaws
It is also important to have a conflict of interest policy in place. This policy should require that directors and officers disclose any potential conflicts of interest and recuse themselves from voting on or participating in any decision in which they have a conflict. Typically you’re going to find the following type(s) of guidelines for this document:
- A statement of the nonprofit’s commitment to avoiding conflicts of interest
- A definition of what constitutes a conflict of interest
- A procedure for disclosing potential conflicts of interest
- A requirement that directors and officers recuse themselves from voting on or participating in any decision in which they have a conflict
- A procedure for handling actual or potential conflicts of interest
Appoint An Initial Board Of Directors
The next thing you’ll want to do is appoint your initial directors. You will typically find that the bylaws of the organization will have some sort of guidance around this but in general, you’re going to want to have individuals that have a broad understanding of how nonprofits operate, how to file taxes, and how to maintain compliance.
You’re also going to want to have a mix of individuals with different skill sets so that the board is well-rounded. Typically, you’ll see that there are three types of directors on a nonprofit board:
- The executive director: This individual is responsible for the day-to-day operations of the nonprofit and reports to the board.
- The president: This individual presides over board meetings and is typically responsible for fundraising.
- The treasurer: This individual is responsible for the financial affairs of the nonprofit and reports to the board.
The conflict of interest policy should also be approved by a majority vote of the directors.
File Colorado Articles of Incorporation
The next step in starting your Colorado nonprofit is to file articles of incorporation with the Colorado Secretary of State.
The articles of incorporation must contain the following information:
- The name of the nonprofit
- The registered office address and the name and address of the initial registered agent
- The names and addresses of the initial directors
- A statement that the nonprofit is organized for one or more exempt purposes
- A statement that the nonprofit will not engage in any activity that is not permitted by a 501(c)(3) organization
- The signature of an incorporator
- The date of incorporation
The articles of incorporation must be filed with the Colorado Secretary of State along with the filing fee of $50.
Obtain an Employer Identification Number (EIN)
Once you’ve done this it’s time to go get your Federal Employer Identification Number which is as important if not more than anything else on this list. Think of this as your social security number for your business. The Internal Revenue Service is going to want to see this as you setup a business bank account and start asking for sales tax exemption. It’s important to make sure you go to the IRS website here to apply and get your EIN for your Nonprofit Corporation.
Get Colorado State Tax Identification Numbers/Accounts
The next thing to do is apply for your Colorado state tax identification numbers/accounts. This includes a Sales Tax Exemption Certificate and a Withholding Account Number.
To get your Sales Tax Exemption Certificate, you’ll need to complete the following steps:
Fill out the Exemption Certificate Application.
Mail or fax the completed application to the Colorado Department of Revenue.
Once you’ve received your Sales Tax Exemption Certificate, present it to your vendors to avoid paying sales tax on purchases made for your nonprofit.
Apply for 501(c)3 Tax-Exempt Status
The final step in starting your Colorado nonprofit is to apply for 501(c)3 tax-exempt status with the IRS. This will allow you to accept tax-deductible donations and apply for grants.
To apply for 501(c)(3) status, you’ll need to file Form 1023 with the IRS. The filing fee for Form 1023 is $850.
Once you’ve received your 501(c)3 determination letter, you’ll be able to start fundraising and accepting tax-deductible donations!
Obtain Other Business Licenses & Permits
You’re most likely going to need a statewide business license to help you make sure you have the right retail sales tax license and help make sure you’re covered with the right tax exempt status you’re looking for.
Make sure you go to the right city and/or county to get the right business licenses you’re going to need for your type of business.
How much does it cost to start a non profit in Colorado?
While the cost of starting a nonprofit in Colorado varies depending on the size and scope of your organization, the average cost is between $500 and $1,000. This includes filing fees, incorporation fees, and 501(c)3 application fees.
How many board members are required for a nonprofit in Colorado?
There is no minimum or maximum number of board members required by the state of Colorado. However, it’s generally recommended that nonprofits have at least three board members.