How to Start a Nonprofit Organization in Arizona 2024


Steve Bennett
Steve Bennett
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Start a Nonprofit in Arizona

Establishing a nonprofit is kind of similar to forming a corporation in Arizona. You can easily start a nonprofit in Arizona as a limited liability company, a corporation, or any other type of business structure. Unlike for-profit businesses, nonprofits focus on addressing pressing social issues than profit-oriented businesses.

This article will guide you through the Dos and Don’ts of starting a nonprofit in Arizona. LLCBuddy editors explain all the steps you must follow to form a corporation for your nonprofit organization. It must be noted that this page shared generalized steps to form a nonprofit in Arizona. It is recommended to consult an attorney or hire a professional service.

What is a Nonprofit in Arizona

Nonprofit organizations are legal entities that operate to serve public benefits and address community issues. Unlike for-profit organizations, nonprofits do not aim to generate any profit. The Internal Revenue Service (IRS) generally exempts nonprofit organizations from tax. However, based on the business entity structure, you will receive tax exemptions as a nonprofit.

In Arizona, ensure you have a community issue to address before forming your nonprofit. It can generally be education, religion, charity, social service, or other social issues. Nonprofits do not pay taxes on the money they receive through fundraising programs, donations, or any charitable funding.

Types of Nonprofits in Arizona

The first thing one has to decide is what type of nonprofit structure one wants. There are several types of nonprofits one can start. Here is a list of nonprofit types one can choose from-

  1. Nonprofit LLC
  2. Nonprofit Corporation
  3. Unincorporated Nonprofit

BOI Report Filing

According to the Corporate Transparency Act, every LLC, corporation, and other type of business that is registered with the Arizona SOS or similar authority, must file the BOI report with FinCEN. From January 1, 2024, it is mandatory to file a BOI report for every business entity. In this report, LLCs have to share information about the beneficial owners (having equal or more than 25% share). LLC owners can file BOI reports online or offline.

Businesses in Arizona that are created before January 1, 2024, should file their BOI report by January 1, 2025. Businesses that are created in 2024, must file the BOI report within 90 business days of finishing the formation process. Missing out on filing the BOI report may lead to a monetary penalty of $500/day.

How to Start a Nonprofit in Arizona

Nonprofits are certainly different from for-profit organizations. The main focus of the organization is on social values rather than profit. The process of having a nonprofit in Arizona is similar to forming any corporation in Arizona. However, there are a few additional steps to follow.

Step 1: Develop Your Mission and Vision

Before you get into legal details, you need to define the purpose and goal of your organization clearly; this will go a long way in guiding your decisions as well as making it easy for you to explain your mission statement.

  • Pick out what specific cause or issue you want to address;
  • Define who you will target or help reach particular goals;
  • List down both what people should do within a short period and what they should achieve in the long term perspective;
  • Write a captivating mission statement.

Step 2: Name Your Nonprofit in Arizona

Naming a business in Arizona has a handful of regulations. If you start a corporation or an LLC in Arizona, you must follow those regulations to name your nonprofit. The most important rule is to check if the name is available in Arizona to use.

If you’re forming an LLC in Arizona for your nonprofit organization, check out LLC naming guidelines in Arizona. For the corporation regulations, read on how to start a corporation in Arizona. As soon as the name is decided, you can reserve it with the Arizona Secretary of State. You can also file DBA in Arizona before you establish your nonprofit organization. DBA can be filed in several methods. Check Arizona Trade Name Handbook for more details.. The DBA filing fee in Arizona is $10 for filing and $3 for each duplicate copy..

  • Online DBA Filing: For online filing, check the https://apps.azsos.gov/apps/tntp/index.html for the forms
  • Offline DBA Filing: Check Arizona Trade Name Handbook for details.
  • DBA Renew Time in Arizona: five years

Step 3: Appoint Initial Board Members

If you’re forming a corporation for your Arizona nonprofit, it is required to appoint the initial board members. In Arizona, you need at least One unrelated directors to start the organization. If you don’t choose a minimum of One directors, it will automatically become a member-managed corporation.

Step 4: Get Arizona Statutory Agent

This is a very important step for any business in Arizona. The Statutory Agent in Arizona is a person who conducts all types of documentation between the State and your nonprofit organization. The Registered Agent must be from Arizona, above 18 years of age, and must have legal rights to conduct business in the state. Several professional and business formation services offer registered agent services in all the states in the USA. It is better to hire a professional rather than being your own Statutory Agent in Arizona.

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Step 5: File Articles of Incorporation with Arizona SOS

This is the most important step in forming a nonprofit corporation in Arizona. File your Articles of Incorporation with the Arizona Secretary of State. You can file your nonprofit corporation through two ways, in-person and by mail. Submit the details of your nonprofit corporation, like the name of the nonprofit, address, name and address of the registered agent, operation dates, directors’ details, and more information related to your company.

  • Online Incorporation: There’s no online filing available.
  • Offline Incorporation: Send the form by mail or drop it in person to Arizona Corporation Commission, Corporate Filings Section, 1300 W. Washington St., Phoenix, AZ 85007
  • Incorporation Fee in Arizona: $60 for filing in-person and by mail

Hiring a professional service might be a wise idea here. Having a corporation is much more complex than forming an LLC. We recommend ZenBusiness as they are one of the top business service providers currently. They offer LLC formation at $0 in Arizona.

Step 5.1: Write Company Bylaws

As soon as you file the formation documents, it is time for the company bylaws. The directors and board members must decide how the meetings, elections, voting, and other corporate activities will be held. These bylaws must comply with the Arizona state law. It is similar to an LLC operating agreement in Arizona for the LLC owners.

Step 6: Get an EIN in Arizona

The next step is to obtain the EIN in Arizona. The employer identification number (EIN) is required to conduct business in Arizona. You will need to acquire the Arizona EIN from the official IRS website. To obtain the EIN, submit your application to the IRS office either by mail or through their online platform. There is no associated cost for this process.

Step 7: Tax Exemptions for Your Nonprofit

When you start a nonprofit in Arizona, you enjoy tax exemptions. As the nonprofits are not profit-oriented, they get a huge tax exemption from Federal and State authorities.

Federal Tax Exemption

You must submit Form 1023 to the IRS to file for federal tax exemption. This form, titled “Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code,” is required for all nonprofit corporations. Smaller nonprofits have the option to file Form 1023-EZ instead. You will be prompted to provide details about your organization upon obtaining the relevant form. Complete the form with the necessary information and submit it. The filing fees are $600 for Form 1023 and $275 for Form 1023-EZ.

State Tax Exemption

Once you get the Federal Tax Exempt, it is time for State Tax Exempt. In Arizona, you must apply for the tax exemption to the Arizona Department of Revenue. Get the form, fill it up with the correct details, and send it to the office. You may need to pay a fee along with the form and supportive documents to apply for the State Tax Exemption. You need an Exemption Certificate to apply for the state tax exemption. Read Arizona classification of taxes to learn more about the Arizona tax structure.

Can I form an LLC for my Nonprofit in Arizona?

Yes, you can form an LLC in Arizona to run a nonprofit. Establishing an LLC nonprofit in Arizona requires similar documents and paperwork. Except for tax exemption applications that one must file with the state tax and revenue department. LLCs must file Form 1023 with the Arizona Department of Revenue to get the tax exemption.

After You Form a Nonprofit Corporation in Arizona

Once your nonprofit is formed, there are additional steps to complete:

  • Get necessary licenses: As soon as your corporation or an LLC for your Nonprofit in Arizona will be established, get necessary licenses and permits. Check with the local authority/government to get the local permits.
  • Get Insurance for the Arizona Nonprofit: You must get workers’ compensation and unemployment insurance if you have employees. Based on your nonprofit structure, you might need general liability insurance, property, vehicle, auto insurance, etc.
  • Get a Business Bank Account: You must get a business account for all types of business-related transactions in Arizona. You may need different documents based on the bank and place of business. Check with the bank for it.
  • File Nonprofit as Charity: This is optional. Your nonprofit is either for charity purposes or any purpose that meets your community’s needs. If your organization is for charity purposes, then you can file your nonprofit as a charity to enjoy tax exemptions.
  • Other Business Compliances: You may need additional compliances based on your nonprofit type. Check with your attorney or local authority for more information.
  • Evaluating And Improving Performance: To evaluate the performance of your non-profit organization, it is necessary to; establish performance metrics also tied to the mission; and implement continuous improvement strategies.
  • Staying Current With Nonprofit Trends And Best Practices: To stay up-to-date on trends and best practices in the non-profit world you should join nonprofit associations plus networks.

Common Challenges And How To Address Them

  • Funding Sustainability

For funding sustainability issues you need to focus on diversifying funding sources and developing strong relationships with donors. Also, implementing efficient financial management, exploring earned income opportunities for sustainability, and such should be on focus.

  • Volunteer Management

The challenges faced in volunteer management can be resolved by creating clear roles plus expectations for volunteers, and providing adequate training also support. Recognize and appreciate volunteer contributions while implementing volunteer retention strategies such as offering regular appreciation events or awards. Provide trainers’ placement services too.

  • Mission Drift

This problem can be solved by several mechanisms such as regular review and reaffirmation of your organizational mission–this will ensure that all activities are aligned with the core purpose. Educate board members and staff about the importance of the mission and make them understand how this works out in practice. Implement a strategic planning process and explain to the board why it is important for their organizations to have a well-defined mission.

  • Regulatory Compliance

To remain compliant with the law, you need to: keep track of changing laws and regulations all the time; conduct regular compliance audits; seek professional advice when in doubt; and implement comprehensive record-keeping systems.

Names of Nonprofit Corporations in Arizona

Following are some of the Nonprofit Organizations in Arizona. The contact information of these organizations can be found on Arizona Secretary of State portal.

  • Lura Turner Homes INC.
  • AZ ACEs Consortium
  • Grand Canyon Institute
  • Handi-Dogs Inc.
  • Free Arts for Abused Children of Arizona
  • Desert Star Institute for Family Planning Inc
  • Cook Native American Ministries Foundation
  • Circle the City

FAQs

What steps do I need to take to start a nonprofit in Arizona?
To start a nonprofit in Arizona, you need to file articles of incorporation with the Arizona Corporation Commission.
Do I need to register my nonprofit organization with the state of Arizona?
Yes, you must register your nonprofit organization with the state of Arizona to legally operate in the state.
How long does it take to establish a nonprofit in Arizona?
The timeline to establish a nonprofit in Arizona can vary, but it typically takes a few weeks to a few months to complete the necessary paperwork and receive approval.
What are the benefits of starting a nonprofit in Arizona?
Some benefits of starting a nonprofit in Arizona include tax-exempt status, eligibility for grants and donations, and the ability to make a positive impact on your community.
Can anyone start a nonprofit in Arizona?
Yes, anyone who meets the necessary requirements can start a nonprofit in Arizona, including individuals, groups of individuals, or existing organizations.
How much does it cost to start a nonprofit in Arizona?
The cost of starting a nonprofit in Arizona can vary, but typically includes fees for filing articles of incorporation and registering with the state.
What is the process for obtaining tax-exempt status for a nonprofit in Arizona?
To obtain tax-exempt status for a nonprofit in Arizona, you must file Form 1023 with the IRS and meet certain requirements outlined in the IRS Code.
Can I start a nonprofit in Arizona if I live in another state?
Yes, you can start a nonprofit in Arizona even if you live in another state, as long as you meet the state’s requirements for operating a nonprofit organization.
What are the reporting requirements for nonprofits in Arizona?
Nonprofits in Arizona are required to file an annual report with the Arizona Corporation Commission and may also be required to file additional reports with the IRS.
Do I need to have a board of directors to start a nonprofit in Arizona?
Yes, you must have a board of directors to start a nonprofit in Arizona, as well as bylaws that outline the organization’s governance structure.
How do I choose a name for my nonprofit in Arizona?
When choosing a name for your nonprofit in Arizona, make sure it is unique, not misleading, and complies with Arizona’s naming requirements for nonprofit organizations.
Are there any specific requirements for starting a nonprofit in Arizona compared to other states?
In Arizona, nonprofits must register with the Arizona Corporation Commission and comply with state regulations governing charities and fundraising activities.
Do I need to have a physical presence in Arizona to start a nonprofit there?
Yes, you must have a physical address in Arizona to establish a nonprofit organization in the state.
How long does it take to start a nonprofit in Arizona?
The timeline for starting a nonprofit in Arizona can vary, but it typically takes several weeks to file the necessary paperwork, obtain tax-exempt status from the IRS, and complete the incorporation process.
Can I use a registered agent service for my nonprofit in Arizona?
Yes, you can use a registered agent service to receive legal documents and compliance notifications on behalf of your nonprofit in Arizona.
Are there any specific requirements for nonprofit board members in Arizona?
Nonprofit board members in Arizona are subject to state laws governing fiduciary duties, conflicts of interest, and board responsibilities.
How do I apply for tax-exempt status for my nonprofit in Arizona?
To apply for tax-exempt status in Arizona, you will need to file Form 1023 with the IRS and comply with state-specific requirements for charitable organizations.
What are the annual filing requirements for nonprofits in Arizona?
Nonprofits in Arizona must file an annual report with the Arizona Corporation Commission and report any changes in the organization’s status or activities.
Can I operate a nonprofit in Arizona without tax-exempt status?
While you can operate a nonprofit in Arizona without tax-exempt status, obtaining this status can provide significant financial benefits and credibility to your organization.
Are there specific fundraising regulations for nonprofits in Arizona?
Yes, nonprofits in Arizona must comply with state regulations governing charitable solicitations, fundraising activities, and reporting requirements.
Do I need to register my nonprofit with the Arizona Secretary of State?
Yes, you must register your nonprofit with the Arizona Corporation Commission, which serves as the state’s business registration and regulation agency.
Can nonprofits in Arizona engage in political activities?
Nonprofits in Arizona are generally prohibited from engaging in partisan political activities, but they can conduct certain types of nonpartisan advocacy and lobbying efforts.
What types of insurance do I need for my nonprofit in Arizona?
Nonprofits in Arizona may need insurance coverage for general liability, directors and officers (D&O) liability, property damage, and workers’ compensation, among other policies.
Can my nonprofit in Arizona provide grants to individuals?
Nonprofits in Arizona can provide grants to individuals in certain circumstances, but they must comply with state and federal laws governing charitable activities and grantmaking.
Do I need a business license to start a nonprofit in Arizona?
No, nonprofits in Arizona are not required to obtain a business license, but they must comply with state regulations governing charitable organizations and tax-exempt entities.
How do I set up a bank account for my nonprofit in Arizona?
To set up a bank account for your nonprofit in Arizona, you will need to provide the bank with your organization’s EIN, articles of incorporation, and any other required documentation.
Can I use a fiscal sponsor for my nonprofit in Arizona?
Yes, you can use a fiscal sponsor for your nonprofit in Arizona to receive tax-deductible donations and grant funds while waiting to obtain your organization’s tax-exempt status.
Does Arizona offer any incentives for nonprofits?
Arizona offers incentives for nonprofits such as property tax exemptions, sales tax exemptions, and fundraising opportunities through the Arizona Gives Day initiative.
Are there specific zoning requirements for nonprofits in Arizona?
Nonprofits in Arizona may be subject to zoning requirements related to their physical location and activities, depending on local ordinances and regulations.
How can I promote my nonprofit in Arizona?
To promote your nonprofit in Arizona, you can use social media, websites, community events, and partnerships with other organizations to raise awareness and attract supporters.

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In Conclusion

Starting a Nonprofit corporation in the Arizona takes careful thought, dedication, and detailing. Follow the steps detailed in this guide while addressing common challenges so that your organization can be built on solid ground and make a long-lasting impact on your cause. Remember also that running a nonprofit organization in Arizona is a perpetual learning, adapting, and growing process.

As you continue your journey, you may need professional help. Having a professional or experienced person, or attorneys while you run your nonprofit in Arizona can make the journey much simpler in the long run. Since forming a nonprofit involves tax exemptions, the government takes additional care to verify your background.

Donations, charity, and several community services are the most desirable ways to evade tax. Hence, many people get involved in nonprofit organizations. It is recommended to consult a legal professional, accountants, and service providers like ZenBusiness for the paperwork and formation process. With persistence, passion, and proper management structure everything is possible hence changing positively your community as far as Non-Profit corporations are concerned.

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