How to Start a Nonprofit in Massachusetts


Steve Goldstein
Steve Goldstein
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Start a Nonprofit in Massachusetts

Are you looking to start a nonprofit in Massachusetts? You’ve come to the right place. Known for its vibrant community and rich culture, Massachusetts (often referred to as The Bay State) is an ideal location for establishing a nonprofit organization. Unlike for-profit businesses, nonprofits focus on addressing pressing social issues and require a strong foundation, thorough research, and a clear mission targeting a specific community problem.

Embarking on the journey of creating a nonprofit entails various crucial steps, such as obtaining 501(c)(3) status. A 501(c)(3) organization is designed for charitable, religious, educational purposes, and more, qualifying it for federal and state tax exemptions.

In the spirit of Massachusetts’s motto, “By the sword we seek peace, but peace only under liberty (Ense petit placidam sub libertate quietem),” thousands of nonprofits are founded within the state each year. This article will provide a comprehensive guide to starting your own nonprofit corporation in Massachusetts. Keep in mind that the steps discussed here are general guidelines, and modifications may be necessary depending on your specific circumstances. To gain a deep understanding of how to start a nonprofit in Massachusetts, we encourage you to read this article in its entirety.

What is a Nonprofit in Massachusetts?

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 Massachusetts, ensure you have a community issue to address before you start 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 Massachusetts

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

Forming an LLC in Massachusetts for your nonprofit can be a smooth option. However, having a corporation is less complex than having a nonprofit LLC. Hence, it is wise to start a nonprofit corporation instead of an unincorporated nonprofit or nonprofit LLC.

– LLCBuddy Editorial Team.

Technically, starting a corporation for your nonprofit protects your personal assets but also is eligible for Federal and State tax exemptions. When you form an LLC for your nonprofit, it only protects your personal assets but does not give you any tax exemptions. On the other hand, a nonprofit Corporation has both corporation and limited liability company benefits. You can also have an unincorporated structure where you don’t have to register it. Unincorporated nonprofits in Massachusetts might be eligible for tax exemptions (check with Massachusetts Department of Revenue), but this type of organization does not get to enjoy limited liability and personal asset protection.

How to Start a Nonprofit Corporation in Massachusetts

Setting up a nonprofit corporation requires a few things to consider. Name of the nonprofit, initial directors, drafting bylaws, get a Resident Agent, obtain tax IDs, insurance, and a bank account – these are important steps you must follow. The steps mentioned here are general business formation steps. State-wise, some steps can be different. Getting an expert consultation before you start your nonprofit corporation formation is recommended. Here are the steps explained below-

Step 1: Get a Suitable Name for Your Massachusetts Nonprofit Corp

The first step is to name your nonprofit corporation. You must be sure that the name is available and that no other organization is using this name. You can check the Massachusetts LLC name search to find the best suitable name for your organization. You must follow those rules to avoid any legal issues later. You can reserve the name for 60 days for any domestic entity (such as a nonprofit LLC) if you’re not forming the nonprofit immediately.

Step 2: Appoint the Initial Board of Directors

The next step is to get your nonprofit’s initial board of directors. It is very important when you are setting up a nonprofit corporation. 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 3: Appoint Your Massachusetts Resident Agent

The third step is to get a Massachusetts Resident Agent for your nonprofit corporation. The Resident Agent is a person who receives all the legal documents on your behalf. It is necessary to get a registered agent. He/she must be above 18 years old and have a physical address in Massachusetts.

Step 4: Write Massachusetts Nonprofit Bylaws

The next important step is to write 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 Massachusetts state law. It is similar to an LLC operating agreement in Massachusetts for the LLC owners.

Step 5: File the Massachusetts Articles of Incorporation

This is the most important step. File your Articles of Incorporation with the Massachusetts Secretary of State. You can do it through four ways, online, by mail, fax, and in person. All the formation forms, such as the Massachusetts LLC Certificate of Organization form, the Massachusetts Articles of Incorporation form for corporations, forms for LLPs, and all others can be found on the Massachusetts SOS official website. 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. You can send the form (for offline filing) and the filing fee of $275 for filing online, in-person, or by mail to the William Francis Galvin, Secretary of the Commonwealth, One Ashburton Place, Room 1717, Boston, MA 02108 or upload it online (if available).

Step 6: Obtain Tax ID for Your Massachusetts Nonprofit Corporation

The subsequent step involves obtaining a Tax ID for your nonprofit corporation. You will need to acquire an Employer Identification Number (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: Get Business Licenses in Massachusetts

The next step is to get the business licenses you need to run your nonprofit organization in Massachusetts. Check with the local government office if any special licenses you need to run your nonprofit. You can file your nonprofit as a charity if you want.

Step 8: 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.

Step 9: State Tax Exemption

Once you get the Federal Tax Exempt, it is time for State Tax Exempt. In Massachusetts, you must apply for the tax exemption to Massachusetts 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 Form ST-12 Exempt Use Certificate to apply for the state tax exemption. Read Massachusetts classification of taxes to learn more about the Massachusetts tax structure.

Step 10: Get Insurance for Your Massachusetts Nonprofit

Once you start your nonprofit, you must get insurance to protect your organization. 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. You can contact the insurance providers to learn more about which are required for your organization. Also, you can contact Massachusetts Division of Insurance for more information.

After Forming Your Massachusetts Nonprofit Corporation

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

  • Get a Business Bank Account: You must get a business account for all types of business-related transactions in Massachusetts. 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.

Names of Nonprofit Corporations in Massachusetts

Following are some of the Nonprofit Organizations in Massachusetts. The contact information of these organizations can be found on Massachusetts SOS official websites.

  • Hands Across the Sea
  • Inc
  • Friends of the Arava Institute
  • Ceres
  • Rose Kennedy Greenway Conservancy
  • Stone House
  • People Making a Difference (PMD)
  • Sustainable Harvest International
  • Four Paws International Inc.

FAQs

What are the steps for starting a nonprofit in Massachusetts?
The first step to starting a nonprofit in Massachusetts is to determine the type of organization you wish to form, as well as its mission and purpose. Next, you should draft the nonprofit’s formation documents, including its Articles of Organization and bylaws. After that, you should register the nonprofit with the Massachusetts Secretary of State. Once registered, you should apply for tax-exempt status with the IRS. Lastly, you should register the nonprofit with the Massachusetts Attorney General’s Office.
What type of organization can I form in Massachusetts?
In Massachusetts, you can form a corporation, Limited Liability Company (LLC), nonprofit corporation, unincorporated nonprofit association, charitable trust, or charitable foundation.
Is it costly to form a nonprofit in Massachusetts?
Yes, it can be costly to form a nonprofit in Massachusetts, as there are filing fees associated with registering the nonprofit with the Secretary of State, as well as fees related to the Attorney General’s office and IRS.
What documents do I need to form a nonprofit in Massachusetts?
You will need to draft Articles of Organization, bylaws, and any other documents required by the Secretary of State. Additionally, you may need to submit financial statements, tax documents, and other forms depending on the type of organization you are forming.
Do I need to register my nonprofit with the Massachusetts Attorney General’s office?
Yes, all nonprofit organizations formed in Massachusetts must be registered with the Attorney General’s office in order to receive tax-exempt status.
What are the benefits of forming a nonprofit in Massachusetts?
There are many benefits to forming a nonprofit in Massachusetts, such as being able to receive tax-exempt status, being able to solicit donations, and having a structure that allows you to manage the organization in an efficient and effective manner.
What is a nonprofit organization?
A nonprofit organization is a type of legal business that operates to benefit the public or a specific group or cause, and is exempt from paying taxes on the income it generates from activities related to its mission.
How do I start a nonprofit organization in Massachusetts?
To form a nonprofit corporation in Massachusetts, you must file Articles of Organization with the state and receive a Certificate of Organization from the Secretary of State. You must also register with the state Attorney General’s Office, pay any applicable filing fees, and submit all required documents.
What is the filing fee for starting a nonprofit in Massachusetts?
The fee for forming a nonprofit in Massachusetts is $100.
Do I need to register my Massachusetts nonprofit with the IRS?
Yes, you must register your nonprofit with the IRS by filing Form 1023 or Form 1024.
How do I apply for tax-exempt status for my Massachusetts nonprofit?
Once your organization is formed and registered with the Massachusetts Attorney General, you can apply for federal tax-exempt status by filing Form 1023 or Form 1024 with the IRS.
Are there any other taxes that my Massachusetts nonprofit must pay?
In addition to federal income taxes, your nonprofit may be subject to state and local taxes, such as sales and use taxes, payroll taxes, and unemployment taxes.
What types of activities are allowed for Massachusetts nonprofits?
Nonprofits in Massachusetts are allowed to conduct any number of activities that further their mission or purpose, including fundraising, providing services or goods, and engaging in advocacy and education.
Can I pay salaries to employees of my Massachusetts nonprofit?
Yes, Massachusetts nonprofits are allowed to pay salaries to employees. However, salaries must be reasonable and commensurate with the services performed.
Do I need to register my Massachusetts nonprofit with the state?
Yes, you must submit an application and file Articles of Organization with the Secretary of State in order to register your nonprofit.
Are there any reporting requirements for Massachusetts nonprofits?
Yes, Massachusetts nonprofits must file an annual report with the Attorney General’s Office and submit financial reports to the IRS.
Is there a minimum number of directors required for a Massachusetts nonprofit?
Yes, the minimum number of directors required for a Massachusetts nonprofit is three.
Are there any restrictions on how a Massachusetts nonprofit can use its funds?
Yes, a Massachusetts nonprofit must use its funds for activities related to its mission or purpose and may not use them to benefit any private individuals or organizations.
How do I obtain a Massachusetts sales tax exemption for my nonprofit?
To obtain a Massachusetts sales tax exemption, you must apply for an exemption certificate from the Massachusetts Department of Revenue.
What is the difference between a nonprofit corporation and a charitable organization?
A nonprofit corporation is a legal business entity that is exempt from paying taxes on income related to its mission. A charitable organization is a type of nonprofit organization that is recognized as exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code.
How do I apply for 501(c)(3) status for my Massachusetts nonprofit?
To apply for 501(c)(3) status for your Massachusetts nonprofit, you must submit Form 1023 or Form 1024 to the IRS.
What are the requirements for maintaining 501(c)(3) status in Massachusetts?
To maintain 501(c)(3) status, your Massachusetts nonprofit must comply with all the applicable federal and state regulations, including filing annual reports with the state and IRS, and filing any required tax returns.
Are there any special licensing requirements for Massachusetts nonprofits?
Depending on the type of activities your organization engages in, you may need to obtain certain licenses or permits from the state or local government.
Do I need to purchase insurance for my Massachusetts nonprofit?
Yes, it is a good idea to purchase liability insurance for your Massachusetts nonprofit.
What is the difference between a nonprofit and a for-profit business?
Nonprofits are organizations that are exempt from paying taxes on income related to their mission and are usually formed to benefit the public or a specific group or cause. For-profit businesses are organizations that are formed to generate a profit and are subject to taxes on the income they generate.
Who governs a Massachusetts nonprofit?
A Massachusetts nonprofit is governed by a board of directors.
Are there any restrictions on who can be a director of a Massachusetts nonprofit?
Yes, to be a director of a Massachusetts nonprofit, the individual must be at least eighteen years old and cannot be a paid employee or owner of the organization.
Do I need to file a business registration with the Massachusetts Secretary of State?
Yes, you must file Articles of Organization and a Certificate of Organization with the Secretary of State in order to register your nonprofit.
What are the requirements for holding a board meeting in Massachusetts?
To hold a board meeting in Massachusetts, you must provide notice of the meeting to all directors and follow all applicable state regulations, such as having a quorum of directors present.
Can I solicit donations for my Massachusetts nonprofit?
Yes, you can solicit donations for your Massachusetts nonprofit from individuals and organizations. However, you must comply with all applicable state and federal laws.
Are there any special requirements for fundraising in Massachusetts?
Yes, you must register with the state Attorney General’s Office before you can solicit donations.
Are there any restrictions on how I can use donated funds?
Yes, donated funds must be used for activities related to your mission and may not be used to benefit any private individuals or organizations.
What are the reporting requirements for grants and donations I receive for my Massachusetts nonprofit?
You must report all grants and donations you receive to the IRS and the state Attorney General’s Office.

Also Read

Why Massachusetts Nonprofit Corporation is So Important

One of the primary reasons why Massachusetts nonprofit corporations are so important is their ability to provide essential services to communities. Many organizations offer a wide range of services, such as food assistance, shelter, health care, education, and support for vulnerable populations. These services are often tailored to meet the specific needs of the communities they serve, helping to create a more inclusive and supportive environment for all residents.

In addition to providing critical services, Massachusetts nonprofit corporations also play a crucial role in fostering a sense of community and social cohesion. By bringing people together to work towards a common goal, nonprofit organizations help to build stronger, more resilient communities. This sense of community and belonging can be especially important for marginalized or underserved populations, helping to combat feelings of isolation and alienation.

Beyond providing services and fostering community, Massachusetts nonprofit corporations also serve as advocates for important causes and issues. Many organizations work tirelessly to raise awareness about pressing social, environmental, and political issues, mobilizing communities to take action and create meaningful change. From advocating for affordable housing and healthcare to fighting against discrimination and injustice, nonprofits play a key role in shaping our society for the better.

Furthermore, Massachusetts nonprofit corporations are often at the forefront of innovation and entrepreneurial spirit. Many organizations are driven by a desire to make a positive impact and are constantly seeking new and improved ways to address complex social problems. This spirit of innovation not only benefits the communities served by nonprofits but also has a ripple effect, inspiring others to think creatively and work towards positive change.

Nonprofit organizations in Massachusetts also provide valuable opportunities for individuals to give back and get involved in their communities. Whether through volunteering, donating, or simply raising awareness, individuals can make a meaningful contribution to the causes they care about through nonprofit organizations. This level of engagement fosters a sense of civic responsibility and empowers individuals to become active participants in creating a better world for everyone.

In conclusion, Massachusetts nonprofit corporations are a vital part of our society, providing essential services, fostering community, advocating for important causes, driving innovation, and empowering individuals to make a difference. As we continue to navigate the challenges of today’s world, nonprofit organizations play a critical role in addressing social, environmental, and economic issues. By supporting and investing in these organizations, we can all play a part in creating a more just, compassionate, and inclusive society for everyone.

Conclusion

Starting a nonprofit corporation in Massachusetts is an incredible way to give back to your community and positively impact the causes that matter most to you. By forming a nonprofit, you can provide essential services, promote awareness, and make a lasting difference in the lives of those who need it most. In Massachusetts, a lot of nonprofit organizations are there to cater to people in need. Starting a nonprofit corporation is better than an LLC, as it provides limited liability and tax benefits. It helps you save taxes. If you want to start a nonprofit in Massachusetts, you must follow the steps mentioned above in the article.

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