How to Start a Nonprofit: Step-by-Step (Federal + State)

What does it take to start a nonprofit?

A nonprofit needs two separate approvals. Your state recognizes the organization when you file formation papers, usually articles of incorporation for a nonprofit corporation. The IRS then recognizes it as tax-exempt, which is what lets donors deduct gifts to a 501(c)(3) public charity.

The IRS sets four basic tests for 501(c)(3) status. The organization must be organized and operated exclusively for exempt purposes, none of its earnings may go to any private shareholder or individual, it may not make lobbying a substantial part of its work, and it may not take part in any campaign for or against political candidates ^[1].

A nonprofit can pay reasonable salaries and earn revenue, but nobody owns it and its profits cannot be paid out to insiders. If you want to build something you own and can sell, a business is the better fit; our guide to starting a business covers that path.

Before you file anything, write down three things:

• Mission: one or two sentences on who you serve and how.
• Board: the people who will govern. Your state sets the minimum number of directors, so check its nonprofit statute or filing office.
• Money plan: how you expect to fund the first three years. You will need these estimates for the IRS application, and the startup cost calculator can help you list first-year expenses.

How do you start a nonprofit step by step?

The order matters. The IRS reviews your state formation document, so the state step comes first. You can file online yourself in most states; you do not need a lawyer or a paid service to file.

1. Plan the mission and board. Decide who serves as directors and officers. Many groups keep family members from controlling the board, which makes conflicts easier to manage.
2. Check the name. Search your state's business entity database. The same office that handles LLCs usually handles nonprofit corporations, and our LLC by state hub lists those offices.
3. File articles of incorporation. Use your state's nonprofit form, not the LLC form. Write the 501(c)(3) purpose clause and dissolution clause into the articles now, because the IRS checks for them. Your purposes must be limited to those in section 501(c)(3), and your assets must be permanently dedicated to an exempt purpose if you dissolve ^[2].
4. Adopt bylaws and a conflict of interest policy. Bylaws set how the board meets, votes and elects officers. Hold a first board meeting and keep minutes.
5. Get an EIN. The IRS issues an employer identification number for free, in minutes, online; you never have to pay a fee for one ^[3]. Open a bank account in the organization's name with it.
6. Apply for 501(c)(3) status. File Form 1023 or Form 1023-EZ online through Pay.gov (details below).
7. Register with your state and keep filing. Charitable solicitation registration, state tax exemption and annual reports come next.

Some founders pay a lawyer or an online formation service to prepare these papers. That fee is in addition to the state fee and the IRS user fee, and you still sign and stay responsible for the filings.

How much does it cost to start a nonprofit?

Expect three kinds of cost: the state formation fee, the IRS user fee and any state registration fees.

Cost	Who sets it	Amount
Articles of incorporation	Your state	Varies by state; check the filing office
Form 1023 user fee	IRS	$600 as of November 2026 [4]
Form 1023-EZ user fee	IRS	$275 as of November 2026 [4]
EIN	IRS	Free
Charitable solicitation registration	Some states	Varies; check your state charity office

The IRS user fee is $600 for Form 1023 and $275 for Form 1023-EZ as of November 2026, paid through Pay.gov when you file ^[4]. The IRS notes that these amounts can change, so check the fee page on the day you file.

Nonprofit corporation fees are not the same as LLC fees. Each state sets its own fee for nonprofit articles, and it is often different from the LLC filing fee shown on pages like our Texas LLC guide or California LLC guide. Look up the nonprofit form and fee on your state's own filing site rather than reusing an LLC number.

Should you file Form 1023 or Form 1023-EZ?

Form 1023-EZ is a shorter application for small organizations. To use it, you must complete the Eligibility Worksheet at the end of the Form 1023-EZ instructions. A "Yes" to any worksheet question means you must file the full Form 1023 instead ^[2].

The first three questions are about money. You are not eligible for the EZ form if you project annual gross receipts over $50,000 in any of the next 3 years, if your gross receipts were over $50,000 in any of the past 3 years, or if your total assets are worth more than $250,000 ^[2].

Both forms are filed online only. Form 1023 must be filed electronically through Pay.gov ^[5], and the IRS does not accept printed Form 1023-EZ submissions.

Timing matters too. If you file within 27 months after the end of the month you were legally formed and the IRS approves you, your exemption reaches back to your formation date. File later, and the exemption generally starts on the date you submit ^[2].

Even if you qualify for the EZ form, some groups choose the full Form 1023 because it makes them describe programs, finances and governance in detail. That work doubles as a first draft of a plan; if you have never written one, our cleaning business plan template shows how SBA-style plan sections fit together.

What do you file with your state after you form?

State rules vary, so treat this as a checklist to confirm with your state:

• Charitable solicitation registration. Many states regulate fundraising, and their statutes generally require organizations to register with a state agency before asking the state's residents for donations ^[6]. The IRS points readers to the National Association of State Charity Officials to find which states require it. If you raise money online from donors in several states, check each one.
• State tax exemption. Federal exemption does not automatically cover state income, sales or property tax. Apply separately where your state requires it.
• Annual or biennial reports. Most states require nonprofit corporations to file a periodic report with the secretary of state to stay in good standing.
• Local permits. Raffles, events and running a facility can need city or county permits.

Our resources page collects the official federal starting points.

How do you keep 501(c)(3) status every year?

Approval is not the finish line. Every year, the IRS expects a Form 990 series return. Which one depends on size:

Annual return	Who files it
Form 990-N (e-Postcard)	Gross receipts normally $50,000 or less
Form 990-EZ or Form 990	Gross receipts under $200,000 and total assets under $500,000
Form 990	Gross receipts of $200,000 or more, or total assets of $500,000 or more
Form 990-PF	Private foundations, regardless of size

These thresholds come from the IRS Form 990 series filing table ^[7]. The 990-N is due by the 15th day of the 5th month after your tax year ends, and it cannot be filed until the year has closed ^[8].

Organizations that do not file for three consecutive years automatically lose their tax-exempt status. The revocation takes effect on the original due date of the third missed return ^[9]. Put the due date on a shared calendar that more than one board member can see.