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A nonprofit is an entity or association created to promote and maintain the well-being and greater good of a community, in which profits (or surplus) are directed towards the business and mission rather than divided among the owners and shareholders. Nonprofits are often tax exempt. There are several different types of nonprofits, each with its own purpose, structure, regulations and limitations, and tax implications.

Advantages:

• Maine not-for-profits are exempt from Maine income tax.
• Nonprofit corporations provide their shareholders, directors and officers with protection from liability.
• Some Maine nonprofits have advantages in fundraising, especially 501(c)(3) nonprofits.
• A nonprofit corporation can outlive its original organizers, unlike partnerships and associations.
• Not-for-profit organizations may be exempt from property taxes on all or part of their real property.

Disadvantages:

• Although nonprofits are good for managing large numbers of members, they're not an appropriate choice if you want to maintain personal control of your organization.
• Nonprofits require more time and money to create and maintain than sole proprietorships or partnerships.
• Grants from some federal and state government organizations may require nonprofit status.

Starting your nonprofit in Maine doesn’t have to be a complicated process. Here are a few simple steps:

1. Doing research. Is your nonprofit serving a mission in the community? And do you have the means to maintain it?
2. Making your case. Write your mission statement, think about a name, select your directors carefully.
3. Filing. Rocket Lawyer can help you with this step!

Although they’re used interchangeably, a 501(c)(3) and a nonprofit are not the same thing. 

A nonprofit is an organization that meets the requirements of its state law. While most people think of nonprofits as charitable organizations, states recognize many types of nonprofits, including many that do not perform charitable activities. Insurance companies, industry-specific professional societies, homeowners' associations, and social clubs are just a few examples of nonprofits that are not necessarily 501(c)(3) organizations. 

A 501(c)(3) organization, on the other hand, is an additional application on a federal level. It’s a nonprofit organization that is exempt from most state and federal income tax because it applied for recognition as exempt from tax under section 501(c)(3) of the Internal Revenue Code. A 501(c)(3) organization must operate for exempt purposes. The exempt purpose must be charitable, scientific, educational, religious, literary, public safety, amateur sports competition, or the prevention of cruelty to children or animals.

In addition to 501(c)(3), the IRS recognizes 26 other types of nonprofit organizations. The most familiar type is charitable organizations. Others include:

• 501(c)(4) Civic League, Social Welfare Organization, or Local Employee Association.
• 501(c)(5) Labor, Agricultural and Horticultural.
• 501(c)(6) Trade or Professional Association.
• 501(c)(7) Social or Recreational Club.
• 501(c)(8) Fraternal Societies.
• 501(c)(9) Employee Beneficiary Association.
• 501(c)(12) Local Benevolent Life Insurance Associations, Mutual Irrigation and Telephone Companies, and Like Organizations.
• 501(c)(14) State Chartered Credit Union and Mutual Reserve Fund.
• 501(c)(19) Veterans Organizations.
• 501(c)(29) CO-OP Health Insurance Issuers.

• You must submit Articles of Incorporation (Form MNPCA-6) with the Corporate Examining Section of the Maine Secretary of State.
• If your organization is a 501(c)(3) nonprofit, submit Form 1023, Application for Recognition of Exemption to the Internal Revenue Service. Exemption from Maine state income tax is automatic for nonprofits that have obtained 501(c)(3) from the IRS.
• 501(c)(3) nonprofits may also apply for exemption from Maine sales and use taxes by submitting a copy of the IRS 501(c)(3) determination letter, a statement of the purposes of the organization, and a sales and use tax exemption form to the Maine Revenue Services.
• File a charitable organization form and a copy of the IRS 501(c)(3) determination letter with the Maine Department of Professional and Financial Regulation.

Fees for registering a nonprofit can differ from county to county and even specific times of the year. Some fees may also be dependent on how much the nonprofit is expected to earn or has earned in previous years. 

There are a few fees that you may be charged when you register a Maine nonprofit. They include the following:

Maine state filing fees and processing times: 

• State fee: $40.
  • Fee to expedite your filing: $50.
• State processing time: 16-20 weeks.
  • Expedited state processing time: 3-4 weeks.
• Rocket Lawyer state filing fee: $0 $99.99.
  • First filing FREE* for RocketLegal+ members.
  • Get additional filings HALF OFF with RocketLegal+.

501C IRS filing fees and processing times

• IRS exemption-status fee: $275 for shorter applications or $600 for applications requiring more detailed information (including LLCs, organizations with higher income or value, foreign organizations, churches, schools, some healthcare organizations and some research organizations).
• IRS processing time: typically 6-12 months.
  • Simple applications may be processed more quickly.
• Rocket Lawyer IRS filing fee: $599 $1,199.
  • RocketLegal+ members get HALF OFF.

The Business Services team at Rocket Lawyer are pros when it comes to the requirements for registering a nonprofit and the steps and processes required to file in Maine. They can help you gather and file the necessary information quickly and at an affordable price. Rocket Legal+ members get their first business registration filing for free, paying only the state filing fees, and also get access to professional services for up to half off, including registered agent services, tax prep and filing, trademark registration, and more.

If your nonprofit does not have a physical address in Maine (P.O. boxes are not acceptable substitutions), you may be required to have a registered agent. Registered agents accept official and legal correspondence on behalf of your organization. While you are setting up your nonprofit, why not set up Rocket Lawyer as your registered agent at the same time? Better yet, if you have a Rocket Legal+ membership, you can save on your business registration and your registered agent services with the membership that pays for itself.

Businesses can save up to $2,500 per year with a Rocket Legal+™ membership. This calculation is based on total savings on an initial business registration and registered agent, trademark, and business tax filing services for Rocket Legal+ members (a total cost of $924.97) compared to Rocket Legal members (a total cost of $1,949.96). This is in addition to savings on the average cost of 5 hours for document preparation by a non-Rocket Lawyer network attorney at the average attorney hourly rate in the U.S. of $300 (an estimated cost of $1,500 when purchased without any form of Rocket Lawyer membership) compared to unlimited use of customizable business documents for both Rocket Legal+ and Rocket Legal members at no extra cost.

Grants and loans from federal, state and private sources are a major source of funding for Maine nonprofits. It's important for nonprofits to keep money received from grants separate and apart from the nonprofit's general fund. A good reputation in administering grant monies helps nonprofits obtain more funding from these sources.

A mission statement clarifies your goals and explains how you plan to meet them. As a guideline, describe what, where, when, and how your nonprofit's purpose will be met, as well as who is going to help your nonprofit meet it. It may take a few tries to narrow your ambitions down into a workable plan.

Although you're creating a nonprofit because you want to give back to your community, you still have to meet certain requirements to protect yourself and to ensure that you achieve your organization's goals. When you create a mission statement, you can explain your organization's purpose. Consider what problem or issue your organization wants to address, then focus your statement on including the efforts and values that will guide your nonprofit to these goals.

After forming your not-for-profit organization, you must meet specific guidelines to retain your nonprofit status.

• Nonprofit corporations must file an annual report (Form MNPCA 13) with the Maine Division of Corporations five months after the end of their fiscal year.
• A nonprofit corporation should maintain complete books and records of accounts, as well as minutes of board meetings, at its registered office.
• Nonprofits must file a charitable organization registration form with the Maine Department of Professional and Financial Regulation on Nov. 30 each year.

• Maine Association of Nonprofits: MANP is an association committed to strengthening and advancing Maine's nonprofit sector. Their website offers resources, professional skill development programs and affordable healthcare and benefits plans.
• Maine Community Foundation: This is a Maine-based foundation that provides grants to support organizations and individuals in numerous geographic and interest areas.
• Maine Secretary of State: The Maine Secretary of State offers regulations, requirements and further information on beginning and maintaining nonprofit corporations in Maine.

If you are planning to operate in another state, you may need to register a nonprofit in that state. Rocket Lawyer can help you determine which states you should register in.

Other states may have their own rules for foreign nonprofits that originate in Maine or domestic nonprofits that also operate in Maine. Talk to an attorney to understand the legal and tax requirements for the state(s) in which you plan to operate.