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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:

• Forming a nonprofit protects your personal assets from your nonprofit's lawsuits and creditor claims. It also protects your trustees, officers, and volunteers.
• New York nonprofits are usually exempt from federal tax on any income related to your organization's exempt purposes.
• You can obtain an exemption from collecting sales and use taxes if your organization is formed under IRS Section 501(c)(3).
• Your nonprofit may qualify to receive public and private grant money.

Disadvantages:

• Because your nonprofit is not owned by you or your shareholders, you won't have individual control and autonomy over your organization.
• More paperwork is involved, such as creating bylaws and recording and maintaining corporate minutes.
• You'll need time and money to apply for the federal tax exemption, and you'll need an accountant or legal professional to help you operate your nonprofit.
• Your nonprofit's finances are subject to public inspection.

Starting your nonprofit in New York 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.

• A Certificate of Incorporation, filed with the New York State Department of State Commission, Division of Corporations.
• Name reservation request form.
• Certificate of type.
• Bylaws.
• Certificate of assumed name.
• IRS Form 1023: Application for Recognition of Exemption.
• Form SS-4: Application for employer identification number.
• IRS 501(c)(3) determination letter.
• Form CT-247 to obtain New York income tax exemption.
• Form ST-119.2 to obtain New York sales tax exemption.
• EPTL Form Char 410 Charities Registration Statement, to be filed with the New York Attorney General's Office prior to solicitations of contributions or within 6 months after property is held or income is received.
• IRS Form 990: Annual Information Return.

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 New York nonprofit. They include the following:

New York state filing fees and processing times: 

• State fee: $105.
• State processing time: 3-5 business days.
• Rocket Lawyer state filing fee: $0 $99.99.
  • First filing FREE* for Rocket Legal+ members.
  • Get additional filings HALF OFF with Rocket Legal+.

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 New York. 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 New York (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.

Yes. Here are some resources for finding grants and loans for New York nonprofits:

• City of New York, Office of the Mayor (PDF): This is an excellent resource for New York nonprofits that are seeking loans or grants. The New York City Returnable Grant Fund provides interest-free loans on a short-term basis.
• Nonprofit Finance Fund: This is a community development fund that provides loans and lines of credit to nonprofits, as well as financial training workshops, analysis of businesses, and advice regarding how to maximize use of grants.
• Candid: For information on how to receive funds from the New York City Council for nonprofit, community-based social service providers, visit this website. It also discusses discretionary funding for nonprofits.

Grants can be used for general purposes, or to help your organization meet its operating expenses. If a grant is awarded for a specific project, you should take steps to restrict the funds to that project.

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 New York not-for-profit organization, be sure to follow specific guidelines to retain your nonprofit status:

• Keep detailed records of all sources of income.
• File annual reports.
• Keep unrelated activities separate from your nonprofit and pay separate taxes on them. This income could jeopardize your nonprofit status if it makes up a substantial portion of your business.
• Ensure that the time and resources spent on your nonprofit are related to your organization's exempt status.
• Maintain detailed records of corporate meetings.
• Make sure your nonprofit's assets are distributed to another tax-exempt group when and if it dissolves.
• Do not make loans to any of your directors or officers.
• Do not issue shares of stock or pay dividends or other shares of income to members, directors, or officers.

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 New York or domestic nonprofits that also operate in New York. Talk to an attorney to understand the legal and tax requirements for the state(s) in which you plan to operate.