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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:

• Utah not-for-profits are exempt from Utah income tax.
• Nonprofit corporations may provide their shareholders, directors, and officers with protection from liability.
• Some Utah 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 a large number of members, they're not a good choice if you want to retain personal control of your organization.
• Nonprofits require more time and money to create and maintain than sole proprietorships or partnerships.

Starting your nonprofit in Utah 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 to the Utah Department of Commerce.
• Your nonprofit must publish either the intent to file, or the actual filing, of its Articles of Incorporation in two newspapers. Proof of publication should be kept with the nonprofit's minutes.
• If your corporation is a 501(c)(3) nonprofit, submit Form 1023, Application for Recognition of Exemption, to the Internal Revenue Services. Nonprofits exempt from federal tax are automatically exempt from Utah Franchise and Income Tax.
• 501(c)(3) nonprofits may apply for exemption from Utah sales tax by submitting Form TC-160, along with a copy of the IRS exemption letter, to the Utah State Tax Commission, Religious and Charitable Section.
• Nonprofit organizations that will solicit donations must also register with the Utah Department of Commerce, Division of Consumer Protection. Submit the Charitable Organization Permit Application Form, along with copies of the IRS exemption letter, your Articles of Incorporation, bylaws, copies of contracts with any fundraisers, and IRS Form 990 or annual financial report.
• Board members should avoid conflicts of interest. They must disqualify themselves from decisions if a conflict is present.
• Nonprofits should respect the intentions of their donors in areas such as anonymity, and the use of gifts. Written agreements can help avoid disputes about how gifts will be used.
• Nonprofits operate for public purposes with public support, so information regarding your nonprofit's mission activities and finances should be made available to the public.

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 Utah nonprofit. They include the following:

Utah state filing fees and processing times: 

• State fee: $36.
  • Fee to expedite your filing: $135.
• State processing time: 15 business days.
  • Expedited processing time: 5-7 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.
  • Rocket Legal+ 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 Utah. 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 Utah (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. Grants and loans from federal, state, and private sources are a major source of funding for Utah nonprofits. A not-for-profit corporation is responsible for complying with grant requirements and keeping appropriate records. 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 registering your not-for-profit organization, you must follow certain guidelines to retain your nonprofit status:

• Nonprofit corporations must file annual reports with the Utah Department of Commerce, Division of Corporations.
• File a Charitable Organization Permit Application Form Renewal 12 months after the original filing.
• A nonprofit corporation should maintain complete books and records of accounts, as well as minutes of corporate meetings, at its registered office.

Here are some additional best practices for retaining your nonprofit status:

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

• Utah Nonprofits Association: UNA provides training, networking, information, discounts, and advocacy for Utah nonprofits.
• National Council of Nonprofits: This national organization provides resources for starting and maintaining a nonprofit organization.
• Utah Division of Corporations and Commercial Code: This website offers regulations and guidelines for starting and maintaining nonprofits in Utah.

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