CREATING A NONPROFIT-IF YOU WANT TO

This particular blog post is going to be a long read, but well worth it if you wish to create a nonprofit in the state of West Virginia. Many people create nonprofits because they see a change that they want to make. It takes dedication and is hard work, but can be worth it in the end. There are more than 11,000 nonprofits in West Virginia according to the Chamber of Commerce, with more than 121,000 people employed and a combined revenue of $13 billion.

Some of the most successful, potential models to be emulated, are the National Humane Education Society, and the Tamarack Foundation Inc.

If you still feel the nonprofit inspiration spark, please follow the steps below. They are not an all inclusive list, simple a course plotting tool to help get you started.

Photo from: https://pitt.libguides.com/nonprofit

STEPS FOR CREATING A NONPROFIT

WEST VIRGINIA

Step 1: The first step in starting a nonprofit organization is choosing the perfect name that sums up your brand and image. The name should be easily searchable by potential donors and members. A few guidelines apply in West Virginia when selecting a name for a nonprofit:

• The name must include an organizational delegation (Ltd, Inc., etc)

• The name must not imply that it was formed for any reason other than what is stated in your Articles of Incorporation.

• The name must not be already taken by another business.

  • In addition to this, you should ensure that the web domain is available for your name should you choose to create a website for your nonproft.

• Complete naming rules can be found here (http://wvlegislature.gov/wvcode/ChapterEntire.cfm?chap=31e&art=4&section=401)

Step 2: The second step is to nominate a registered agent to receive official mail, legal documentation and other important documents on behalf of the business. This is required for the state of West Virginia. The person must meet the following requirements:

• A resident of West Virginia

• Physical address in the state

• Be of at least 18 years or older

• Maintain business hours

• Consent to the appointment

Step 3: The next step is to recruit your board members. Each nonprofit organization stated in West Virginia needs to nominate officers and directors to serve on the board.

• For directors:

  • There must be at least 3

  • Do not need to be residents of the state or members of the organization

  • Should not be related to one another

• For officers

  • Need to fill the roles of president, secretary, and treasurer

• An incorporator must also be nominated

  • Responsible for signing and delivering the Articles of Incorporation

Step 4: Next is the consent to bylaws. Additionally, a policy must be implemented called the conflict of interest policy. These documents do not need to be filed with the state but they are important and should always be available to reference.

• The bylaws are the governing documents that are a collecting of rules that determine how the organization will run and be operated.

• The conflict of interest policy is made up of the rules and procedures put in place to ensure that the decision made by the board of directors always benefits the nonprofits' purpose, not an individual.

Step 5: Selecting a corporation structure of the nonprofit is the next step in the process. The state of West Virginia has different options available. Deciding on the structure of the organization is an important part of the process.

• Typical structures for nonprofit organizations are:

  • Nonprofit public benefit corporation (usually charities)

  • Trusts

  • Associations

  • Mutual Benefits (business leagues and social clubs)

  • Religious Corporations (churches and synagogues)

Consulting of legal advice is particularly helpful at this point. After making the proper determination, the necessary forms must be filed out and can be found on the West Virginia Secretary of State website. (https://apps.sos.wv.gov/business/corporations/)

Step 6: This step details the filing of the nonprofit Articles of Incorporation. They must be completed and filed with the West Virginia Secretary of State. They must include the following:

• The nonprofit’s name

• Whether your nonprofit has members or not

• The initial registered office location and mailing address

• The name and address of the registered agent

• Incorporator’s name and address

• The principal offices mailing address

• Mission statement that meets IRS requirements

• Include a dissolution of assets clause

The necessary form (CD-1NP) can be found here: https://sos.wv.gov/Forms/Pages/Search-Results.aspx?Title=Incorporation&FormNumber=&FormCategory=Business%20and%20Licensing

Step 7: Some other states might require an initial report, but West Virginia does not. Skip this step and move to Step 8.

Step 8: This step is where you secure an EIN (Employer Identification Number). It is required for all businesses in the state of West Virginia. The EIN is assigned by the IRS and is used as a way to identify the organization in a similar way that a SSN identifies a person.

• Fill out the IRS Form-4 and then complete and file Form SS-4 online.

  • Form-4 https://www.irs.gov/forms-pubs/about-form-ss-4

  • Form SS-4 https://www.irs.gov/forms-pubs/about-form-ss-4

Step 9: Applying for federal tax exempt status is step 9 of the process. There are benefits for such status. Those benefits include limited liability, perpetual existence, and tax-deductible donations. In the state of West Virginia, the following must be completed prior to filing.

• Must already have an elected minimum of three directors

• Already submitted Articles of Incorporation

• Adopted important governing policies

• Obtained EIN

Once everything above has been completed, it is time to file Form 1023 online (https://www.irs.gov/forms-pubs/about-form-1023). Small businesses can file Form 1023-EZ (https://www.irs.gov/forms-pubs/about-form-1023-ez). The IRS will review the application and will either approve or disapprove the tax exemption. If denied, an explanation will be mailed out explaining why.

Step 10: After applying for federal tax exemption and being approved, the next step is to apply for West Virginia state tax exemptions. This will be done through the West Virginia State Tax Department (https://tax.wv.gov/Pages/default.aspx). Additionally you should file for sales and user tax exemptions with the West Virginia State Tax Department.

Step 11: Nonprofits in West Virginia do not need a statewide business license to operate, but depending on the services offered, other licenses or permits may be required. Ensure that you verify the requirements based on what your organizations may offer and file the corset permits. Additionally, all West Virginia nonprofits are required to register with the West Virginia Secretary of State Charitable Organizations Division (https://sos.wv.gov/business/Pages/Charities.aspx).

Step 12: The last step is to file annual reports by the 1st of July each year. The report contains information about the nonprofit. The information includes but might not be limited to:

• Address

• Names of board of directors

• Updated necessary information about the organization

The report can be submitted online with the West Virginia Secretary of State (https://sos.wv.gov/business/Pages/AnnualReports.aspx)

Expected Associated Costs:

• Fees:

  • Filing Articles of Incorporation: $25

  • 501(c) or Federal tax exemption application: $275 or $600 IRS fee

  • West Virginia charitable registration: $15-50 ($0 if exempt)

Items of note

If you have successfully made it this far and completed all the steps for establishing your nonprofit, the following will simply help you continue on your journey:

• Open a bank account

• Hire a business accountant

• Obtain insurance

• Create a Website

• Sign legal documents

References

How to start a nonprofit in West Virginia. Chamber of Commerce. (2022, June 7). https://www.chamberofcommerce.org/nonprofit/west-virginia