Understand the objective of the non-profit.  The primary objective is to support some issue or matter of private interest or public concern (such as the arts, charities, education, politics, religion, research, or some other endeavor) for non-commercial purposes. There are different kinds of non-profits, one of them being a 501(c)(3), which is exempt from income and (sometimes) property tax, and able to receive tax-deductible charitable contributions. It is helpful to consult with an attorney who is experienced in the area of non-profit law to help avoid mistakes that people sometimes make when they try to incorporate by themselves.

Formulate a mission statement. A non-profit organization exists to accomplish its mission, which should be worded to clearly include the purpose, services and values of the organization. The mission statement is a concise statement that covers in one or two sentences describing who the organization is, what it does, for whom and where. It should have a compelling appeal, as it will be used in all published materials, funding requests and public relations. It should also portray how your organization is distinct from others to avoid confusion.

Form a Board of Directors.  Selecting a board requires thought and extensive recruitment efforts. Each state has regulations that determine the minimum size of the board, typically three, but the optimum number of people who sit on the board should be determined by the needs of the organization. Based on what your organization would like to accomplish, you should decide what special skills and qualities you will require of the individuals on your board. Identify qualified individuals who are supportive of the mission and are willing to give of their talents and time. 

File Articles of Incorporation.  Articles of Incorporation are official statements of creation of an organization filed with the appropriate state agency. They are important to protect both board and staff from legal liabilities incurred by the organization, making the corporation the holder of debts and liabilities, not the individuals and officers who work for the organization. The specific requirements governing how to incorporate are determined by each state. You can obtain the information you need to proceed with this step from your state Attorney General?s office or your state Secretary?s office. Consult with an experienced attorney who understands non-profit law to avoid mistakes.

Draft bylaws.  Bylaws are simply the "rules" of how the organization operates. Although Bylaws are not required to file for 501(c)(3) status, they will help you in governing your organization. Bylaws should be drafted with the help of an attorney and approved by the board early in the organization's development.

Develop a record-keeping system.  Legally, you must save all Board documents including minutes and financial statements. It is necessary to preserve your important corporate documents, including board meeting minutes, bylaws, Articles of Incorporation, financial reports, and other official records. You should contact your appropriate state agency for more information on what records you are required to keep in the official files.

Develop an accounting system.  Work with a CPA firm such as TB&A, CPA, PLLC, with extensive non-profit experience. Non-profits are accountable to the public, their funders, and, in some instances, government granting bodies, and it is vital to establish a system

of controls (checks and balances) when establishing the organization?s accounting practices. Responsible financial management requires the establishment of an accounting system that meets both current and anticipated needs for compliance and avoidance of large fines.

Apply for a federal employer identification number.  Regardless of whether or not you have employees, non-profits are required to obtain a federal Employer Identification Number (EIN) ? also referred to as the federal ID number. Available from the IRS, this number is used to identify the organization when tax documents are filed and is used not unlike an individual?s Social Security number. If you received your number prior to incorporation, you will need to apply for a new number under the corporate name. Ask for Form SS-4 when applying for your EIN.

File for 501(c)(3) status. Obtain Form 1023 (application) and Publication 557 (detailed instructions) from the local IRS office to apply for recognition of a tax-exempt organization. The application is an important legal document, so it is advisable to seek the assistance of an experienced attorney or certified public accountant when preparing it. Both of these documents can be downloaded from IRS web site.  The filing fee depends upon the size of the organization?s budget and the amount of money expected to be received on an annual basis.  

File for state and local tax exemption.  In accordance with state, county, and municipal law, the non-profit may apply for exemption from income, sales, and property taxes. Contact The NC Department of Revenue, the County Department of Revenue, and county or municipal clerk?s offices.

Fulfill charitable solicitation law requirements. If your organization?s plans include fundraising, be aware that many states and few local jurisdictions regulate organizations that solicit funds within that state, county, or city. Usually compliance involves obtaining a permit or license and then filing an annual report and financial statement. Contact the NC Attorney General?s office, the NC Department of Commerce, state and local Departments of Revenue and county or municipal clerk?s offices to get more information.

Apply for a non-profit mailing permit.  The federal government provides non-profits with reduced postage rates on bulk mailings. While first-class postage rates for non-profits remain the same as those for the for-profit sector, second- and third-class rates are less when non-profits mail to a large number of members or constituencies. For more information on eligibility, contact the U.S. Postal Service and ask for Publication 417, Non-profit Standard Mail Eligibility.