If you want to know how to start a nonprofit in Florida, you need to know both the federal and state procedures. It is a complicated and time-consuming endeavor to form a nonprofit to secure federal and state tax-exempt status. Therefore, it is advisable to consult with an attorney and an accountant with expertise in nonprofits.
Before beginning the filing process, you should:
- Become familiar with the requirements of the Florida Not For Profit Corporation Act, which is contained in Chapter 617 of the Florida Statutes.
- Read the Internal Revenue Service (IRS) publication, Tax-Exempt Status for Your Organization (Pub. 557).
- Determine the name your organization will use, and assure it doesn't infringe on any trademark. There is no provision in Florida to reserve a name of your corporation, but you can check to see if the name is already in use.
- Develop a clear purpose for your organization that meets the state and federal requirements for a nonprofit.
- Create Florida nonprofit bylaws that will support your tax-exempt status.
- Select your board of directors.
In general, the term "nonprofit" is most often used to refer to a nonprofit corporation. In Florida, a corporation is the only type of structure specifically authorized for forming a nonprofit. Unlike many other states, Florida law has no provision for an unincorporated nonprofit association.
Two main considerations in setting up a nonprofit are limiting liability for the organizers and avoiding taxes. A Florida nonprofit corporation offers both of these advantages.
Can an LLC be a nonprofit in Florida? According to Florida law, a limited liability company (LLC) may "have any lawful purpose, regardless of whether the company is a for-profit company." However, there is no separate classification of a nonprofit LLC. While an LLC formed for a nonprofit purpose would provide the members with limited liability, it poses significant problems in obtaining federal tax-exempt status. The position of the IRS is that an LLC may only be granted tax-exempt status if all of the members of the LLC are exempt organizations.
Filing Articles of Incorporation
You will need to file Florida nonprofit Articles of Incorporation with the Florida Department of State, Division of Corporations. There is a $35 filing fee, plus a $35 fee for designating a registered agent. This form also contains a required cover letter. The form includes instructions, and particular attention should be paid to the note that, while the form meets the minimum requirements of Florida law, it does not meet the requirements of the IRS for securing federal tax-exempt status.
Apply for a Federal Employer Identification Number
Regardless of whether your nonprofit will have employees, you will need to obtain an employer identification number. This is done by filing an Application for Employer Identification Number (Form SS-4) with the IRS. This may be done online, by fax, or by mail.
Federal Tax Exemption
To avoid federal taxes, you need to request an exemption under Section 501(c) of the Internal Revenue Code by filing an Application for Recognition of Exemption (Form 1023) with the IRS, and paying a $600 "user fee." It can take several months for the IRS to process the application. The IRS says it will take several hours to learn how to complete Form 1023, and several more hours to complete the form.
If your nonprofit meets certain requirements, you can use Form 1023-EZ, and pay a $275 user fee. However, Form 1023-EZ may only be filed online, after you set up an online account with pay.gov.
Florida Tax Exemptions
The Florida taxes that relate to nonprofit corporations are administered by the Florida Department of Revenue. For information about these taxes, a good place to start is the Department's website.
Florida corporate income tax. There is no procedure to request an exemption from the Florida corporate income tax. A nonprofit corporation is automatically exempt. It does not need to pay the tax, or file a corporate tax return, unless it has "unrelated trade or business income" for federal income tax purposes.
Sales and use tax. To obtain an exemption from the Florida Sales and Use Tax, you need to file an Application for a Consumer's Certificate of Exemption (Form DR-5). Generally, if you have obtained the federal Section 501(c)(3) exemption, you will qualify for the Florida exemption. The Florida Department of Revenue provides more information.
Reemployment tax. A nonprofit corporation must pay reemployment tax (Florida's term for unemployment tax) if it employs four or more workers for any portion of a day in 20 different calendar weeks during a calendar year. Churches and church schools are automatically exempt. For more information, see the Department's bulletin titled Information for Nonprofit Organizations (RTS-1C)
Registering with the Florida Department of Agriculture and Consumer Services
Any nonprofit soliciting contributions from the public must register annually with the Florida Department of Agriculture and Consumer Services. A nonprofit meeting certain qualifications may file a Small Charitable Organizations/Sponsors Application (Form FDACS-10110). However, if it has revenues over $25,000 per year, or engages paid fundraisers, it must file a Charitable Organizations/Sponsors Registration Application (Form FDACS-10100).
For more information, you can visit the Florida Department of Agriculture and Consumer Services online, or it may be simpler to get the information you need by phone at (800) 435-7352.
Starting a successful nonprofit in Florida requires that you be aware of both the federal and Florida-specific requirements governing your new endeavor. Before you set off to do good works, be sure that you've put all the right structures in place to support your nonprofit, both now and as it grows.