Starting a nonprofit in Colorado? Consider these tips for launching your non-for-profit organization and learn how technology can help.
The state of Colorado currently lists over 19,000 nonprofit organizations. Colorado is an attractive state for nonprofit organizations because they can receive tax-exempt status on net income. Additionally, nonprofits don’t pay taxes, meaning all proceeds cycle back into the organization. As such, if you’re passionate about helping people and impacting change, consider starting a nonprofit organization in Colorado.
To ensure your nonprofit’s success, consider using nonprofit board management software to enhance communications, enable remote meeting access, store critical documents in a secure environment, and more. Read on to learn more about starting a nonprofit in Colorado, and gain tips for using technology to improve nonprofit governance.
What is a Nonprofit?
According to Investopedia, “A nonprofit organization is a business that has been granted tax-exempt status by the Internal Revenue Service (IRS) because it furthers a social cause and provides a public benefit. Donations made to a nonprofit organization are typically tax-deductible to individuals and businesses that make them, and the nonprofit itself pays no tax on the received donations or on any other money earned through fundraising activities. Nonprofit organizations are sometimes called NPOs or 501(c)(3) organizations based on the section of the tax code that permits them to operate.”
Steps to Start a Nonprofit in Colorado
Setting up a nonprofit in Colorado can be rewarding and exciting. Here are the steps you need to follow to start a nonprofit in Colorado.
1. Name Your Organization
Choosing a name for your organization is the first step in starting a nonprofit in Colorado. This name represents your cause and introduces your nonprofit to the world. As you learn how to raise money for a nonprofit, you’ll realize your name has the potential to open lots of doors. After choosing a name and ensuring it’s not already in use, register it with the Colorado Secretary of State’s office.
2. Recruit a Board of Directors
The next step involves recruiting various leaders to serve on your nonprofit board. These members will serve as board directors and support the organization in achieving its goals and objectives. For instance, if you run a tech nonprofit, consider adding a treasurer to help with obtaining technology grants that best suit the organization.
3. Appoint a Registered Agent
Colorado mandates all nonprofit corporations within the state must list an agent for service of process. Referred to as a registered agent, this individual agrees to accept legal documents on behalf of the nonprofit. This agent is required to have a physical street address in Colorado. Note: A P.O. box doesn’t meet this requirement.
If you’re just starting out, you can have your director or officer serve as the appointed registered agent during the infancy of the nonprofit. Then, nominate another registered agent in their place. All the appointed registered agents must consent to their appointment to this position.
4. Obtain Employer Identification Number (EIN)
Your Employer Identification Number (EIN) is also referred to as a Federal Tax ID. The nine-digit number is issued by the IRS and used to identify your business for tax purposes. The EIN allows you to open a business checking, savings, or investment accounts. You’ll also be able to file taxes for your business, complete payroll for your employees, and file for tax-exempt status.
5. File Form 1023 for Federal Tax Exemption
While nonprofits in Colorado can be tax-exempt, it’s not automatic. You’ll need to first file for exempt status with the IRS using Form 1023. After submitting the form, you’ll receive an official IRS Determination Letter after gaining approval.
6. Hold Nonprofit Board Meeting
Once you have your board in place, it’s time to hold your first board of directors meeting. At the meeting, the new board of directors will approve the bylaws, appoint officers, set an accounting period and tax year, and approve initial transactions of the corporation
Make sure to record comprehensive meeting minutes to document all of the decisions and insights. To help you get started, use this nonprofit board meeting minutes template.
Understanding the Board of Directors' Role in a Nonprofit
The nonprofit board of directors is tasked with several critical responsibilities, including:
- Oversee the effective operations of the nonprofit
- Ensure the nonprofit fulfills its legal obligations
- Set goals and objectives
- Provide proper financial oversight
- Improve the nonprofit’s public standing
- Recruit, supervise, retain, evaluate, and compensate the CEO or general manager
- Establish a policy-based governance system and adopt technologies that promote seamless board management
Your board of directors helps guide the nonprofit from day one, so don’t delay on board member recruitment.
Getting Started with OnBoard
If you’re looking for the most effective, simple, and secure way to run your nonprofit board meetings and streamline board business, your search ends here! OnBoard provides a first-class board management platform designed specifically for nonprofits. It offers all the features you’d expect from a modern software solution, including automated agenda creation, online voting, real-time collaboration, and comprehensive reporting, among other capabilities.
Good boardwork starts with effective meetings. Download OnBoard’s free board meeting agenda template to organize a board meeting.
Frequently Asked Questions
How Much Does it Cost to Start a Nonprofit in Colorado?
Colorado’s Secretary of State charges a $50 filing fee for nonprofit Articles of Incorporation. It costs an additional $25 to reserve a name for your nonprofit.
How Many Board Members are Required for a Nonprofit in Colorado?
While you only need one director in Colorado, you need at least three members to become tax-exempt with the IRS.
Does Colorado Require a 990?
Yes. Colorado requires a 990 submitted via the Colorado Secretary of State’s website.
About The Author
- Gina Guy is an implementation consultant who specializes in working with nonprofit organizations get the most from their board meetings. She loves helping customers ease their workloads through their use of OnBoard. A Purdue University graduate, Gina enjoys refinishing furniture, running, kayaking, and traveling in her spare time. She lives in Monticello, Indiana, with her husband.
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