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Do I Need a Lawyer to Start a Nonprofit?

By Christopher Coble, Esq. on December 18, 2017 5:56 AM

Entrepreneurs are natural self-starters with a belief they can do it all themselves, including all of the incorporation work necessary to start a small business. (And with some of the resources available on the internet, sometimes they might be right.)

But incorporation can be a tricky thing to get right. And if you're starting a nonprofit to do good, make sure you do it well. That may mean hiring an attorney to help you with starting a nonprofit.

Starting From Scratch

Even choosing a name for your nonprofit can get legally complicated. While you want the name to state your mission, there are limitations: A nonprofit name can't conflict with the name of another business or nonprofit, can't infringe on an existing trademark, and must steer clear of certain terms (like "bank," "federal," or "insurance") that may imply an affiliation. Checking state agencies for naming rules and existing business names can often be done more quickly and easily by an attorney.

And a lawyer will have experience filing the incorporating paperwork in order to comply with local, state, and federal law. You'll need to file "articles of incorporation" along with your application, which some states call a "certificate of incorporation" or "certificate of formation." Most states require general information about the purpose of the corporation, the name, address, and a list of initial directors.

Moving Forward

But incorporation documents may not be just a one-time activity. You can always make changes later if needed, but that's easier said than done. Changing a nonprofit's bylaws, structure, or articles of incorporation means filing those modifications with the state.

And then there's the tax issue. One of the biggest reasons to incorporate as a nonprofit is to qualify for tax-exempt status with federal and state governments. In addition, if a nonprofit is a 501(c)(3), donors can receive tax deductions for their contributions to the organization.

But not every nonprofit can qualify for this type of status, and must have a religious, charitable, scientific, educational, or literary purpose. Making sure your organization qualifies for and complies with tax laws regarding nonprofits is the job of an experienced attorney.

As we mentioned above, you could incorporate without legal help, but if things go wrong, it can be hard to undo the problems you've created for yourself, and you may end up having to starting over with an attorney anyway. That's a waste of time and money that could be saved by hiring a professional to begin with.

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