Essential Steps to Create a Wisconsin Non-Profit Organization

March 03, 2020 by Moertl, Wilkins & Campbell, S.C.

            Do you have a charitable cause you are passionate about? Do you notice needs in your community that haven’t been met? If so, you may have an idea for a new charitable organization but aren't sure how to make that idea a reality. Whether your concept is large or local, creating a nonprofit organization is the first step to bringing your vision to life.

            Nonprofit organizations can be established for a variety of charitable purposes such as shelters, group homes, religious missions, scientific research, animal welfare, and educational programs.  A nonprofit can be established as a corporation, LLC, trust or unincorporated association. However, a 501(c)3 corporation is the most common business formation for a number of reasons.

            As a 501(c)3 nonprofit, your organization will have the benefit of being exempt from state and federal income tax, have the ability to fundraise and accept donations, and limit the legal liability of its directors and members.  

            Starting a nonprofit 501(c)3 corporation is often the best method to turn your charitable vision into reality. In order to establish your 501(c)3, you’ll need to complete the following steps:

1.     Incorporation in Wisconsin

The first step to incorporation is to file Articles of Incorporation with the Wisconsin Department of Financial Institutions Division of Corporate and Consumer Services. Within the articles, you’ll need to name a registered agent for your corporation and indicate whether the corporation will have any members in addition to the required board of directors. You’ll also need to include a statement of purpose, dissolution clause, and the names of your directors, if prepared.

 2.     Hold Your First Organizational Meeting

Next, the new members, incorporators and/or directors must hold an organizational meeting to formalize the creation of the corporation and its structure, including the appointment of additional directors, officers, and members. The minutes of this meeting should include the decision of the board to form the organization, a statement of the organization’s purpose, and the intention to pursue federal tax-exempt status.

 3.     Create Bylaws

Wisconsin law does not require that the organization’s bylaws are filed with the Articles of Incorporation, but the law does require their creation. In addition, the bylaws will need to be submitted to the IRS when filing for 501(c)3 status. Very small nonprofits qualified to file for 501(c)3 status with form 1023-EZ do not need to include a copy of the bylaws. An attorney can assist with ensuring your organization’s bylaws are thorough and within the boundaries of the law.

 4.     Apply for a Federal Identification Number (EIN)

A Federal Identification Number, or EIN, is a unique identifier that every business is required to have, much like a Social Security number for a person. You can request an EIN for your business through the IRS.

 5.     Apply for Federal Tax Exemption Status

To apply for federal tax-exempt status, you will need to complete form 1023 or 1023-EZ and submit the form to the IRS. There is a $600 filing fee with form 1023-EZ and a $275 filing fee with form 1023-EZ. Only small entities are eligible to use form 1023-EZ. An attorney can work with you to determine which form is best for your organization. If federal tax-exempt status is granted, the IRS will issue your organization a Letter of Determination that proves its exemption status.

 6.     Gain State Income Tax Exemption Status

In Wisconsin, a nonprofit organization with federal 501(c)3 status is automatically exempt from state income tax. The federal Letter of Determination from the IRS can be used as documentation of tax-exempt status.

 7.     Apply for Wisconsin Sales and Use Tax Exemption

Next, you’ll need to apply for a Wisconsin Sales and Use Tax Certificate of Exempt Status (CES) through the Wisconsin Department of Revenue.  Along with your application, you’ll need to include a copy of the Articles of Incorporation or bylaws, statement of receipts and disbursements for the organization’s last accounting period (if applicable), and the Federal IRS Determination Letter.

 8.     Obtain a Wisconsin Tax ID

To receive a Wisconsin Tax ID, your organization will need to fill out an Application for Wisconsin Business Tax Registration and submit it to the Wisconsin Department of Revenue.

 9.     Register for Charitable Fundraising

In order to legally fundraise and collect donations, the organization will need to complete the Charitable Organization Application and mail it to the Wisconsin Department of Financial Institutions Division of Corporate and Consumer Services. This application is required if your organization solicits or receives $25,000 or more in charitable contributions in a single year, and/or has any paid employees.

 10.     Apply for any other licenses or permits required for your specific type of nonprofit.

             Creating a nonprofit organization is a rewarding experience, but the process to create it can be overwhelming. While you manage your creative vision, our skilled attorneys can advise you on the forms, fees, and structure your nonprofit organization will need to hit the ground running.