How to Start a Nonprofit in California

Step 1: Name Your California Nonprofit

Your first step before starting a nonprofit is to find a name that complies with all California naming requirements. You should also choose one that is easy for people to search for and find — make it distinguishable from others so your nonprofit stands out.

Our How to Name a Nonprofit in California page talks more about the steps you need to take to get the right name for your nonprofit.

1. Remember to follow these naming guidelines:

• Your organization’s name cannot include:
• Words related to the United States Olympic Committee. These include words like: “Citis Altius Fortius” or “Olympiad.”
• Words or terms associated with financial institutions, like the words “bank” or “trust company.”
• Grossly offensive terms.
• Unless you obtain consent, don’t use a name too similar to other California-based businesses.
• Choose a name that does not mislead the public or lead to confusion about your organization.

The Secretary of State's official guidelines provide more detailed information about naming your business in California and all the requirements you need to adhere to.

2. Does anyone else in California use this name? Complete a quick name search on the State of California website to be sure no one else is already using the business name you’ve chosen.

3. Can you get the URL? Even if you don’t want to have a website, you may still want to buy your web domain. If you don’t purchase it now, someone else could buy it, which could result in you being unable to use it later.

After you get a name together and decide if you want to purchase a URL, it’s time to talk to a professional service that can help you with the California nonprofit formation process. Our recommendation is:

Northwest ($29 + State Fees)

Step 2: Choose an Agent for Service of Process in California

Your organization is required to have a registered agent, known in the state as an agent for service of process. 

What does an agent for service of process do? An agent for service of process’s job is to work as the main point of contact between your business and the state. They accept legal documents on your behalf. You can choose to be the agent for your business or nominate someone from your company to fill the role instead. 

Who can be your business’s agent for service of process? Agents need to be corporations or individuals that reside in California. The corporation could be a registered agent service, which is a third party authorized to accept a business’s legal documents (i.e., service of process) in California. 

Not sure where to start with your agent? Check out our How to Choose a Registered Agent for your California Nonprofit guide.

Step 3: Select your Directors & Officers

The directors of an organization come together to form a board of directors. This board of directors is responsible for overseeing the operations of the nonprofit. 

The president, secretary, and other members of the nonprofit who have individual responsibilities and authorities are known as officers. 

To be eligible for 501c3 status, the organizational structure of your California nonprofit corporation must include:

1. At least 3 directors not related to each other
2. A president
3. A secretary
4. A treasurer or chief financial officer

NOTE: The president may not also hold the office of secretary or treasurer.

To learn more about electing a California nonprofit board of directors, read our full guide.

Step 4: Adopt Bylaws & Conflict of Interest Policy

Before you can be eligible for your goal of a 501c3 status, your nonprofit has to establish two documents. These include your:

1. Bylaws 
2. Conflict of interest policy

What are your company’s bylaws? Bylaws outline the operating procedures of the nonprofit, and they explain how it will be run.

What is the importance of a conflict of interest policy? Conflict of interest policies are a set of rules that explain that those working with the nonprofit, such as officers or directors, cannot make decisions that benefit them but not the nonprofit. All decisions have to be in the nonprofit’s best interests. 

NOTE: During your first organizational meeting, you’ll appoint your directors and officers to the board. At that time, you will also need to adopt and implement the bylaws and conflict of interest policy.

Step 5: File the California Articles of Incorporation

To register your nonprofit, you will need to file the Articles of Incorporation with the State of California. 

To ensure that your nonprofit is eligible to apply for 501c3 status, in the Articles of Incorporation you must explicitly state the following:

1. Purpose:

In order to qualify for 501c3 status, the organization’s purpose must explicitly be limited to one or more of the following:

Charitable, Religious, Scientific, Educational, Literary, Fostering national/international amateur sports competition, Preventing cruelty to animals/children, Testing for public safety

2. Dissolution:

You must explicitly state what the assets of the organization will be used for, and what will happen to the assets if the organization is dissolved. 

To be eligible for 501c3 status, the assets of your organization must only ever be used for purposes approved under section 501c3. 

Section 5 of this sample IRS document provides an example of these provisions required for 501c3 eligibility. 

Step 6: Get an EIN

What is an EIN? EIN stands for Employer Identification Number. The Federal Tax Identification Number (FTIN) may also be used. Either number is used to identify your business — the federal government accepts that in place of a Social Security number. You’ve probably heard this term before or seen it on tax forms. 

Why should I obtain an EIN? An EIN typically isn’t optional. It’s required for you to:

• Hire employees
• Pay taxes to the state or federal governments 
• Open bank accounts for your nonprofit

How do I go about getting an EIN? As a business owner, you need to obtain an EIN from the IRS after forming your company. You can do so by mail or via the IRS website. Take a look at our EIN Lookup guide to learn more about this process. 

Step 7: Apply for 501c3 Status

Before a nonprofit can apply for 501c3 status it must, 

1. Elect at least 3 directors not related to each other
2. File the Articles of Incorporation with the required provisions (As covered in Step 5)
3. Adopt the bylaws and conflict of interest policy
4. Have an EIN number

Once these four conditions have been met your nonprofit can apply for 501c3 tax-exempt status by filing Form-1023 online. 

If your application is approved, the IRS will send you a determination letter stating that your organization is exempt from federal taxes under section 501c3.