How to Start a Nonprofit in Virginia

Thinking about starting an LLC in Virginia? We’ve got all the details you need.

Begin by selecting a unique business name, appointing a registered agent, and filing your Articles of Organization with the Virginia State Corporation Commission, which includes a $100 processing fee.

You can do this independently, consult with a business attorney for specialized legal guidance, or join the other 75% of our readers and hire a specialized Virginia LLC formation service (recommended).

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What Is a Nonprofit in Virginia?

Nonprofit companies are organizations that are there to address social or religious issues. While they operate in similar ways as traditional companies, the profits made by the company don’t go into the pockets of shareholders and owners.

Nonprofits focus on using any revenue to further improve their cause. Ultimately, their purpose is to benefit the public instead of profit from the public.

Nonprofits can also enter many fields and serve people in different ways. For example, some nonprofits like the Salvation Army focus on helping the poor, and they even provide rehab and housing services to those in need. Other nonprofits may focus on improving the environment or another area of society that needs assistance.

Can a Nonprofit Be an LLC?

Nonprofits can be LLCs in Virginia. There are many types of LLCs in Virginia, and a nonprofit LLC is one of them. That said, nonprofits are usually corporations due to how many board members are needed and how they’re taxed.

It’s usually easier for the IRS to approve nonprofit companies that have multiple board members and a corporation status because it leaves less power in the hands of one person. This can reduce the chances of embezzlement or fraud on behalf of the nonprofit. Still, LLCS can be nonprofit in Virginia if all of the appropriate rules and laws are followed.

How Much Does It Cost to Start a Nonprofit Organization in Virginia?

The cost to start a nonprofit in Virginia varies depending on several factors, but expect to pay around $360 to $1,100.

There is a wide range in cost because the tax exemption from the IRS can be either $275 or $600 and Virginia Charitable Solicitation Registration can be $100, plus another $30 to $325.

Other costs like the Articles of Incorporation, which costs $75, or other filing options may also alter the cost of starting a nonprofit in Virginia. To offset the cost of starting a nonprofit in Virginia most nonprofit boards seek investments from venture capitalists, angel investors, or banks.

How Do I Start a Non-Profit in Virginia?

The process for starting a nonprofit in Virginia can be summarized in a handful of steps. While the process can vary based on the type of legal entity you plan on choosing, the steps for starting a nonprofit are similar.

For the purpose of this article will focus on the steps to form one of the most common nonprofits, which is a corporate nonprofit. However, we offer some insights into how to start an LLC nonprofit as well.

Follow the steps below to learn how to start a nonprofit in Virginia.

Step 1: Come up With a Plan

First and foremost, you have to come up with a plan if you want to start a nonprofit in Virginia.

The planning phase is the most important part of the process when starting a nonprofit because it’s where you outline how your business will operate and what your mission will be.

During this phase, you can focus on your executive summary, marketing strategy, and figure out a path ahead that helps those in need without bankrupting the company. Business plans are even more important for nonprofit operations because of the nature of the business.

Since you won’t be turning a profit you need to have a plan to secure startup funding and raise money through fundraisers to keep your company going. Business plans should include all members of the company, including board members and any donors that you know you have. This will help you outline how your business will operate in Virginia.

Business plans should also include how much revenue you plan on generating, what you’ll do with that revenue, and how much of that revenue will be distributed.

Your business plan should also include the business entity that you plan on choosing. Most nonprofits are corporations due to the need to have board members to file for tax exemption status.

That said, you can also choose an LLC if it’s right for you. Still, we recommend going the corporation route because it’s the best option for nonprofits and increases your chances of being approved for tax exemption status.

Step 2: Select Board Members and Have a Board Meeting

Now that you’ve come up with a plan, you may be wondering, “How many directors do you need for a nonprofit in Virginia?” Luckily, the answer is pretty simple.

To have a nonprofit corporation in Virginia you need to have at least one initial director on your company’s board. While you can operate like this for as long as you want, the IRS recommends having at least 3 board members before applying for tax-exempt status.

While it’s not impossible to get approved with only 1 or 2 board members, your chances of approval are much higher with more members.

Once you have your board members you should have your first board meeting. This meeting will cover the initial business plan, help with the creation of bylaws, and allow you to appoint officers.

Getting together with board members early can also help you come up with accounting periods and approve any initial transactions that your nonprofit needs to make to get started. You can also use this board meeting to elect directors for the nonprofit if that’s not something you’ve done already.

You can hold a board meeting at any time during the nonprofit formation process, but we recommend doing it sooner rather than later. This ensures that the formation process is smooth from start to finish and that everyone is up-to-date on their tasks and responsibilities.

Step 3: Name Your Virginia Nonprofit

Names are important when you have a nonprofit. We recommend choosing a name that relates to your nonprofit and its mission. This can help people find your organization when they search online and make it more appealing for people who want to donate to your cause.

That said, you need to choose an available name. Check with the state’s business name database to determine if the name you’re looking for is available.

Once you know what name you want, you can reserve the name by paying a slight fee of $10 and filling out the application for Reservation or Renewal of a Corporate Name. This only takes a few minutes to fill out and we recommend doing so to prevent you from losing the name.

Step 4: Choose a Registered Agent

Registered agents are essential for all nonprofits in Virginia if you want to remain compliant. These agents can be people or even other companies, and they act on behalf of your organization in the event of a lawsuit.

Registered agents also have to be available during normal business hours in case the state needs to contact the business. Nonprofits usually end up choosing a board member to be a registered agent, but you can choose anyone you trust.

Step 5: Create Bylaws for Your Nonprofit

Bylaws are an important part of the process when creating a nonprofit in Virginia. Essentially, bylaws are the laws that govern how your nonprofit will operate. These bylaws usually contain any rules or methods your corporation will have when board members meet and create new rules.

Bylaws also usually contain the process of selecting board members and when you can vote for them.

That said, these bylaws have to be in line with Virginia state laws. However, they don’t have to be filed with the state. Instead, bylaws are kept internally and function as the blueprint for your corporation’s rules and processes.

Step 6: File Nonstock Articles of Incorporation

When you’re starting a nonprofit corporation in Virginia, which is the most common legal entity for nonprofits in the state, you need to file the nonstock articles of incorporation. Nonstock corporations are the most common legal entity for nonprofits in Virginia because they’re corporations that don’t have stock holdings.

This paperwork needs to be filed with the State Corporation Commission, and it’s necessary because the state will have a record of your company once you file.

When you file your nonstock articles of incorporation you must include the following information:

• The corporate name for your nonprofit
• The purpose of your nonprofit
• How many members your nonprofit will have if it has members
• How you will elect directors
• The street address and name of the registered agent; if you selected a company, provide that information instead
• Address and name of initial directors
• Limitations or any restrictions
• Signature of the Incorporator
• Information about how the nonprofit’s assets will be managed

Filing the nonstock articles of incorporation is an important part of the process, but it doesn’t guarantee tax-exempt status. Expect to pay $75 to file this information with the state.

Step 7: Obtain an EIN

Every corporation needs an EIN, including nonprofits. EIN is short for employer identification number and it helps the IRS collect tax from your nonprofit. While nonprofits have tax protections, the IRS still needs an EIN to monitor your nonprofit and collect taxes that do need to be paid.

EINs are simple to get and you can get one before becoming tax-exempt by filling out the necessary forms online via the IRS website. You should never use your Social Security number in place of an EIN for your nonprofit.

Step 8: File for Tax Exemption Status With the IRS – 501c3 Virginia

Nonprofits can file for tax-exempt status from the IRS and in the state of Virginia, which means they can save money on income tax and other types of tax. This is important for nonprofits because it can help the company save money during tax season and use that money to pay employees or support the cause.

When a nonprofit applies for tax-exempt status it becomes known as a 501(c)(3) business. To obtain this status from the IRS you need to fill out Form 1023, which asks you for information about your nonprofit organization to see if you qualify for tax-exempt status.

You’ll have to provide information about board members, outline what your nonprofit does, and go over the company’s structure. It’s for this reason that having your company’s bylaws written out is helpful and important.

There is also a 1023-EZ form that nonprofits can fill out if they’re projected to have less than $50,000 in total gross receipts. This form will also help you get approved faster, and you can fill out all of the necessary forms online.

The last part of tax exemption to consider is how it’s handled by Virginia. Luckily, companies that go through the process of becoming tax-exempt with the IRS are automatically exempt from Virginia’s state income tax. However, you do still have to apply for sales and use tax exemptions.

Step 9: Apply for a Business License and Necessary Permits

Virginia requires you to have a business license if you plan on providing a good or service. Since nonprofits usually provide some type of good or service to help the community, there is a good chance that your nonprofit will need a business license in Virginia.

Typically, you’ll only need a local license and to get one you can check with the county clerk in each region.

However, some nonprofits may offer food or other services to people who need them. In these cases, there’s a good chance that you’ll need a health inspection and food handling permit. Therefore, it’s important to determine what types of permits you need before you start helping people with your nonprofit.

Step 10: File Your Annual Report

Every nonprofit has to file an annual report in Virginia. This is a rule that applies to most entities that plan on doing business in Virginia.

The report has to be filed once per year by the last day of the month that the company was established. Therefore, if your nonprofit was founded in July, the report needs to be filed in July. Annual reports need to be filed with the Office of the Clerk and you can do so online or by mailing in the report.

Virginia Nonprofit FAQ

More questions about Virginia nonprofits? We have answers below.

Do Nonprofits Pay Sales Tax in Virginia?

Nonprofit business entities do have to pay sales tax in Virginia. However, you don’t have to pay sales tax if you file for sales tax exemption in Virginia. If you’re approved by the IRS for tax exemption, you should have no issue getting tax exemption status in the state of Virginia.

How to Start a Nonprofit Organization With No Money?

The best way to start a nonprofit with no money is to have investors. Investors can provide you with funds to start your nonprofit organization.

Having a solid business plan and strong bylaws is the key to getting investors on board. Investors will also have to like the message and goal of your company, so focus on having a good cause that you’re planning on supporting.

If you don’t have investors, you can speak with banks for loans. The only problem with banks is that they might not loan you money, due to the nature of a nonprofit not making any profit.

Are There Methods for How to Start a Nonprofit in Virginia Online?

Yes, you can start a nonprofit organization online in Virginia. There are plenty of forms available for you to fill out online and the state prefers you do it this way. In fact, there’s a good chance that you’ll be approved faster if you fill out the forms online.

Furthermore, if your company is going to have less than $50,000 in gross receipts you can use the 1023-EZ form to file for tax exemption status online as well.

Start a Nonprofit in Virginia Today!

A nonprofit is a great way to help the community. It allows you to help those in need, whether it’s the homeless who need shelter or a religious group who need a place to pray. Regardless of your reasons, starting a nonprofit is a noble venture, and you can still make enough money to earn a living.

That said, you have to go about the process the right way and make sure you choose board members who believe in your vision.

Additionally, learning how to start a nonprofit in Virginia the proper way will help the process go smoothly. Thankfully, the steps we covered in this article offer enough insight to help you get started with a nonprofit today.