West Virginia is home to approximately 11,513 organizations in their nonprofit sector. These nonprofits employ 121,534 people and have combined revenue of US$13 billion.
Among the most successful nonprofits in West Virginia are, National Humane Education Society, Tamarack Foundation Inc, and Community Combined Ministries.
Nonprofit organizations are always created for the greater good of humanity or the natural world. While starting a nonprofit organization and achieving federal tax exemption from the IRS comes with various tangible privileges, the intangible rewards are just as enticing.
Starting a nonprofit in West Virginia takes anywhere between two weeks to three months until the organization is registered with the state and incorporated.
The following step-by-step guide will show you how to start a nonprofit in West Virginia.
1. Select a name for your organization
The step-by-step process of starting a nonprofit organization in West Virginia begins with choosing a name for your nonprofit. This is the first step and also an essential one.
The nonprofit name establishes its image and brand and therefore requires careful consideration. Additionally, your nonprofit name should be easily searchable by potential members and donors.
The following naming guidelines apply to West Virginia nonprofit organizations:
The name you pick for your nonprofit organization must include an organizational designation such as Ltd, Inc, Inc., or company
The name you choose for your West Virginia nonprofit should not imply that it was formed for any other purpose other than what’s included or stated in your Articles of Incorporation
Complete rules for naming a West Virginia-based nonprofit may be found on the West Virginia Legislature official guidelines
A name search is also available to ensure that another business entity in the state has not already taken the name. Conduct the name search on the West Virginia Secretary of State website
It is also recommended that you determine whether the business name is available as a web domain if you plan to create a website for your nonprofit at a later stage.
2. Nominate a West Virginia registered agent
The primary goal of a registered agent is to receive official mail, legal documentation, and service of process on a business’s behalf.
All business entities in the state of West Virginia are required to nominate an individual who will fulfill this designated role.
You may choose to nominate anyone as the nonprofit registered agent; however, the individual must meet the following criteria:
- They must be a resident of West Virginia
- They must have a physical address in the state
- They must be at least 18 years of age or older
- They must maintain the business hours
- They must consent to the appointment
3. Recruit your board members
Every West Virginia nonprofit needs to nominate directors and officers to serve as the board of directors.
You’ll also need to nominate an incorporator who will be responsible for signing and delivering the nonprofit’s Articles of Incorporation. You only need to recruit one incorporator; however, you may have more than one.
When it comes to recruiting directors, you need to nominate at least three. They do not need to be residents of the state, nor do they need to be members of the organization; however, they should also have no relation to each other.
Additionally, you need to nominate officers to fulfill the roles of president, secretary, and treasurer roles.
4. Consent to bylaws and conflict of interest policy
Regardless of which state it is located in, every nonprofit organization will need to establish important governing documents. This needs to be done to officially register your nonprofit with the state.
These governing documents are referred to as bylaws. The bylaws are a collection of rules that basically determine how an organization will be operated.
The next document is called a conflict of interest policy. This policy is made up of the rules and procedures put in place to ensure that decisions made by the board of directors always benefit the nonprofit’s purpose and not the individual agendas of members.
Both of these governing documents do not need to be filed with the state of West Virginia; however, they should be kept on file as they are important documents for your nonprofit’s reference as and when needed.
The bylaws should also be established during the organization’s first board meeting when directors and officers are elected.
5. Select a West Virginia nonprofit startup corporation structure
The state of West Virginia has different types of nonprofits or organizational structures. Deciding on the legal form for your organization is an important part of this process.
Usually, public charities take the legal form of a nonprofit public benefit corporation. However, other nonprofits are created as trusts or associations.
Consulting legal advice to determine what legal form is best for your organization is highly recommended. Thereafter, you’ll need the necessary forms available on the West Virginia Secretary of State website in order to incorporate your nonprofit.
Other types of corporations or types of nonprofits include mutual benefit and religious corporations. Mutual benefit corporations are formed typically to benefit their members. This includes the business leagues and social clubs.
Religious corporations are places of worship such as churches and synagogues.
6. Prepare and file nonprofit Articles of Incorporation
Your West Virginia nonprofit cannot be incorporated without filing the Articles of Incorporation. The articles need to be filed with the West Virginia Secretary of State, and they must include some pertinent details regarding your nonprofit such as:
- The nonprofit’s name
- Whether your nonprofit has members or not
- The initial registered office location and mailing address
- The name and address of the registered agent
- Incorporator’s name and address
- The principal offices mailing address
Also, ensure that your Articles of Incorporation are accompanied by a statement of purpose that meets IRS requirements. Think of this as the organization’s mission statement.
Also, ensure that your articles include the dissolution of assets clause. The clause should state what the assets are being used for and the outcome of the assets if the nonprofit is dissolved.
Once you compile the relevant information, ensure that you complete the Articles of Incorporation Form or template, also known as Form CD-1NP. It may be found on the West Virginia Secretary of State website.
Use the instructions provided and then complete the articles online.
7. File an initial report
West Virginia nonprofits do not need to file an initial report.
8. Secure an EIN (Employer Identification Number)
An EIN is an Employer Identification Number. This number is required for all business entities in the state of West Virginia. The EIN is assigned by the Internal Revenue Service to all business entities in the state, and it’s used as a way to identify businesses. Think of it as a Social Security number for your nonprofit organization.
In order to receive an Employer Identification Number, you need to complete IRS Form-4. Thereafter, complete and file Form SS-4 online to receive your Employer Identification Number instantaneously.
However, please note that the IRS website is operational during specific hours, and therefore you’ll need to print the EIN prior to closing the session. There is no fee to apply for or obtain your Employer Identification Number.
9. Apply for federal tax exemption
Obtaining federal tax exemption from the Internal Revenue Service comes with various benefits such as limited liability, perpetual existence, and receiving tax-deductible donations.
However, prior to applying for 501(c)(3) tax-exempt status in West Virginia, your nonprofit must have completed the following steps to gain eligibility:
- Your West Virginia nonprofit must have already elected a minimum of three directors not related to each other
- Your West Virginia nonprofit must have already submitted Articles of Incorporation
- Your West Virginia nonprofit must have already adopted important governing policies
- You must have already obtained your Employer Identification Number for your West Virginia nonprofit
If you’ve completed the above-mentioned steps, then you can go ahead and file Form 1023 online. Small business organizations can file Form 1023-EZ.
Once the IRS reviews your application, they will either approve or decline your request for federal tax exemption. If the application is approved, the IRS will send you a determination letter stating that the nonprofit is one of the existing organizations exempt from taxes under the Internal Revenue Code.
In the event that your application for federal income tax exemption is declined, you’ll receive a letter of explanation from the IRS detailing why the application was unsuccessful.
10. Apply for West Virginia state tax exemption
After receiving your IRS determination letter or becoming an exempt organization, the next step in the West Virginia nonprofit process is filing to obtain an exemption from state income tax.
This may be done with the West Virginia State Tax Department. Additionally, you should also file to obtain sales and use tax exemption, likewise with the West Virginia State Tax Department.
11. Other applicable permits and licenses
West Virginia nonprofits do not need a statewide business license in order to operate in the state. However, depending on the services that your nonprofit plans on rendering, you may require one or more permits or licenses. Ensure that you check with your county or town’s licensing division to determine the requirements for your nonprofit.
Additional state registration and reporting requirements
West Virginia nonprofit organizations are required to register with the West Virginia Secretary of State Charitable Organizations Division. This is a necessary process prior to the nonprofit being able to conduct fundraising activities or charitable solicitation.
12. Submit an annual report
West Virginia nonprofits must file their annual reports by the 1st of July each year. The report will confirm and update pertinent information about your nonprofit organization, such as the nonprofit’s address, as well as the names and addresses of the board of directors. You may submit your report online with the West Virginia Secretary of state.
Costs of starting a new nonprofit in West Virginia
The following filing fees apply to all West Virginia nonprofits:
- Filing Articles of Incorporation: $25
- 501(c) or Federal tax exemption application: $275 or $600 IRS fee
- West Virginia charitable registration: $15-50 ($0 if exempt)
After you’ve started your nonprofit, there are a few necessary steps that you should take to keep your organization running smoothly. Let’s take a closer look at them below:
Open a business bank account
- Maintain accounting and tax filing
- Ensure that your personal assets are kept separate from your nonprofits’ assets
To open a bank account, you will need to provide:
- Your EIN
- A copy of your articles of incorporation
- A copy of your organization’s bylaws.
Hire a business accountant
- Simplify payroll and bookkeeping
- Prevent your nonprofit from avoiding penalties and tax errors
- Manage your nonprofit’s funding
- Focus on growing your nonprofit
- Manage risks
You may opt for General liability, Personal liability, or Worker’s compensation insurance.
Build a website
As we mentioned earlier, you may want to create a website for your organization to legitimize your business or give it more credibility. A dedicated website is also one of the best ways to share your nonprofit’s vision, mission, and story with supporters. Consequently, it’s also a great way to announce upcoming events and goals.
Sign legal documents
One aspect that tends to get overlooked is signing legal documents in your personal capacity instead of as an authorized representative of your nonprofit.
If you’ve appointed yourself as a registered agent of the nonprofit, then the following tips will help avoid personal liability:
- State the registered name of your nonprofit
- Use your name and signature
- State your position/role in the organization as its authorized representative
When signing legal documents on behalf of the nonprofit, it is important that you do so in your capacity as the registered agent, as opposed to your capacity as an individual.
Example: Instead of signing your name only, state the name of the nonprofit and then your name and position within the organization before signing.
The fundamental difference between for-profit organizations and nonprofit corporations is that for-profits are created to generate profit which is then sent out in dividends to stakeholders. Additionally, for-profit organizations are usually owned by an individual, corporation, or family. On the other hand, nonprofit organizations generate revenue from the public, government, donors, and private foundations. All profit earned by the nonprofit must be cycled back into the organization to further the cause.
Your nonprofit’s business plan must include the organization’s description. This basically means it should describe exactly what the nonprofit was formed for or the purpose for which the nonprofit organization was created. Additionally, including information such as market analysis, management and organization, customer segmentation, logistics, and operations planning will all make your business plan more credible.
Yes, social media is one of the most effective tools used by nonprofit organizations and charities to build engagement with donors, raise awareness, and drive donations. Ultimately, by using social media, you’ll be able to reach more networks of people and ultimately bring in more funds to fulfill your nonprofit’s cause.
The National Council of Nonprofit Associations is designed to advance the role and capacity of nonprofits in civil society. They do this by supporting, giving advice, and connecting the policy dots for nonprofit organizations across the states. Ultimately, they keep nonprofit organizations informed and empowered to make an impact in the community by fulfilling their cause.
Yes, the founder of a nonprofit organization is allowed to pay themselves a fair salary for their work and the time they give to run the organization. Likewise, the founder of the nonprofit organization is also allowed to compensate full and part-time employees for their time and service within the nonprofit’s cause. However, all salaries must be disclosed to the IRS.