The Cost of Starting a Nonprofit
Many people ask how much it costs to start a nonprofit. While there are many different programs to fund a nonprofit once you get started, the startup costs will likely come from your pocket. I know this firsthand – I started my nonprofit, Revolution Leadership, with my own money. So, you will need to know how much money you’ll need for your first few steps. Let’s talk about the cost of starting a nonprofit.
Costs Vary
Unfortunately, there is no straightforward answer about how much it costs to start a nonprofit. The amounts can often vary, depending on different factors. The structure of your nonprofit and what you want to do will affect the startup costs. Your structure includes details such as: whether or not you want to give yourself a salary or if you’re planning on giving out grants. Regardless of your plans, however, I can tell you that you need to pay filing fees.
State Filing Fees
Filing fees are the fees you have to pay to the state and federal government. The amount you pay to your state government can vary depending on the state you live in. When you hire someone to help you start your nonprofit, they’ll first start by asking you which state you plan on starting your organization. State filing fees average around $100, but they can be anywhere between $30-150+.
Federal Filing Fees
In addition to the state filing fees, you will have filing fees with the IRS. Fees paid to the IRS can range from $100 to $600, depending on what you need. To be on the safe side, you should prepare to spend about $700 just for the filing fees. Now on top of those fees, if you choose to engage an attorney or other experts to help you start your nonprofit, then you’ll have those additional costs on top of the filing fees. That’s called a legal fee, which, again, can vary.
Cost Breakdown
As we said before, the cost of starting a nonprofit will vary depending on your state and your structure. So, let’s break down the potential costs of starting your organization.
Articles of Incorporation
This paperwork is the formal charter document for your nonprofit filed with your state. Depending on your state, these fees could range between $8 to $1098.
Charitable Registration
You may need to register as a charity with your state to raise money. Since some states don’t charge for this registration, and some charge hundreds of dollars, you’ll need to find this information on your state’s website.
Business Registration
Depending on your state, you may be required to obtain a business license or register as a business. You’ll have to consult with your local government to see if this is something you’ll need to do.
Filing for 501(c)3 Status
To receive 501(c)3 tax-exempt status from the federal government, you’ll need to file forms with the IRS and wait for a determination letter. Form 1023 is $600, while Form 1023-EZ is $275.
The benefits of filing for 501(c)3 status include tax-deductible contributions, an exemption from federal income tax, possible exemption from state income, sales, and employment taxes, reduced postal rates, exemption from federal unemployment tax, and tax-exempt financing.
Get Started Today
At the very minimum, you will have to pay filing fees, which could cost around $700. If you know you at least have $700 and want to move forward, give Chisholm Law Firm a call. We’d love to talk with you on a strategy call so that we can get into specifics about the structure of your nonprofit. Once we understand your goals and plans, we can recommend one of our flat fee packages.
Starting and growing a nonprofit is not a simple task. You need the right team with the right expertise to help you on this journey. Our team has helped thousands of people start and grow nonprofits that impact the world. If you want the best for your nonprofit, look no further than Chisholm Law Firm. We have a 100% success rate for our clients.
You can rest assured that your nonprofit is in the best hands and that we’ll get everything done right the first time. Call us today to schedule your free consultation.
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