In Tennessee, the process for forming a nonprofit corporation is different from the process for forming a for-profit corporation. A nonprofit corporation must file additional documentation with state and federal authorities to be recognized and obtain the advantages of nonprofit status. You can complete and file the paperwork yourself, or use an online document preparation website. Recognition as a nonprofit corporation confers three main advantages: tax breaks for the corporation, tax breaks for donors, and the legal right to solicit donations. In Tennessee, nonprofit corporations are governed by the Tennessee Nonprofit Corporation Act.
Select a name for your organization. Your corporation's name must not be in use by any other business organization operating in Tennessee. It also may not infringe on another party's trademark, and must include a suffix that indicates its limited liability status such as “corporation,” “company,” “incorporated” or an abbreviation of one of these words, either in English or in a foreign language. You can perform a business name availability search free of charge on the website of the Tennessee Secretary of State. You can download a name reservation form from the website. By filling out and submitting the form with the appropriate fee, you can reserve your corporation name while you complete your other paperwork. Name availability is subject to further review by the Tennessee Secretary of State at the time the formation document is processed and filed.
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Appoint directors and a registered agent for the corporation. You must name at least three directors. Directors appoint officers and decide the corporation's most important policy matters, while the registered agent's purpose is to receive official correspondence on behalf of the corporation. The registered agent must have a street address in Tennessee.
Download and print a Nonprofit Corporation Charter from the website of the Tennessee Department of State and complete it. File it by mail or hand delivery with the Corporate Filings Division of the Tennessee Department of State and pay the filing fee. The Nonprofit Corporation Charter is the Tennessee equivalent of Articles of Incorporation in other states. On the Charter, you must supply the name of the corporation, the name and address of its registered agent, the names and addresses of the corporate founders and the corporation's principal office address. You must also state how to corporation's assets are to be distributed upon dissolution. You do not have to identify the directors. The mailing address is Tennessee Department of State, Corporate Filings, 312 Rosa L. Parks Avenue, 6th Floor, William R. Snodgrass Tower, Nashville, TN 37243. The telephone number is 615-741-2286.
Create corporate bylaws. Corporate bylaws provide a guide for corporate governance and deal with issues such as how and when meetings are to be held, the appointment, replacement and duties of officers and directors, and the formation of committees. Since the corporation will be nonprofit, the bylaws may not name shareholders or authorize the issuance of shares.
Download IRS Form 1023 from the IRS website, complete and submit it to the IRS to apply for recognition under the appropriate subsection of Section 501(c) of the Internal Revenue Code. Most nonprofit corporations qualify under Section 501(c)(3). Form 1023 requires extensive information about the corporation's organizational structure, purposes, activities and finances. You must pay a filing fee when you file this form. If the IRS approves your application, the corporation will be exempt from most federal income taxes, although it must still file Form 990 with the IRS each year. In addition, donors to the corporation can deduct the value of their donations from their taxable incomes.
Download and print an application for exemption from sales and use taxes from the website of the Tennessee Department of Revenue. This one-page document requires much of the same information that is required in the corporate charter. It also requires you to describe the corporation's business activities, and state the basis of your tax-exempt status, for example Section 501(c)(3) of the Internal Revenue Code. There is no filing fee for this application.
Register with the Charitable Solicitations Division of the Tennessee Department of State, if the corporation is a charitable organization. Registration requires you to download and print a two-page Application for Registration of a Charitable Organization from the website of the Tennessee Department of State. This form requires basic information about the corporation and its tax-exempt status. It also solicits information designed to determine whether the corporation is likely to engage in illegitimate fund-raising activities; for example, you must reveal whether any officer or manager of the corporation has even been the subject of an injunction or convicted of a felony. Two corporate officers must sign the application. Submit the application along with a copy of the corporation's charter, a copy of its bylaws and a copy of its most recently filed federal tax return, if any, to Tennessee Department of State, Division of Charitable Solicitations and Gaming, William R. Snodgrass Tennessee Tower, 312 Rosa L. Parks Avenue, 8th Floor, Nashville, TN 37243. The telephone number is 615-741-2555. The corporation may not legally solicit donations until the Tennessee Department of State approves the corporation's application for registration.
In Tennessee, nonprofit corporations are exempt from state franchise and excise taxes. There is no need to apply for an exemption.
- Hurwit & Associates: Initial Filings for Tennessee Nonprofit Organizations
- Tennesse Department of State Division of Business Services: Filing Guide for Nonprofit Corporations
- Tennessee Government Office of the Attorney General and Reporter: Guidebook for Tennessee Nonprofit Organizations
- Fogbees: Tennessee Nonprofit Corporation Act
- State of Tennessee Department of State: Charter (Nonprofit Corporation)
- Internal Revenue Service: Form 1023
- Tennessee Department of State: Application for Registration of a Charitable Organization
- Tennessee Department of Revenue: Application for Registration Sales and Use Tax Exempt Entities
- Tennessee Secretary of State: Business Name Availability
- IRS Form 990: Return of Organization Exempt From Income Tax
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