Quick answer: To start a nonprofit in Virginia, file articles of incorporation for a nonstock corporation with the State Corporation Commission, adopt bylaws with your board, get an EIN, and apply for 501(c)(3) status with Form 1023 or Form 1023-EZ. If you will ask the public for donations, you will usually also register with the Virginia Department of Agriculture and Consumer Services.
Starting a nonprofit takes more than a good cause. You need a legal entity, IRS approval and a few state registrations before you can accept tax deductible donations with confidence. Here is the process in Virginia.
The steps at a glance
- Choose a name and confirm it is available with the Virginia State Corporation Commission
- File articles of incorporation as a Virginia nonstock corporation, including the purpose and dissolution language the IRS requires
- Recruit a board of directors and adopt bylaws and a conflict of interest policy
- Get an EIN from the IRS
- Apply for 501(c)(3) status with Form 1023 or Form 1023-EZ
- Register for charitable solicitation in Virginia if you will ask the public for donations
- Set up your bank account and books
Form 1023 or Form 1023-EZ?
| Form 1023-EZ | Form 1023 | |
|---|---|---|
| Who can use it | Small organizations, generally projecting $50,000 or less in annual gross receipts and $250,000 or less in assets | Any organization |
| IRS user fee | $275 | $600 |
| Detail required | Short online form | Full narrative, budgets and financial projections |
Both are filed online. Approval can take weeks for the EZ and several months for the full form, so file early.
Virginia charitable solicitation registration
Organizations that ask Virginia residents for donations generally must register with the Virginia Department of Agriculture and Consumer Services before soliciting, and renew each year. Some small, volunteer run organizations may qualify for an exemption, so check before your first campaign.
Set up your books from day one
- Open a separate bank account in the organization’s name
- Set up a simple nonprofit chart of accounts and track restricted gifts separately
- Keep receipts and send written acknowledgments for gifts of $250 or more
- Track expenses by program, management and fundraising from the start
Ongoing requirements
- File the right Form 990 every year by the 15th day of the 5th month after year end
- Renew your Virginia corporation registration each year
- Renew charitable solicitation registration if it applies
- Hold board meetings and keep minutes
Starting a Nonprofit in Virginia FAQs
How much does it cost to start a nonprofit in Virginia?
The basic government fees are the State Corporation Commission filing fee for articles of incorporation and the IRS user fee, which is $275 for Form 1023-EZ or $600 for Form 1023. Charitable solicitation registration, if required, has its own fee.
How many board members does a Virginia nonprofit need?
Virginia law allows a nonstock corporation to have as few as one director. Many grantors and advisors recommend at least three unrelated board members for good governance.
Are donations tax deductible before the IRS approves my application?
If you file Form 1023 within 27 months of incorporating and are approved, your exemption is generally retroactive to the date you were formed. Donations made in that window are then deductible.
Do Virginia nonprofits automatically avoid sales tax?
No. A 501(c)(3) is not automatically exempt from Virginia sales tax on its purchases. Nonprofits must apply to Virginia Tax for the exemption.
Can a nonprofit pay its founder?
Yes. A founder who works for the organization can be paid reasonable compensation for that work, approved by the board. Paying more than is reasonable can put the exemption at risk.
Start on solid footing
We help new nonprofits set up their books, prepare Form 1023 financial projections and file annual returns. Learn more about our nonprofit accounting and formation services.
This article is general information and not tax advice for your situation. Tax rules change, so talk with a qualified professional before making decisions.
