Are you looking to start a nonprofit corporation in Arizona, but you’re not entirely familiar with how the formation process works?
Forming a nonprofit organization can have some tricky compliance requirements, and you don’t want to risk making any mistakes during this process. In this guide, we’ll discuss all the relevant details of forming a nonprofit corporation in Arizona.
To get started, please reference our 11-step guide below or hire a professional online incorporation service to get started.
How to Form an Arizona Nonprofit Corporation (in 11 Steps)
1) Name Your Nonprofit
The first step for forming a nonprofit organization in any state is to come up with a strong name for it. Remember that the name of your nonprofit is often your best opportunity to make a good first impression with people, and you should clearly describe your organization’s mission in your name.
Before you become too attached to one name idea, you should run a Name Availability Search on the Arizona Corporation Commission website. This will tell you if someone else is already using your desired name, or if it’s available for your nonprofit to use.
2) Designate an Incorporator and an Initial Board of Directors
The incorporator is the person who is responsible for preparing, signing, and filing your nonprofit’s Articles of Incorporation. This document is the form that officially creates your organization with the state of Arizona.
At this time, you should also choose your initial board of directors.
In Arizona, you are required to have at least one person on your initial board.
3) Designate a Registered Agent
Arizona nonprofit corporations must designate a person or business to receive legal notices on behalf of the company. This important point of contact is known as the registered agent. You will be required to list the registered agent’s name and address when filing the Articles of Incorporation.
Who Can Be My Registered Agent? A registered agent must have a physical address within the state of Arizona where mail and legal notices can be served during regular business hours. You can hire a service to act as your registered agent, serve as your own registered agent, or even use an accountant or other business professional’s address – with their consent, of course.
The Arizona Secretary of State says that,
A Statutory Agent is an individual or a business entity that the corporation appoints for the purpose of accepting service of process (lawsuit papers or legal documents) for the corporation.”
We recommend hiring a professional registered agent service to act as your registered agent. Doing so will help eliminate junk mail and more importantly, keep your personal and/or corporate or personal address off the public record.
4) File Articles of Incorporation
The official document required to form your nonprofit corporation with the state of Arizona is the Articles of Incorporation.
This three-page document includes all of the vital information describing the organizational structure of your nonprofit, including the following information:
- Name of your nonprofit corporation
- Usual purpose for your nonprofit
- Whether or not your nonprofit corporation will have members
- Physical address of your organization (if different from that of statutory agent)
- Name and address of your statutory agent
- Names and addresses of initial directors
- Copy of your Certificate of Disclosure
- Signature(s) of incorporator(s)
Once you’ve finished filling out this form, you’ll need to write a check for $40 and mail it along with your Articles of Incorporation to the following address:
Arizona Corporation Commission
Corporate Filings Section
1300 W. Washington St.
Phoenix, Arizona 85007
In Arizona, your formation documents are usually processed within 15-17 business days. This waiting period assumes that you have completed your document correctly.
5) Acquire an EIN
According to the IRS, every nonprofit corporation should obtain a federal tax ID number, otherwise known as an employer identification number (EIN).
The EIN enables your nonprofit to hire employees, open business bank accounts, and file for 501(c)(3) tax exempt status. The process to acquire an EIN is quite simple, and includes the preparation and filing of one simple form. Obtaining an EIN is also free.
6) Establish Bylaws and a Conflict of Interest Policy
Think of the bylaws as a governing document for how your nonprofit corporation will be operated. Bylaws outline procedures for things like holding meetings, outlining your membership structure, defining your corporate purpose, describing the responsibilities of your board of directors, and other important details.
A conflict of interest arises when a contributor to your nonprofit has personal interests that compete with those of your corporation.
The conflict of interest policy protects your nonprofit in these situations. It includes a duty to disclose clause that says anyone involved with your nonprofit must disclose any financial interests and material facts to your directors. It also outlines procedures for addressing conflicts of interest if they ever arise.
7) Hold an Initial Meeting and Establish Your Corporate Record
At this point, you’re ready to hold an initial organizational meeting with your board of directors. At this important meeting, you need to elect directors and officers, approve the bylaws and conflict of interest policy, and adopt resolutions.
As with any meeting of your nonprofit corporation, you should take detailed notes of everything that takes place. This documentation can then become part of your corporate record, which is a permanent written record of all important organizational decisions.
8) File for Arizona Tax Exemption
Most nonprofits are not exempt from the state’s transaction privilege tax. To put it as simply as possible, purchases your corporation makes are not exempt. However sales by your corporation are usually exempt. This distinction has to do with how the tax is levied; you can learn more here.
9) Register for Charitable Fundraising
Most states require that charitable organizations register for charitable fundraising; however, in 2013, Arizona repealed its act which required this registration. The main exception to this is nonprofits which act as veterans’ charities. These will still need to file with the state. You can learn more here.
10) Obtain Business Licenses and Permits
Arizona does not require a general business license for nonprofits operating in the state. However, the state does uphold the licensure required by the federal government. You can browse the federally regulated occupations here.
Your city or county may also require general business licenses. In fact, local licenses are far more numerous than those required by the state. Here some of the largest cities in Arizona which require local licenses:
11) Acquire Insurance
Every business with employees located in the state of Arizona is required by law to obtain two different kinds of insurance policies: unemployment insurance and workers’ compensation insurance.
You can learn more about these insurance types and how they apply to Arizona businesses by visiting the Arizona Department of Economic Security and the Industrial Commission of Arizona. No matter what line of business your nonprofit is in, you need (and want) these policies.
In addition, you should also pursue general liability insurance and other more industry-specific types of insurance, but these are not legally required.
Where Can I Find Help for My Arizona Nonprofit?
The process of forming and maintaining nonprofit corporations can be tricky, no matter which state you’re located. Fortunately, there are great resources in Arizona to help you out in case you get stuck.
As for the state of Arizona, if you require assistance, you can always turn to the Arizona Alliance of Nonprofits. In their own words, the AAN is “the only statewide association dedicated to serving the needs of the more than 20,000 nonprofit organizations all across Arizona…through advocacy, education, information, connection and resources, which are tailored specifically for nonprofits.” The AAN does require membership (they offer 2 levels), but the alliance does offer a wide variety of learning tools and nonprofit advocacy programs that make it worthwhile.
In addition, if you would rather hire a service to incorporate your nonprofit for you, that’s an option as well. There are plenty of services that can handle much of the formation process, leaving you more time to focus on the actual operation of your nonprofit corporation.
These service providers (like Northwest Registered Agent) also offer valuable and convenient bonus features, like the inclusion of a full year of registered agent service with the purchase of a nonprofit formation package. They can save you a considerable amount of hassle, and all without costing an arm and a leg.
As you can see, there are quite a few crucial steps that you’ll need to take if you want to form a compliant nonprofit corporation in the state of Arizona. However, it’s important to remember that if you need help at any time, it is available to you ― you don’t need to DIY the entire process.
We hope this guide helped you understand the details of the Arizona nonprofit corporation process, and we wish you the best of luck with your new charitable organization!