Are you looking to start a nonprofit corporation in Massachusetts, 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 Massachusetts.
To get started, please reference our 11-step guide below or hire a professional online incorporation service to get started.
How to Form a Massachusetts 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 search for business entities on the Massachusetts Secretary of the Commonwealth 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 Massachusetts.
At this time, you should also choose your initial board of directors.
In Massachusetts, you are required to have at least one person on your initial board.
3) Designate a Registered Agent
Massachusetts 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 Massachusetts 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 Massachusetts Secretary of State says that,
A corporation’s registered agent is the corporation’s agent for service of process, notice, or demand required or permitted by law to be served on 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 the Articles of Incorporation
The official document required to form your nonprofit corporation with the state of Massachusetts is the Articles of Incorporation.
This four-page document includes all of the vital information describing the organizational structure of your nonprofit, including the following information:
- Name of your nonprofit corporation
- Purpose and intended activities of your organization
- Classes of members and their voting rights (if applicable)
- Effective date of the nonprofit (if later than filing date)
- Street address of your principal office
- Names and addresses of your president, treasurer, clerk (3 offices required by law), and your initial director(s)
- Month which will end your fiscal year
- Name and address of your registered agent
- Signature(s) and address(es) of your incorporator(s)
Once you’ve finished filling out this form, you’ll need to write a check for $35 and mail it along with your Articles of Incorporation to the following address:
William Francis Galvin
Secretary of the Commonwealth
One Ashburton Place, Room 1717
Boston, Massachusetts 02108-1512
The Massachusetts Secretary of State typically processes nonprofit corporation formations within 2-4 business days of receiving your articles. This processing time assumes that all of your information has been filed 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 Massachusetts Tax Exemption
Many nonprofit entities which receive tax exempt status from the IRS as a 501(c)3 can apply to be exempt from Massachusetts income taxes and sales taxes. These exemptions usually apply to religious organizations, charities, educational institutions, and similar organizations. To get this status, you’ll need to send a copy of your IRS letter of tax exemption to the Corporate Exemptions Division with the Department of Revenue. For more information on this important step, the Secretary of the Commonwealth of Massachusetts can help.
9) Register for Charitable Fundraising
In Massachusetts, nonprofit corporations are required to register with the attorney general in order to receive and solicit charitable contributions. To learn more, check out the state’s information page on registering a public charity. Then you’ll be ready to raise funds for your cause.
10) Obtain Business Licenses and Permits
While Massachusetts does not have a general business license that applies to all companies operating in the state, there are hundreds of industry-specific permits and licenses that you may need to acquire for your organization.
For one, Massachusetts upholds the licensing requirements of any federally-regulated industries. Check here to determine if your business must be licensed by a federal agency.
You’ll also want to take a look at the state’s page for common permits and licenses to determine if any of them will apply to your nonprofit corporation.
Your city or county may also require general business licenses. Here some of the largest cities in Massachusetts which require local licenses:
11) Acquire Insurance
Every business with employees located in the state of Massachusetts is required by law to obtain two different kinds of insurance policies: workers’ compensation and unemployment insurance.
You can learn more about these insurance types and how they apply to Massachusetts businesses by visiting the MassHealth or the Massachusetts Department of Unemployment Assistance websites. No matter what line of business your nonprofit is in, you need 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 Massachusetts 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 Massachusetts to help you out in case you get stuck.
As for the state of Massachusetts, if you require assistance, you can always turn to the Massachusetts Nonprofit Network. In their own words, the MNN is “the voice of the nonprofit sector, a statewide organization that brings together all parts of the nonprofit ecosystem—nonprofits, funders, community and business leaders, and elected officials—to strengthen nonprofits and raise the sector’s voice on critical issues.”
The MNN does require membership, but joining grants you several advantages, including conference programming data tools, networking, and more, so joining will be worth your while.
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 Massachusetts. 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 Massachusetts nonprofit corporation process, and we wish you the best of luck with your new charitable organization!