Starting a 501(c)(3) in Montana

Resource CenterStarting a 501(c)(3) in Montana

Before You Begin

Read up on Nonprofit Basics 

Consider taking this nonprofit assessment from Candid to see if starting a nonprofit is the right decision for your idea.

Read this article on Founding your Nonprofit Board.

  • Have you asked others to evaluate the idea for your proposed organization?
  • Is there a demonstrated need for this service/project that is not being fulfilled elsewhere?
  • Is there anyone else that is doing this locally? …in Montana? …the region? …nationally?
  • Have you carefully considered a collaboration or partnership with an existing organization rather than starting a new one?
  • Can you articulate your mission in two to three sentences?
  • Do you want to be a membership organization or non-member organization?
  • What interests or constituencies should be on the Board of Directors?
  • Have you developed a two-year draft budget for the organization?
  • Will you rely on contributed funds or earned income (program/service fees, etc.)?  Both?
  • Do you have a plan for financial sustainability?
  • Do you and your supporters have the needed skills to start and maintain the new organization?

Nonprofit Funding

Here are some things to keep in mind regarding funding for nonprofits:

  • Sustainable funding is difficult to find – it will take great effort and time to raise funds for your organization every year.
  • Some foundations will only fund organizations that already have a track-record spanning several years.
  • Grants can be restricted to a narrowly defined purpose and often may not be used to administrative expenses such as rent, utilities, or office supplies.
  • IRS Form 990 asks you to report the time and money your organization spent doing fund-raising.
  • However, you can begin fundraising as you wait for your tax status.

General Steps to Incorporating your Nonprofit Organization:

This list is NOT comprehensive – but it does provide a general overview and resource links that will aid you in your effort to become a 501(c)(3) charitable organization in Montana.

Meeting with the board and filing with the state

  1. Choose a name for the organization.
  2. Meet with your potential board of directors (at least three individuals) to develop your Articles of Incorporation and bylaws
  3. Check name availability by visiting the US Department of Patents and Trademarks as well as the Montana Secretary of State’s Office Business Entity Search.
  4. Create an account With the Montana Secretary of State’s office and file your state Articles of Incorporation. ($20 for standard 7-10 business day processing). For this you will need:
    • Entity details including corporation type and intended IRS filing status (c3 or other nonprofit entity)
    • A copy of the IRS required language to upload when prompted if you choose to file as a c3 entity (Example here)
    • A registered agent with a physical mailing address who can be a point of contact for the organization (often a member of the board or you can choose from the list provided)
    • At least one named incorporator (can also be a member of your board)
    • At least three board members
    • At least three officers: President/Chair; Treasurer; Secretary (If needed one person can hold both treasurer and secretary roles – list them twice)

Federal Filing with the IRS

  1. Apply for a Federal Tax ID or EIN – here is the IRS link to apply.
  2. Next, you will want to apply for federal  tax exemptions. Register for an account on Pay.gov.

Additional Filings for Property Tax Exemption, Withholding Tax

  1. If your nonprofit owns property, you can file for property tax exemption in Montana. Form here.
  2. If your nonprofit will have employees, you’ll need to register for the Montana withholding tax with the Montana Department of Revenue. Find more on how to submit a Montana Department of Revenue Business Registration here.

Opening a Bank Account

  1. You will also want to open a bank account for your nonprofit. To open a bank account for your Montana nonprofit, you will need to bring the following items with you to the bank:
  • A copy of your Montana nonprofit articles of incorporation
  • A copy of your nonprofit’s bylaws
  • Your Montana nonprofit’s EIN

The Internal Revenue Service (IRS) is the Federal agency charged with overseeing nonprofit organizations recognized under Internal Revenue Code 501(a), including 501(c)(3) organizations which are generally referred to as charitable organizations. The IRS has a webpage that it maintains to help you as you work through the details of starting a 501(c)(3) organization.

Visit the IRS site

Additional resources:

Annual Filing Requirements

  1. Annual Report with MT Secretary of State: You may do that here.
  2. W-3 to State and IRS
  3. Form IRS 990 – unless your organization is a religious institution (i.e. a church)
    1. Annual gross receipts over $200,000 or assets greater than $500,000: 990
    2. Annual gross receipts under $200,000 but above $50,000: 990 EZ
    3. Annual gross receipts under $50,000: 990 Postcard
  4. Properly acknowledge donors for receipt of donations according to IRS rules
  5. Some organizations (recommended for organizations with annual total revenues over $500,000) will need to hire a CPA to perform an annual Audit or Financial Review

Quarterly Filing

  1. Quarterly Payroll Tax reports – state and federal
  2. State Work Comp payments

Monthly

  1. State Unemployment Insurance payments

Resources

These links will help you as you work to start a 501(c)(3) organization.

Montana information

• Montana Department of Justice Consumer Protection for Nonprofits
   • Principles and Practices for Nonprofit Excellence in Montana
• Montana Department of Revenue Tax Exemption Request Form

Federal information

   • IRS Resources for Exempt Organizations
   • www.stayexempt.irs.gov – a site created and maintained by the IRS

Nonprofit development and management

• Nonprofit Startup Assessment
• BoardSource e-Book “Starting a Nonprofit Organization”
• The Looking Glass World of Nonprofit Money: Managing in For-Profits’ Shadow Universe
• Accountability Matters
• Starting a Nonprofit Toolkit
• Setting up a Nonprofit Office Toolkit
• Nonprofit Operations Toolkit
• Harbor Compliance Sample Articles of Incorporation
• Harbor Compliance Sample Bylaws
• Fiscal Sponsorship for Nonprofits