Starting a nonprofit may qualify you for superhero status, but the costs and requirements to start a nonprofit could be more than you expect. Luckily, there are states in the United States that welcome nonprofits and have fewer regulations and fees to get in the way. We’ve listed the best states to start a nonprofit below.
Nonprofits may be created to support individuals and families, save animals and the planet, or just offer a sense of community. Starting a nonprofit may even qualify you for superhero status, but the costs and requirements to start a nonprofit could be more than you expect. Luckily, there are states in the United States that welcome nonprofits.
We have listed the best states to start a nonprofit. All 5 states on this list have fewer nonprofit regulations and offer fewer fees to start a nonprofit.
All nonprofits that want tax-exempt status with the Internal Revenue Service (IRS) must also file either Form 1023 for $600 or Form 1023EZ for $275 to receive a 501c3 deferment letter.
Delaware is a small state but remains the most popular state to start a nonprofit. Many nonprofits register as corporations, and unlike other states on the East Coast, in Delaware, you can form nonprofits under the same statutes as other for-profit corporations. Governance and annual reporting requirements are also more flexible and straightforward than in other states. Another perk involves the state’s leadership requirements. To start a nonprofit in the state of Delaware, an organization is only required to have one director.
There are currently over 9,410 nonprofit organizations registered in Delaware. These organizations employ 75,022 people and earn more than $17 billion in revenue every year. The cost of starting a nonprofit is also on the lower side. Nonprofits must file a Certificate of Incorporation for Exempt Corporations with a cost of $109. There is an additional $9 fee for additional pages. You will receive a stamped “Filed” copy when submitted. You can also get a certified copy for an additional $50 in three weeks. If you need the certified copy quicker, you can pay an expedited fee ranging from $50 to $1,000.
Finally, Delaware nonprofits that are tax-exempt with the IRS are not required to pay taxes in the state of Delaware. Nonprofits will still need to register with the Division of Revenue, withhold taxes for all employees, and register with the Department of Labor.
There are currently over 31,062 nonprofit organizations registered in Arizona. These organizations employ 315,633 people and earn more than $52 billion in revenue every year. With fewer regulations and reasonable fees, this state is one of the favorites for nonprofits willing to make a difference.
Nonprofits in the state must file their Articles of Incorporation for $25 and an additional $35 to $400 to expedite. Nonprofits must also pay to publish their articles within 60 days of incorporation. The cost for this will generally be $200, but other than a $12 license or location fee no other state fees are required. All nonprofits hoping to become tax-exempt must still file with the IRS. This costs $275 for Form 1023-EZ and $600 for Form 1023. Similar to Delaware, Arizona has fewer governing restrictions for nonprofits. Check out this article for a step-by-step guide to starting a nonprofit in Arizona.
Nevada is known as a tax haven because there is no state tax income. This is a benefit for all corporations in the state. There are currently over 16,092 nonprofit organizations registered in Nevada. These organizations employ 58,279 people and earn more than $11 billion in revenue every year. There are no strict regulations in the state for nonprofits.
Nevada nonprofits must also file their Articles of Incorporation for $50 with the state. The state generally takes one week to finalize this process, but nonprofits can pay an additional expedited fee of $125 to $1000. Nonprofits get a business license with the state for $200 and file an initial report for $50.
Wisconsin has complex reporting requirements, but the fees and relaxed regulations are enough to get it on the list. There are currently over 40,390 nonprofit organizations registered in Wisconsin. These organizations employ 435,536 people and earn more than $66 billion in revenue every year. Starting a nonprofit in Wisconsin is pretty straightforward.
Other than paying the IRS $275 or $600 for tax-exempt status, nonprofits in Wisconsin fees are the lowest on this list. Wisconsin nonprofits must file an Articles of Incorporation for $35 along with a business tax registration fee of $20.
There are currently over 150,739 nonprofit organizations registered in Texas. These organizations employ 931,501 people and earn more than $194 billion in revenue every year. Texas is considered the best state to start a business; this fact also draws many nonprofits to it. The regulations are somewhat stricter than others on this list. Annual filings must be completed within given deadlines and 3 directors are required for nonprofits’ boards. However, these are often no match for the ample benefits and low fees that nonprofits get here.
Nonprofits in Texas can file their Articles of Incorporation for $25 if they’re willing to wait up to 40 business days. Those who can’t wait can pay a $25 expedited fee. Once a nonprofit has filed for tax-exempt status with the IRS, it must register to solicit funds from the state. The cost to register depends on the type of organization, with veteran organizations paying a fee of $150 and other public safety organizations paying $250.
Starting a nonprofit can be time-consuming, but the end result is an organization that can change the world. We have created a guide to help you register your 501c3 nonprofit organization and answer additional questions you may have. We also have state-specific blogs on starting a nonprofit; you should definitely give them a read for useful insights.
For more tips and resources on fundraising and nonprofit management, check out our nonprofit blog.
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Kristine Ensor is a freelance writer with over a decade of experience working with local and international nonprofits. As a nonprofit professional she has specialized in fundraising, marketing, event planning, volunteer management, and board development.
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Kristine Ensor