How To Start A Nonprofit In Alabama

Do I need to reserve a name for my Alabama nonprofit?

When forming an Alabama nonprofit, you don’t start with the Certificate of Formation. You begin with a name reservation. Alabama is the only state where you have to reserve your nonprofit’s name first. Fortunately, this can be done online and only costs $28. After you’ve reserved your name, print out the reservation. You’ll submit it with your Certificate of Formation.

To incorporate an Alabama nonprofit, you must complete and file the Alabama nonprofit corporation Certificate of Formation with the Alabama Secretary of State. See the document below and click on any number to see what information is required in the corresponding section.

How Much Does It Cost to Incorporate an Alabama Nonprofit?

You will pay approximately $228 or $236 in combined fees to incorporate an Alabama nonprofit corporation. This total includes a required $28 fee to reserve your nonprofit’s name online, a $200 fee to file your nonprofit’s certificate of formation with the Alabama Secretary of State, and a 4% convenience fee if you file your certificate online.

How Long Does It Take to Start an Alabama Nonprofit?

The state processes online filings quickly, typically within 2 business days. The processing time is pretty much the same for mail filings, at least once the Alabama Secretary of State’s office receives your filing. However, the sending and receiving of documents through the mail could tack on an extra few days. Expedited services are not available in Alabama.

Does an Alabama Nonprofit Need a Registered Agent?

Alabama requires the appointment of a registered agent to receive services of process (lawsuits) for your nonprofit. It’s possible to take on this job yourself, but keep in mind that a registered agent has to be available at a publicly listed physical address during normal business hours. If you can’t make that commitment, don’t know of someone else you can trust with the job, or don’t want your personal or office address listed publicly on your Certificate of Formation, it’s best to go with an Alabama registered agent service like Northwest.

Hiring a registered agent comes with numerous benefits. When you hire Northwest, you’ll have the option to list the address of our Alabama registered office on your Certificate of Formation. As a result, you’re less likely to get targeted by data-sellers, you’ll receive less junk mail, and you won’t have to deal with a bunch of unwanted solicitors showing up at your door. Furthermore, managing and growing your Alabama nonprofit means leaving your desk, attending meetings, traveling, and soliciting contributions from potential donors. That’s a difficult job if you’re stuck at your desk all day during business hours.

Hire Northwest, and we’ll make sure someone is always available to accept services of process on your behalf. If your Alabama nonprofit ever receives a legal notice, we’ll scan it and send it to you on the day we receive it.

If you’re planning to open a bank account in your nonprofit’s name, get state permits, register as a charity, collect donations, or apply for federal or state tax exemptions, you’re going to need a federal employer identification number (FEIN or EIN).

Once you form your Alabama nonprofit, you can apply for an EIN at the IRS website. Or you can save yourself the trouble and add our convenient EIN service for an additional fee when you hire Northwest.

Alabama requires a nonprofit’s board of directors to adopt bylaws at its organizational meeting. This is your first official meeting where your nonprofit endorses its Certificate of Formation, elects officers, approves its bylaws, and otherwise truly completes the process of incorporation. You can hold your organizational before or after Alabama approves your Certificate of Formation, but make sure the meeting happens before you apply to the IRS for 501(c) federal tax-exempt status. The IRS will expect your nonprofit to be fully organized before you submit your Application for Recognition of Exemption.

Why do bylaws matter? Bylaws are all about self-control. Bylaws help a board of directors follow a consistent, agreed-upon path while managing and guiding a nonprofit’s activities. Bylaws say, for example, how long the directors stay in office and which powers and responsibilities belong to which officers. For these reasons and more, your bylaws are your nonprofit’s most essential internal document. Hire Northwest to form your Alabama nonprofit, and your account will include an adaptable template for writing nonprofit bylaws, as well as other free nonprofit forms, to help you get started. We also provide a free template and information for Alabama nonprofit bylaws.

If you want to obtain federal tax-exempt status for your nonprofit, you’ll need to file an Application for Recognition of Exemption with the IRS—a lengthy, difficult process that will take more time than any other stage in forming your nonprofit (sometimes up to 6-9 months). Section 501(c) of the Internal Revenue Code describes more than two dozen types of tax-exempt nonprofits recognized by the IRS, but most nonprofits apply for 501(c)(3) status, which describes public charities and private foundations. If your nonprofit intends to become a 501(c)(3) organization, be sure your Articles contain specific language required by the IRS limiting your nonprofit’s activities exclusively to one or more recognized exempt purposes. Learn more at Northwest’s detailed Guide to 501(c)(3) Tax-Exempt Status.

If you manage to obtain federal tax-exempt status from the IRS, Alabama will automatically exempt your nonprofit from paying the state income tax. However, most nonprofits, including charities, still pay sales and use taxes in Alabama. See our Alabama state tax exemptions page for more details.

Does an Alabama nonprofit need a business license?

Most businesses (including nonprofits) need various business licenses to operate in Alabama, but the types of licenses required, as well as the fees, get determined locally through the county licensing commission or county probate office.

Does an Alabama nonprofit need to get a state tax ID?

Your nonprofit will need to get a state tax account number from the Alabama Department of Revenue. To register, access “My Alabama Taxes” (MAT) at the Alabama Department of Revenue’s website. The application is free, but it will take between 3-5 business days to receive your account number. You will need your Alabama tax ID to apply for Alabama state tax exemptions.

Should my Alabama nonprofit register as a charity?

Any organization that collects donations in the State of Alabama must register as a charity with the Alabama Attorney General. There is a $25 registration fee, and Alabama charities renew their registrations each year within 90 days of the end of their fiscal year. The annual renewal fee is also $25.

To open a bank account for your Alabama nonprofit, you will need to bring the following items with you to the bank:

• A copy of your nonprofit’s certificate of formation
• A copy of your nonprofit’s bylaws
• Your Alabama nonprofit’s EIN

We recommend calling your bank ahead of time to find out what their requirements are. If your nonprofit has several directors and/or officers, for instance, you may need to bring a board resolution authorizing you to open a bank account in your nonprofit’s name.