State-By-State Initial Compliance - California
For a general discussion on starting a nonprofit organization, please refer to our article, Starting a Nonprofit Organization.
Please note that as of January 1, 2005, California has instituted the Nonprofit Integrity Act of 2004. Much like the Sarbanes-Oxley Act in the for-profit sector, this new law (SB 1262 - Sher, Chapter 919, Stats of 2004) seeks to improve nonprofit governance, limit abuses of executive compensation and prevent commercial fundraising abuses. Please refer to the California Attorney General's publication "Guide to the Nonprofit Integrity Act of 2004" for specifics on the newly instituted regulations. For more information on the impact of the Sarbanes-Oxley Act on the nonprofit sector, refer to our article, Sarbanes-Oxley and Nonprofit Organizations and Independent Sector's website.
To view annual filing requirements for California nonprofit organizations, refer to our annual filings page:www.hurwitassociates.com/l_s_annual_ca.php.
- To Incorporate in California
a. Submit Articles of Incorporation to:Secretary of State
PO Box 944260
Sacramento, CA 94244-2600
Information: (916) 657-5448
Web Site: www.sos.ca.gov/
Filing Fee: $30
b. Within 90 days of filing the Articles of Incorporation, submit Form SI-100 (Statement of Information) to:Secretary of State
Statement of Information Unit
P.O. Box 944230
Sacramento, CA 94244-2300 Information: (916) 657-5448
Web Site: www.sos.ca.gov/
Filing Fee: $20*
Notes: The Statement of Information may be filed online at: businessfilings.sos.ca.gov
Failure to file by the due date may result in the assessment of a $50 penalty.
- To Obtain 501(c) Tax-Exempt Status
a. Submit Form 1023 (501(c)(3) organizations) or 1024 (other 501(c) organizations), Application for Recognition of Exemption to:Note new address:
Internal Revenue Service
P.O. Box 12192
Covington, KY 41012-0192 Information: (800) 829-1040
Forms: (800) 829-3676
Web Site: www.irs.gov/charities
Form 1023 Filing Fee: $850 ($275 for IRS Form 1023-EZ)
Form 1024 Filing Fee: $850 ($400 if annual receipts will average not more than $10,000 in the first 4 years)
Note: Certain 501(c)(3) organizations, including those with gross revenues at or below $50,000 annually, may qualify to file the online Form 1023-EZ, Streamlined Application for Recognition of Exemption. For more information and to determine if you are eligible for this form, refer to our Form 1023-EZ FAQ.
b. 501(c)(4) organizations formed after July 8, 2016 must file Form 8976, Notice of Intent to Operate Under Section 501(c)(4), electronically within 60 days of formation:Web Site: services.irs.gov/datamart/login.do
Filing Fee: $50 (This fee must be paid through the pay.gov website)
Notes: This filing must be completed by all 501(c)(4) organizations - including "self-declaring" organizations that do not file IRS Form 1024.
For more information about this filing, refer to the IRS website.
- To Obtain California Income Tax Exemption
Submit Form FTB 3500 with Bylaws, Articles of Incorporation, and detailed financial statements, funding and activities, leases and literature samples to:Exempt Organizations Unit MS F120
Franchise Tax Board
PO Box 1286
Rancho Cordova, CA 95741-1286 Information: (916) 845-4171
Web Site: www.ftb.ca.gov/
Filing Fee: $0
Notes: An organization may file the simpler Form 3500A if it already has a letter of determination from the IRS. Refer to the Exempt Organizations section of the Franchise Tax Board's website for details.
- To Obtain California Sales and Use Tax Exemption
Nonprofit purchasers generally are not exempt from sales and use taxes. However, some charitable organizations that qualify for California's "welfare exemption" and are involved in selling or donating items used principally to assist purchasers/donees in distressed financial condition may qualify for exemption from sales taxes on purchases made for these purposes.
To apply for exemption, the organization should request a "review of eligibility" by submitting Bylaws, Articles of Incorporation, IRS 501(c)(3) determination letter, a copy of the California Franchise Tax Board's tax-exempt qualification letter, and a letter describing the practices and activities of the organization to:Compliance Planning & Evaluation
Board of Equalization
PO Box 942879
Sacramento, CA 94279-0002 Information: (800) 400-7115
Web Site: www.boe.ca.gov/
Filing Fee: $0
For more information on sales of specific items, or by specific types of nonprofit organizations that are exempt from California sales and use taxes, refer to California's "Publication 18".
- To Register with the California Attorney General
Within 30 days of receiving assets for the charitable purposes for which organized, submit Form CT-1 (Registration Form) with Articles of Incorporation, Bylaws, IRS Form 1023, IRS 501(c)(3) determination letter, most recent IRS Form 990, and a statement describing the primary activity of the organization (a copy of the statement of purposes from the IRS 1023 application will suffice) to:State of California
Office of the Attorney General
Registry of Charitable Trusts
PO Box 903447
Sacramento, CA 94203-4470 Phone: (916) 445-2021
Fax: (916) 444-3651
Web Site: oag.ca.gov/charities
Filing Fee: $25
Corporations organized and operated primarily as hospitals, schools or religious organizations are exempt from filing, but must furnish information substantiating such status to the above address. See California Government Code section 12583 for details.
The Unified Registration Statement form may be filed in place of form CT-1.
If the organization will have employees, the following filing is also required:
Complete the online registration for an Employer Payroll Tax Account Number for payroll withholding taxes and unemployment insurance taxes.Employment Development Department
PO Box 826880
Sacramento, CA 94280-0001
Information: (888) 745-3886
Web Site: http://edd.ca.gov/
|Note:||For more information, refer to the FAQ's on the Employment Development Department's website.|
Important note about unemployment insurance: Many states allow nonprofit organizations to fund unemployment insurance benefits on a reimbursable basis. This method of funding unemployment insurance may require additional filings not listed here. Furthermore, electing this method may require the organization to register and file in paper format. Organizations contemplating this method of funding their unemployment insurance obligations should check with the appropriate state office administering the unemployment insurance in that state.