Nonprofit Articles of Incorporation

The first step in setting up your tax-exempt organization is to incorporate as a nonprofit corporation with the North Carolina Secretary of State.  The IRS will grant tax-exempt status to corporations, trusts, unincorporated associations, and some limited liability companies; however, a corporation offers the most protection from liability to individuals operating on behalf of the organization, and is generally the best choice of entity.

When filing Articles of Incorporation, the North Carolina Secretary of State provides a form that can be filled in which contains the information required by that office for incorporation.

  1. The corporation must have a name which is sufficiently distinct from any other corporate name on file with the North Carolina Secretary of State

  2. If you intend to obtain tax-exempt status with the IRS, you must check line 2 to indicate that the corporation is a charitable or religious corporation as defined in North Carolina statutes.

  3. You must name the registered agent, who is the individual authorized to receive service of process on behalf of the corporation.

  4. Contact address, including a physical address, is required for your registered agent.

  5. You must list the name and address of each incorporator.

  6. You must select whether you will have “members”.  “Members” does not refer to individuals on your Board of Directors; it refers to a body of individuals who will have membership rights, including the right to elect the Board of Directors.  Unless you are developing an organization focusing on member services, it is generally preferable to check that the corporation will NOT have members and operate with a self-perpetuating Board of Directors.

  7. You must attach a separate provision designating distribution of the corporation’s assets upon dissolution.  The IRS has very specific language that it requires on this topic.

  8. You have the option to include additional information.  It is important to include additional language regarding the Purpose of the organization as required by the IRS; a prohibition of private inurement; and language about not engaging in prohibited activities, including political activity.   It is also advisable in this section to have an indemnification provision protecting your officers and directors from potential liability.

The Secretary of State provides this form for your convenience.  It seems simple, but needs to be carefully completed, taking into consideration the additional requirements of the IRS when you get to the next stage.