The Complete Guide
Most guides to starting a nonprofit read like a checklist from the company that wants to file your paperwork for you. This one skips the upsell and gives you the real order of operations, the real costs, and the real timelines, including the step almost everyone else leaves out: whether you should form a new organization at all.
This is the step nearly every "how to start a nonprofit" guide skips, because the guides that skip it are usually written by companies that sell nonprofit formation services. Before you spend months and hundreds of dollars forming a new legal entity, it's worth 20 minutes to check whether you actually need one.
An existing 501(c)(3) can act as your legal parent, letting you fundraise and accept tax-deductible donations under their umbrella while you test whether your idea has legs. No formation, no IRS application, no annual filing burden on you directly. The trade-off is a fee (typically 5 to 15 percent of funds raised) and less independence. We cover the full mechanics, including when it makes sense, in our FAQ's fiscal sponsorship answer.
If what you actually want is a vehicle for giving money away (yours or a small group's) rather than running programs yourself, a donor-advised fund at a community foundation or a sponsor like Fidelity Charitable or Schwab Charitable lets you get the tax deduction now and direct grants out over time, with no formation or annual filing at all. This fits a "we want to do good with our money" goal much better than a nonprofit does, and it's nearly instant to set up.
If an established nonprofit is already doing close to what you want to do, volunteering, joining their board, or proposing your idea as a new program inside their organization gets you to impact immediately, with none of the overhead of running a separate corporation, board, and set of filings.
None of this means you shouldn't form your own nonprofit. Plenty of missions genuinely need their own independent organization, their own board, and their own brand. But if you've only ever heard "start a nonprofit" as the default answer, it's worth ruling out the faster, cheaper paths first. If you've done that and a new, independent 501(c)(3) is still the right call, keep going.
Your state of incorporation is almost always the state where your nonprofit will actually operate, not the state with the lowest fees or friendliest laws. Unlike a for-profit LLC, there's little upside to incorporating in a state you don't operate in; you'd likely still have to register as a "foreign" nonprofit in your home state anyway, doubling your paperwork.
For your name, most states require it to be distinguishable from existing registered entities, and many require a corporate designator or at least prohibit words implying you're a government agency or a type of business you're not (like "bank" or "insurance" without the right licensing). Check your state's business name database before you fall in love with a name, and consider checking domain and social handle availability at the same time since you'll want them to match.
Do this before you file anything. Both your state's incorporation form and the IRS's Form 1023 ask about your board, and you don't want to be scrambling to find directors after you've already filed.
Most states require a minimum of one to three directors depending on the state, but the IRS effectively expects a functioning, independent board as part of showing you're organized for public benefit rather than private gain, and most practitioners treat three directors as the practical floor for a new 501(c)(3), even in states that technically allow fewer. Fewer than three makes it harder to demonstrate the arm's-length governance the IRS looks for, and it's a common reason 1023 applications get flagged for follow-up questions.
Your state's specific minimum is one of the things covered on our state pages: California, Texas, Florida, New York, Pennsylvania, Ohio, Michigan, Illinois, Virginia, and Arizona.
This is the step that legally creates your nonprofit corporation. You'll file a document (called Articles of Incorporation, a Certificate of Formation, or similar depending on the state) with your state's filing office, usually the Secretary of State, along with a filing fee.
State fees typically fall in the $20 to $125 range, but they vary a fair amount. Three real examples, verified directly against each state's filing office: California charges a $30 base filing fee, Texas charges $25 for its Certificate of Formation (Form 202), and Florida charges $70 total ($35 filing fee plus a mandatory $35 registered agent designation fee). Some states add extras like a name reservation fee or an initial report due shortly after incorporation, so check your specific state page for the full picture rather than assuming the headline number is the whole cost.
Processing typically takes 1 to 4 weeks, faster if your state offers online filing and you're not paying for expedited service. This step has to happen before you can get your EIN or apply for federal tax-exempt status, since the IRS wants to see that you're already a legal entity.
See the state-specific breakdowns (fees, forms, and processing times) for California, Texas, Florida, New York, Pennsylvania, Ohio, Michigan, Illinois, Virginia, and Arizona.
Your board formally adopts these at its first official meeting, right after incorporation. Bylaws are your organization's internal operating rules (how the board is elected, how meetings are run, how officers are chosen); a conflict-of-interest policy defines how you handle situations where a board member's personal interests might collide with the organization's.
Form 1023 asks directly whether you have a conflict-of-interest policy, and while it's not strictly mandatory in every state, skipping it is one of the fastest ways to raise questions from grantmakers later. Use our bylaws checklist template and conflict-of-interest policy template as a starting point; both are free and built to match what the IRS actually asks for.
Your Employer Identification Number is free, and you apply for it directly at IRS.gov using Form SS-4 (or the online interview version of it). If you apply online, you get the number immediately.
You need your EIN before you can open a nonprofit bank account, and before you can file Form 1023 or 1023-EZ. It's also a distinct step from your state incorporation: the EIN is a federal tax ID, not a state registration.
This is your application for federal 501(c)(3) tax-exempt status, and it's the step most people picture when they think of "starting a nonprofit." There are two versions, and which one you qualify for changes your cost and timeline substantially.
You're eligible if your organization's projected annual gross receipts are $50,000 or less for each of the next three years (and, if you've already been operating, for each of the past three years) and your total assets are $250,000 or less. There's a longer eligibility worksheet in the official instructions that also excludes certain organization types (churches, schools, hospitals, and a handful of others) regardless of size, so check the full worksheet if you're close to the line.
The user fee is $275, paid through Pay.gov when you submit.
Current IRS processing data: 80% of Form 1023-EZ determinations are issued within 22 days of submission. Applications that need further review can take up to 120 days. Either way, this is dramatically faster than the full form.
If you don't qualify for the EZ version, whether because you expect to raise more than $50,000 a year, hold more than $250,000 in assets, or fall into an excluded category, you'll file the full Form 1023. It's a much longer narrative application: your programs, your finances, your governance, and how you'll operate, all in detail.
The user fee is $600, also paid through Pay.gov.
Current IRS processing data: 80% of Form 1023 determinations are issued within 191 days (about 6.3 months) of submission. Complex applications, or ones that draw follow-up questions from an IRS reviewer, can run well past that.
The 1023 review period isn't dead time. Most of what you need to get running doesn't actually require your determination letter in hand yet.
While you wait: you can open your nonprofit bank account using your EIN confirmation letter and formation documents (you do not need to wait for IRS approval), and you can start setting up how you'll accept donations. Your organization can legally operate and even raise money before approval arrives; the one thing that's different is that donations aren't tax-deductible for the donor until your determination letter is issued.
After approval: this is where the real "now what" begins, and it's big enough that it deserves its own guide rather than a rushed afterthought here. Our First 90 Days checklist walks through exactly what to do week by week: securing your paperwork, actually opening accounts, understanding your annual filing obligation, and the governance basics that come next. Pair it with our bank account comparison and donation platform comparison when you're ready to set those up for real.
Add it up and here's what actually forming a 501(c)(3), start to finish, tends to cost in direct government fees:
| State filing fee | $20 – $125 (varies by state; see examples above) |
| IRS user fee (1023-EZ) | $275 |
| EIN | Free (never pay for this) |
| Typical total | roughly $295 – $400 |
| State filing fee | $20 – $125 (varies by state; see examples above) |
| IRS user fee (Form 1023) | $600 |
| EIN | Free (never pay for this) |
| Typical total | roughly $620 – $725 |
Optional costs not included above: a registered agent service if you don't want to list your own address publicly (often $50 to $150/year), legal review of your bylaws or 1023 narrative if you choose to hire help (highly variable, often $500 to a few thousand dollars for full-form applications), and charitable solicitation registration fees in the states that require it before you fundraise (usually free to under $50 per state; see our FAQ for the canonical 10-state exception list).
| Stage | Typical time |
|---|---|
| Board recruitment + state filing prep | Variable, often 1–3 weeks if you already have your board lined up |
| State incorporation processing | 1–4 weeks |
| EIN | Immediate (online) |
| Bylaws + conflict-of-interest policy | Can happen in parallel with the above; often 1 board meeting |
| Form 1023-EZ review, if eligible | 80% decided within 22 days; up to 120 days if flagged for further review |
| Form 1023 review, if required | 80% decided within 191 days (about 6.3 months); longer if the IRS requests more information |
| Realistic total, start to determination letter | About 6 weeks (1023-EZ, smooth case) to 8 months (full 1023) |