How to Start a 501c3 in California: Steps, Fees, and Filings

To start a 501(c)(3) in California, you incorporate a nonprofit public benefit corporation with the Secretary of State, get a federal Employer Identification Number, apply to the IRS for 501(c)(3) tax-exempt status, apply separately to the Franchise Tax Board for California tax exemption, and register with the Attorney General’s Registry of Charities and Fundraisers. Government filing fees start at roughly $375 for a small organization eligible for the streamlined IRS Form 1023-EZ and rise to about $700 or more for larger organizations that must file the full Form 1023.¹

The steps below are in the order you should complete them. Doing them out of sequence — for example, accepting donations before registering with the Attorney General, or waiting on the state exemption until after your first tax year — creates avoidable fees and penalties.

Choose a Name and File Articles of Incorporation

Your name must be distinguishable from every other corporation on file with the California Secretary of State. Adding “Inc.” or changing punctuation is not enough; you need at least one different letter or numeral, or a plainly different arrangement of characters.² Search existing names through bizfile Online before committing. If you want to lock in a name before filing, you can reserve it for 60 days.³ Certain words carry extra requirements: “bank,” “trust,” or “trustee” in a corporate name requires a Certificate of Approval from the Commissioner of Business Oversight attached to your Articles of Incorporation.

A charitable nonprofit uses Form ARTS-PB-501(c)(3) (Articles of Incorporation of a Nonprofit Public Benefit Corporation). Religious organizations file the separate ARTS-RE.⁴ Three provisions must appear in your articles for the corporation to work as a 501(c)(3):

A statement of purpose declaring that the corporation is organized under the Nonprofit Public Benefit Corporation Law for charitable or public purposes and not for any person’s private gain, as required by California Corporations Code Section 5130. You can add a more detailed description of your specific mission after the required language.⁵
A dissolution clause stating that any remaining assets on dissolution will go to another 501(c)(3) organization or to a government entity for a public purpose. The IRS requires this.⁶
An agent for service of process — either an individual with a physical California street address (no P.O. boxes) or a registered corporate agent qualified with the Secretary of State.⁷

File through bizfile Online. The nonprofit filing fee is $30.⁸ Standard processing runs about two weeks. If you need it faster, 24-hour expedited service costs an additional $350 and same-day service costs $750.

Appoint Directors and Adopt Bylaws

California allows a nonprofit public benefit corporation to have as few as one director, but most organizations appoint at least three. A three-member board is a basic governance safeguard the IRS looks for, and a smaller board can complicate the federal application. Directors owe the organization duties of care and loyalty: they must act in its best interest, stay informed, and avoid conflicts between personal finances and board decisions.

Draft your bylaws before you file anything at the federal level. Bylaws are the internal rulebook and should cover board size and elections, officer roles (California requires at least a president or board chair, a secretary, and a treasurer or chief financial officer), meeting and quorum rules, voting and conflict handling, the fiscal year, and how bylaws are amended. Director terms can run up to four years for most nonprofits, or up to six years for corporations without members.

Adopt a written conflict-of-interest policy at the same time. The IRS encourages one, and Form 1023 asks directly whether you have one.⁹

File the Initial Statement of Information

Within 90 days of the Secretary of State approving your articles, file Form SI-100 listing your officers, directors, and agent for service of process. The fee is $20.⁸ After the initial filing, you must update the statement every two years during the calendar month your articles were originally filed, and whenever key information changes.¹⁰

Get an EIN

Every nonprofit needs an Employer Identification Number from the IRS, even if it will never have employees. Apply online at irs.gov and you receive the nine-digit number immediately. It is free.¹¹ The EIN is not your tax-exempt number; it is simply the federal identifier you will use on every application that follows.

Apply to the IRS for 501(c)(3) Status

Federal 501(c)(3) status is what exempts your nonprofit from federal income tax on mission-related revenue and lets donors deduct their contributions.¹² You apply through Pay.gov using either the streamlined Form 1023-EZ or the full Form 1023.

Form 1023-EZ or Full Form 1023

You can use Form 1023-EZ only if you meet all of the following:¹³

You do not project annual gross receipts above $50,000 in any of the next three years.
Your actual annual gross receipts have not exceeded $50,000 in any of the past three years, if you have any operating history.
Your total assets do not exceed $250,000.

Complete the Form 1023-EZ Eligibility Worksheet before filing. A “yes” to any question sends you to the full Form 1023, which requires a detailed narrative of past, present, and planned activities, three years of projected or actual budgets, itemized revenue sources, expense breakdowns, and compensation and conflict information.

The user fee is $275 for Form 1023-EZ and $600 for the full Form 1023, paid through Pay.gov when you file.¹ The IRS reports that 80 percent of Form 1023-EZ applications get a determination within about 22 days, while 80 percent of full Form 1023 applications take roughly 191 days.¹⁴ Once approved, you receive a Determination Letter. Keep it. Donors and grantmakers will ask for it.

Public Charity or Private Foundation

The application asks you to claim public charity status. Every 501(c)(3) is presumed a private foundation unless it qualifies for one of the excluded categories that make it a public charity.¹⁵ Most new nonprofits want public charity classification because donors can generally deduct contributions up to 50 percent of adjusted gross income for public charities, compared with 30 percent for most private foundations, and public charities avoid the excise taxes and self-dealing restrictions that apply to private foundations.¹⁶

To qualify as a publicly supported charity, an organization generally must receive a substantial part of its support from government or the general public, or more than one-third of its support from gifts, grants, and program revenue with no more than one-third from investment income. The IRS looks at this over a five-year period.¹⁷ Hospitals, schools, and churches qualify automatically by type. If you do not claim an exclusion and do not give timely notice, the IRS treats you as a private foundation by default.¹⁵

Apply for California Tax Exemption

A federal Determination Letter does not exempt you from California taxes. You apply separately with the Franchise Tax Board.¹⁸ Two forms exist:

Form FTB 3500 is the full application, used if you have not yet received your federal Determination Letter. It requires detailed information on structure, activities, and finances, including a complete financial statement.
Form FTB 3500A is the shorter submission for organizations that already hold a federal 501(c)(3) determination. You attach a copy of the Determination Letter, and the FTB processes it more quickly.¹⁸

Neither form carries a filing fee. Once granted, the state exemption relieves the organization of California’s $800 annual minimum franchise tax that otherwise applies to all California corporations. Newly incorporated corporations do not owe the $800 in their first taxable year regardless of exempt status, a rule in effect since January 1, 2020.¹⁹ After the first year, the $800 accrues annually until the FTB grants your exemption, so apply promptly.

Register with the California Attorney General

California’s Supervision of Trustees and Fundraisers for Charitable Purposes Act (Government Code Section 12580) requires charitable nonprofits to register with the Attorney General’s Registry of Charities and Fundraisers.²⁰ File Form CT-1 within 30 days of first receiving any property, including your own start-up contributions. The initial registration fee is $50.²¹

CT-1 asks for your founding documents, bylaws, a list of officers and directors with home addresses, your primary purpose, and the fundraising methods you plan to use. File through the Attorney General’s website. Missing the 30-day deadline can trigger penalties and complicate soliciting donations in California.

What Formation Does Not Cover

A few tax exposures survive 501(c)(3) status, and knowing about them at formation prevents surprises later.

California does not offer a general sales tax exemption for nonprofits, even those with federal and state income tax exemptions.²² If your nonprofit sells tangible goods, you may need a seller’s permit and must collect sales tax the same as any other business. Narrow exemptions exist for particular organizations and transactions, but there is no blanket exclusion.

Nonprofits that own or lease property used exclusively for charitable, religious, hospital, or scientific purposes can pursue the Welfare Exemption from property tax, co-administered by the State Board of Equalization and the county assessor. You first obtain an Organizational Clearance Certificate from the BOE, then file a welfare exemption claim with your county assessor by February 15 each year.²³²⁴ To qualify, your articles of incorporation need both an irrevocable dedication statement and a dissolution clause, which is another reason to get those provisions right when you incorporate.

Tax-exempt status also does not cover income from a trade or business that is not substantially related to your charitable purpose. An exempt organization with $1,000 or more in gross income from an unrelated business must file IRS Form 990-T, and estimated tax is due if you expect to owe $500 or more.²⁵ Activities run primarily by volunteers and certain fundraising events such as bingo are generally excluded.

Ongoing Filings You Will Owe Every Year

Formation is not the end of the paperwork. The recurring filings that begin the year after you form:

An annual IRS return. Form 990-N (e-Postcard) for organizations with gross receipts normally under $50,000; Form 990-EZ for gross receipts under $200,000 and total assets under $500,000; Form 990 for anything larger. Failure to file for three consecutive years causes automatic loss of tax-exempt status, with no warning and no grace period.²⁶
Attorney General annual renewal on Form RRF-1, with a copy of your Form 990 (or Form CT-TR-1 if a 990 is not required), due four months and 15 days after your fiscal year ends. Renewal fees range from $25 for organizations with less than $50,000 in total revenue to $1,200 for organizations with revenue over $500 million.²⁷
Statement of Information (SI-100) every two years with the Secretary of State, $20.¹⁰
California Form 199 or the FTB 199N e-Postcard with the Franchise Tax Board, depending on gross receipts.

Total Government Fees

Budget the following to form a California 501(c)(3):

Articles of Incorporation, Secretary of State: $30⁸
Initial Statement of Information (SI-100): $20⁸
EIN: free
IRS Form 1023-EZ: $275, or full Form 1023: $600¹
Attorney General CT-1 registration: $50²¹
FTB Form 3500 or 3500A: no fee
Optional Secretary of State expedited filing: $350 for 24-hour, $750 for same-day

The minimum for a small nonprofit filing Form 1023-EZ is $375 in government fees. Organizations filing the full Form 1023 should plan on at least $700. Those numbers do not include optional costs like a registered agent service or professional help drafting your articles and bylaws.

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