Starting a 501(c)(3) in Virginia takes two linked steps: form a nonstock corporation with the Virginia State Corporation Commission (SCC), then apply to the IRS for federal tax-exempt recognition. Expect to pay between $350 and $675 in government filing fees, plus a $100 state charitable solicitation registration if you plan to fundraise. The organization must operate exclusively for charitable, religious, educational, scientific, or similar purposes, and it cannot distribute profits to private individuals.1Office of the Law Revision Counsel. 26 USC 501 – Exemption From Tax on Corporations, Certain Trusts, Etc. Once approved, your nonprofit can accept tax-deductible donations and keeps mission-related income free from federal income tax.
Pick a Name That Clears the State’s Database
The name you choose must be distinguishable from every other entity already on file with the SCC. Search the Clerk’s Information System at cis.scc.virginia.gov before you commit to letterhead or a domain.2Virginia State Corporation Commission. Clerk’s Information System The name also cannot imply the organization conducts business it is not authorized to conduct.3Virginia Code Commission. Virginia Code Title 13.1 Chapter 10 Section 13.1-829 – Corporate Name Virginia doesn’t require nonstock corporations to add “Incorporated” or “Corporation,” though many nonprofits do for clarity.
Appoint a Registered Agent in Virginia
Every Virginia nonstock corporation must maintain a registered agent and a registered office in the state at all times.4Virginia Code Commission. Virginia Code Title 13.1 Chapter 10 Section 13.1-833 – Registered Office and Registered Agent The agent is the person or entity authorized to accept legal documents and government notices for your nonprofit. If you use an individual, they must be a Virginia resident who is either a director of the corporation or a member of the Virginia State Bar, and their business address has to match the registered office address. A domestic or foreign business entity authorized to operate in Virginia can serve instead. Commercial registered agent services generally charge $100 to $300 a year.
File Articles of Incorporation With the SCC
You create the corporation by filing Articles of Incorporation (Form SCC819) with the SCC. The filing fee is $75, and the SCC typically processes submissions within seven to ten business days, issuing a Certificate of Incorporation once your documents are accepted. File online through the SCC eFile portal or by mail.5Virginia State Corporation Commission. SCC eFile
Virginia law requires your articles to include the corporate name, a statement about whether the corporation will have members (and if so, their classes, qualifications, and rights), the method for selecting directors, and the name and address of the initial registered agent and registered office.6Virginia Code Commission. Virginia Code Title 13.1 Chapter 10 Section 13.1-819 – Articles of Incorporation
Two additional clauses matter for 501(c)(3) qualification but are not required by Virginia on their own. The first is a purpose clause limiting your activities to exempt purposes such as charitable, religious, educational, or scientific work. The second is a dissolution clause stating that if the organization shuts down, any remaining assets will go to another 501(c)(3) organization or to the government, never to private individuals.1Office of the Law Revision Counsel. 26 USC 501 – Exemption From Tax on Corporations, Certain Trusts, Etc. Leave these out and the IRS will reject your exemption application.
Build Your Board and Adopt Bylaws
Virginia allows a nonstock corporation to operate with as few as one director, though you can set a higher number in your bylaws or articles.7Virginia Code Commission. Virginia Code Title 13.1 Chapter 10 Section 13.1-855 – Number and Election of Directors The IRS generally expects at least three unrelated board members for a 501(c)(3), as evidence that no insider controls the organization. Directors are responsible for guiding the mission, approving budgets, and ensuring financial accountability. A conflict-of-interest policy isn’t required by Virginia statute, but the IRS expects to see one to prevent insiders from personally benefiting from the organization’s resources.
Either the incorporators or the initial board must adopt bylaws, which you keep internally rather than filing with the state.8Virginia Code Commission. Virginia Code Title 13.1 Chapter 10 Section 13.1-823 – Bylaws Bylaws usually cover how meetings run, how officers are elected, voting procedures, officer duties, and the process for amending the bylaws. They cannot conflict with the articles of incorporation; if they do, the articles control.6Virginia Code Commission. Virginia Code Title 13.1 Chapter 10 Section 13.1-819 – Articles of Incorporation
Get an EIN From the IRS
Before you open a bank account, hire anyone, or submit the exemption application, apply for an Employer Identification Number (EIN). This nine-digit number functions as the organization’s federal tax ID.9U.S. Small Business Administration. Get Federal and State Tax ID Numbers Apply free online at irs.gov and you’ll receive the EIN immediately. You’ll need the legal name exactly as it appears on your articles of incorporation, the physical address, and the Social Security number of the responsible officer.
One payroll detail worth knowing early: once your 501(c)(3) status is approved, employees are subject to Social Security and Medicare withholding but exempt from Federal Unemployment Tax Act (FUTA) tax.10Internal Revenue Service. Section 501(c)(3) Organizations – FUTA Exemption State payroll obligations still run through the Virginia Employment Commission.
Apply for 501(c)(3) Recognition
Federal tax-exempt recognition requires filing an application with the IRS through Pay.gov.11Internal Revenue Service. Applying for Tax Exempt Status Two versions exist, and your projected size decides which one.
- Form 1023-EZ is the streamlined application. You qualify if gross receipts are projected at $50,000 or less in each of the next three years and total assets stay below $250,000. The user fee is $275.12Internal Revenue Service. Instructions for Form 1023-EZ
- Form 1023 is the full application for larger organizations. It asks for a detailed description of planned activities and financial projections, usually covering three years for a newly formed organization, or a mix of actual and projected data if you’ve been operating. The user fee is $600.13Internal Revenue Service. Form 1023 and 1023-EZ – Amount of User Fee
Both forms want the legal name exactly as it appears on your articles, along with a list of officers and directors.14Internal Revenue Service. Instructions for Form 1023 Applications are reviewed in the order received. Form 1023-EZ approvals often arrive within a few weeks; the full Form 1023 can take six months or longer. When the IRS approves yours, it issues a Determination Letter confirming 501(c)(3) status.
Register Before You Fundraise
If your nonprofit will solicit donations from Virginia residents, you must register under the Virginia Charitable Solicitations Act before any fundraising begins. Submit Form 102 to the Virginia Department of Agriculture and Consumer Services with a $100 initial filing fee, and renew the registration every year.15Virginia Department of Agriculture and Consumer Services. Form 102 Registration Statement
Enforcement has teeth. In an action brought by the Attorney General, a court can impose civil penalties of up to $5,000 per violation, investigative costs of up to $250 per violation, and attorney fees.16Virginia Code Commission. Virginia Code Title 57 Chapter 5 – Solicitation of Contributions
Apply Separately for Virginia Sales Tax Exemption
Federal 501(c)(3) status does not automatically exempt your nonprofit from Virginia retail sales and use tax.17Virginia Department of Taxation. Nonprofit Exemption FAQs Apply separately by submitting Form NP-1 to the Virginia Department of Taxation, or online through the department’s Nonprofit Online portal. The department reviews whether you meet the criteria in Virginia Code ยง 58.1-609.11, including whether you provide a substantial public benefit.
Keep the Organization in Good Standing
Two annual filings keep the corporation alive at the state level. You must file an annual report with the SCC (no fee for the report itself) and pay a $25 annual registration fee.18Virginia State Corporation Commission. Annual Registration Fees Both are due by the last day of the month in which your corporation was formed. If the fee goes unpaid or the report isn’t filed within four months after the due date, Virginia automatically terminates the corporation’s existence.19Virginia State Corporation Commission. Maintaining Your Business Reinstatement means extra paperwork and extra fees.
The IRS requires nearly every 501(c)(3) to file an annual information return. Which version depends on size: Form 990-N (the e-Postcard) for gross receipts normally $50,000 or less; Form 990-EZ for gross receipts under $200,000 and total assets under $500,000; and the full Form 990 for gross receipts of $200,000 or more, or total assets of $500,000 or more.20Internal Revenue Service. Instructions for Form 990 Return of Organization Exempt From Income Tax Miss three consecutive years and the IRS automatically revokes your exempt status, effective the filing due date of the third missed return.21Internal Revenue Service. Automatic Revocation of Exemption Getting it back means filing a brand-new application and paying the user fee again.
Know the Activity Limits That Come With Exempt Status
A 501(c)(3) is absolutely prohibited from participating in political campaigns, whether by endorsing candidates, donating to campaigns, or publishing statements for or against anyone running for office.1Office of the Law Revision Counsel. 26 USC 501 – Exemption From Tax on Corporations, Certain Trusts, Etc. Violation can cost you tax-exempt status plus an excise tax on the money spent on the prohibited activity.22Internal Revenue Service. Frequently Asked Questions About the Ban on Political Campaign Intervention by 501(c)(3) Organizations
Lobbying, meaning efforts to influence specific legislation, isn’t banned outright, but it cannot be a substantial part of your activities. The IRS looks at both time and money devoted to lobbying. Excessive lobbying can cost you exempt status and trigger an excise tax of five percent of the organization’s lobbying expenditures for the year. Managers who knowingly approved the spending can be personally liable for an additional five percent tax.23Internal Revenue Service. Measuring Lobbying – Substantial Part Test
Finally, build the habit of sending donor acknowledgments early. For any contribution of $250 or more, provide a written acknowledgment that includes your organization’s name, the cash amount (or a description of non-cash gifts, with no value assigned by you), and a statement about whether goods or services were provided in return.24Internal Revenue Service. Charitable Contributions – Written Acknowledgments Donors need this to claim their deduction, and getting the format right from your first gift saves rework later.