To start a nonprofit in California with 501(c)(3) status, you file articles of incorporation with the Secretary of State, adopt bylaws and elect a board, get an EIN from the IRS, apply for federal tax exemption on Form 1023 or 1023-EZ, apply for California tax exemption with the Franchise Tax Board, and register with the Attorney General’s Registry of Charities and Fundraisers. Base government fees run about $355 if you qualify for the streamlined federal application and roughly $680 with the full Form 1023. State-level paperwork can be done in a few weeks. The IRS determination letter is what adds months.
Pick the Right Type of Nonprofit Corporation
California recognizes three nonprofit corporation types: public benefit, mutual benefit, and religious. If your plan is to run a charity or educational organization and apply for 501(c)(3) status, form a public benefit corporation. Mutual benefit corporations serve their members, like a homeowners association or a social club. Religious corporations are their own category. The type you choose at formation locks in the governance rules that apply for the life of the organization, so get it right the first time.
Your name cannot be deceptively similar to any entity already on file. Run a preliminary check using the Business Search tool on the Secretary of State’s website before you print anything or buy a domain. That online search is only preliminary and does not guarantee clearance at filing.1California Secretary of State. Name Reservations If you want to hold a name while you prepare the rest of the paperwork, reserve it through bizfileOnline.sos.ca.gov.
File the Articles of Incorporation
The articles create the corporation. For a public benefit corporation seeking 501(c)(3) status, use Form ARTS-PB-501(c)(3) from the Secretary of State’s forms page.2California Secretary of State. Forms Four elements of the form matter most:
- A specific purpose statement. Writing only “charitable purposes” will not satisfy the IRS. Describe concretely what the organization does.
- An irrevocable dedication of assets clause stating that corporate property is permanently committed to the charitable purpose and no net income will benefit any director, officer, or private person.3California Secretary of State. Articles of Incorporation of a Nonprofit Public Benefit Corporation
- A dissolution clause directing that remaining assets go to another 501(c)(3) or to the government for a public purpose. Without this language, the IRS returns the 501(c)(3) application. California’s standard form includes it; if you draft custom articles, use the IRS’s suggested language from Publication 557.4Internal Revenue Service. Suggested Language for Corporations and Associations Per Publication 557
- The name and address of your registered agent. An individual agent must be a California resident. Commercial agent services typically run $100 to $300 per year.5California Secretary of State. Frequently Asked Questions
The base filing fee is $30.6California Secretary of State. Business Entities Fee Schedule Online filing through bizfileOnline.sos.ca.gov is fastest. Add $5 if you want a certified copy for banking or grants. If you need to move faster, 24-hour processing costs $350 on top of the base fee, and same-day processing costs $750 (documents must arrive by 9:30 a.m. for a 4:00 p.m. response). The Secretary of State returns a file-stamped copy with your assigned corporate number. That stamped copy is your legal proof of existence.
Adopt Bylaws and Hold the First Board Meeting
Bylaws are the internal rulebook: board size, how directors are elected and removed, meeting procedures, quorum, officer duties. California does not require you to file bylaws with any agency, but the IRS asks for them with your Form 1023, and the Franchise Tax Board requires them with the state exemption application.
Every public benefit corporation must fill at least three officer positions: president (or chair of the board), secretary, and treasurer (or chief financial officer). One person can hold multiple titles, but president and secretary must be different people. Your first board meeting should adopt the bylaws, elect officers, and authorize someone to open the bank account and apply for the EIN. Have the secretary record minutes. The IRS and the state can ask to see them.
Get an EIN From the IRS
You need an Employer Identification Number before you can open a bank account or file for tax-exempt status. The application is free, takes about ten minutes online at irs.gov, and issues the number immediately. The IRS recommends forming your entity with the state first, so apply after the articles are filed.7Internal Revenue Service. Get an Employer Identification Number
Apply for Federal 501(c)(3) Status
This is the filing that makes donations tax-deductible and exempts the organization from federal income tax. You apply with Form 1023 or the streamlined Form 1023-EZ, submitted electronically through Pay.gov.8Internal Revenue Service. About Form 1023, Application for Recognition of Exemption Under Section 501(c)(3)
Form 1023-EZ or the Full Form 1023
Form 1023-EZ costs $275 and is open to organizations projecting annual gross receipts of $50,000 or less for each of the next three years and holding total assets under $250,000.9Internal Revenue Service. Form 1023 and 1023-EZ Amount of User Fee Hitting the financial thresholds alone is not enough. The IRS eligibility worksheet disqualifies schools, churches, hospitals, supporting organizations, entities with donor-advised funds, and a long list of other types.10Internal Revenue Service. Instructions for Form 1023-EZ Work the full worksheet before you assume you qualify.
If you don’t qualify for the EZ, you file the full Form 1023 with a $600 user fee. It requires detailed financial projections, narrative descriptions of every planned activity, officer and director compensation data, and a conflict-of-interest policy. The IRS typically takes three to six months on a full 1023, sometimes longer when the reviewer asks for more information. The 1023-EZ usually comes back within weeks.
Public Charity or Private Foundation
Your application also results in a classification: public charity or private foundation. Public charities face fewer restrictions, and their donors can deduct up to 60% of adjusted gross income for cash gifts, compared with 30% for private foundations. Private foundations pay excise taxes on investment income and face strict self-dealing rules. Most new nonprofits want public charity status, which generally requires at least one-third of financial support to come from the general public over a rolling five-year period.11Internal Revenue Service. Exempt Organizations Annual Reporting Requirements – Form 990, Schedules A and B Public Charity Support Test
Apply for California Tax Exemption
Federal exemption does not automatically exempt you from California’s franchise tax. Until the Franchise Tax Board grants state exemption, your nonprofit is subject to the $800 annual minimum franchise tax that applies to all California corporations.12Franchise Tax Board. Corporations Newly incorporated corporations are not required to pay the minimum franchise tax in their first taxable year.
Two forms, depending on whether you already have the IRS letter:
- Form FTB 3500 is the full application. Use it if you haven’t yet received your IRS determination letter or your organization type doesn’t qualify for the streamlined route. No fee as of 2021. Attach your articles and bylaws.13Franchise Tax Board. 2025 Instructions for Form FTB 3500 Exemption Application Booklet
- Form FTB 3500A is the streamlined submission for organizations that already hold a federal determination letter under IRC Sections 501(c)(3), (4), (5), (6), (7), or (19). No fee. Attach a copy of the IRS letter.14Franchise Tax Board. 2025 Instructions for Form FTB 3500A Submission of Exemption Request
The Franchise Tax Board mails a determination letter once approved. Keep it. Grants, bank accounts, and vendors who collect sales tax will all ask for it.
Register With the Attorney General
Every charitable corporation in California must register with the Attorney General’s Registry of Charities and Fundraisers within 30 days of first receiving any charitable assets, whether cash donations, property, or government grants.15State of California Department of Justice. Initial Registration You file Form CT-1 online through the Attorney General’s portal and pay a $50 registration fee by credit card or bank transfer. Attach copies of your articles and bylaws.
Once processed, the Registry assigns a registration number and lists your organization in its public database. Donors and grant makers check that database. Soliciting donations before you register is a violation of state law, and the Registry enforces it.
File the Statement of Information
Within 90 days of incorporation, file a Statement of Information (Form SI-100) with the Secretary of State.16California Secretary of State. Statements of Information Filing Tips The fee is $20, and the fastest route is online through bizfileOnline.sos.ca.gov. The form collects officer names and addresses, your principal office street address, and your registered agent. Missing the 90-day deadline draws penalties from the Franchise Tax Board and, eventually, suspension or forfeiture of corporate status. You’ll refile every two years.
What You Have to Keep Doing to Keep the Status
Formation is the easy part. Three agencies collect filings from you every year, and missing any of them can suspend the corporation or revoke the exemption.
IRS Annual Returns
Every 501(c)(3) must file an annual return with the IRS, even in a zero-revenue year. Which form depends on size: Form 990-N (the e-Postcard) for gross receipts of $50,000 or less, Form 990-EZ for receipts under $200,000 and assets under $500,000, and the full Form 990 for anything above those thresholds. The return is due on the 15th day of the 5th month after your fiscal year ends, which is May 15 for calendar-year filers.17Internal Revenue Service. Form 990 Series Which Forms Do Exempt Organizations File Filing Phase In Three consecutive years of nonfiling triggers automatic revocation. No warning letter. Reinstatement means starting the application over.
Franchise Tax Board Annual Returns
Organizations with gross receipts over $50,000 file Form 199. Those at or below $50,000 file the simpler FTB 199N e-Postcard.18Franchise Tax Board. Annual and Filing Requirements
Attorney General Renewal
File Form RRF-1 with the Registry each year, due 4 months and 15 days after your fiscal year ends. The fee is on a sliding scale: $25 under $50,000; $50 from $50,000 to $100,000; $75 from $100,001 to $250,000; $100 from $250,001 to $1 million; and $200 to $1,200 above $1 million. The Attorney General’s office has extended the deadline for charities with renewal filings due between January 7, 2025 and April 30, 2026, giving them until April 30, 2026 to file.19State of California Department of Justice. Annual Registration Renewal
Biennial Statement of Information
Update the Statement of Information every two years with the Secretary of State. Same $20 fee. Letting this one lapse is a common reason California nonprofits end up suspended.
Governance Rules That Protect the Exemption
Three governance issues cause the most problems. First, California caps “interested persons” at 49% of a public benefit corporation’s board. An interested person is anyone who received compensation from the organization in the past 12 months (other than reasonable director fees), or a close family member of such a person. You cannot pack the board with paid staff and their relatives.
Second, no part of a 501(c)(3)’s net earnings may benefit private insiders, including founders, directors, officers, or their family.20Internal Revenue Service. Inurement and Private Benefit for Charitable Organizations You can pay your executive director a salary; it must be reasonable, and any transaction with an insider must be at fair market value. A written conflict-of-interest policy, which the IRS asks for on Form 1023, should require directors to disclose financial interests and recuse themselves from related votes.
Third, a 501(c)(3) is absolutely prohibited from participating in any political campaign for or against a candidate at any level of government. That includes endorsements, campaign contributions, materials favoring or opposing a candidate, and even links to partisan content on your website.21Internal Revenue Service. Election Year Activities and the Prohibition on Political Campaign Intervention for Section 501(c)(3) Organizations Violation can mean immediate revocation. Limited lobbying on legislation is permitted under separate rules, and the line between the two catches organizations off guard more often than you’d expect.