To start a nonprofit in Indiana, you incorporate through the Secretary of State, put governance in place, get a federal Employer Identification Number, and then apply to the IRS for 501(c)(3) tax-exempt status. The state incorporation fee is $31 online, and the IRS application costs either $275 or $600 depending on which form you qualify to use. Getting each step right in order saves months of correspondence with federal reviewers and protects your ability to accept tax-deductible donations.
Pick a Name That Meets Indiana’s Rules
Your nonprofit’s name has to be distinguishable from every other business entity already on file with the Secretary of State.1Indiana General Assembly. Indiana Code 23-17-5-1 – Contents; Distinguishable From Other Recorded Names It must also include one of these words or an abbreviation: “Corporation,” “Incorporated,” “Company,” or “Limited.”2Indiana General Assembly. Indiana Code 23-0.5-3-2 – Names of Corporations Search the existing entity database through the INBiz portal at inbiz.in.gov before you file anything else. A name that clearly signals your mission will make life easier with donors, grantmakers, and the IRS reviewer who reads your application.
Appoint a Registered Agent
Every Indiana nonprofit has to designate and maintain a registered agent inside the state.3Indiana General Assembly. Indiana Code 23-0.5-4-1 – Entities Required to Designate and Maintain a Registered Agent This is the person or entity that accepts legal papers and official notices on the organization’s behalf. The agent can be an individual, a domestic business entity, or a registered foreign entity, and the agent must have an Indiana street address.4Indiana General Assembly. Indiana Code 23-0.5-4-3 – Registered Agent Requirements
A founding board member can take the role for free, provided that person is reliably at the listed address during business hours. Commercial registered agent services generally charge $100 to $300 per year if no one on your board wants to be tied to that duty. Either way, the agent’s name and address will appear in your Articles of Incorporation.
File the Articles of Incorporation
The Articles of Incorporation, State Form 4162, is the document that legally creates the nonprofit. You’ll need the organization’s name and principal office address, the registered agent’s name and address, and the names and addresses of each incorporator. You also have to specify whether the corporation will have voting members or whether the board of directors will hold all governance authority.
The most consequential part of the form is the statement of purpose. The IRS requires your articles to contain specific language limiting the organization to purposes described in Section 501(c)(3) of the Internal Revenue Code and prohibiting participation in political campaigns or substantial lobbying.5Internal Revenue Service. Suggested Language for Corporations and Associations Skip or garble that language and the IRS will reject your exemption application; you’ll then have to amend the articles and reapply.
Your articles also need a dissolution clause stating that if the organization ever shuts down, its remaining assets will go to another 501(c)(3), to the government for a public purpose, or be distributed as directed by a court. The IRS publishes suggested language for both the purpose clause and the dissolution clause, and using that language closely is the safest approach. Creative alternatives tend to cause delays.
Submit the completed articles through INBiz. Online filing costs $31; a paper filing mailed to the Business Services Division costs $50. Online submissions are typically processed within a few business days, and the state then issues a Certificate of Incorporation. INBiz lets you generate free certified copies of your formation documents,6INBiz. Information Requests – Business Entity which banks, grantmakers, and the IRS will all ask for. Download several copies right away.
Build the Board and Adopt Bylaws
Indiana requires every nonprofit board to have at least three directors.7Indiana General Assembly. Indiana Code 23-17-12-3 – Number of Directors; Increase or Decrease in Number Your articles or bylaws set the exact number, and it can be adjusted later but never below three. A board stacked with family members will raise red flags at the IRS, so recruit directors who bring complementary skills and a genuine stake in the mission.
Indiana law also requires your incorporators or board to adopt bylaws.8Indiana General Assembly. Indiana Code 23-17-3-8 – Bylaws; Contents Bylaws are the internal operating rules covering how directors are elected and removed, what officers the organization has, how meetings are called, and what constitutes a quorum. You don’t file bylaws with the state, but the IRS will ask for them in your exemption application.
Hold an initial board meeting to adopt the bylaws, elect officers, and authorize a bank account. Keep detailed minutes of that meeting and of every meeting after it. These records become essential during IRS review and any later audit.
Conflict of Interest Policy
The IRS strongly encourages every 501(c)(3) to adopt a written conflict of interest policy, and Form 1023 asks whether you have one.9Internal Revenue Service. Governance and Related Topics – 501(c)(3) Organizations The policy should require directors and officers to disclose any financial interest they or their family members have in entities doing business with the nonprofit, and it should lay out a procedure for the board to evaluate and manage disclosed conflicts. The Form 1023 instructions include a sample policy you can adapt.
Document Retention Policy
Form 990 asks larger nonprofits whether they have a written document retention and destruction policy. At a minimum, keep your articles of incorporation, IRS determination letter, and original Form 1023 application permanently. Retain tax records, financial statements, and grant-related documents for at least seven years. Writing the policy at formation is far easier than reconstructing records later.
Get an Employer Identification Number
Apply for an EIN through the IRS as soon as the state accepts your articles. The online application at irs.gov issues the number immediately.10Internal Revenue Service. Obtaining an Employer Identification Number for an Exempt Organization The EIN functions like a Social Security number for the organization and is required to open a bank account, hire staff, and file returns.
One timing point matters: don’t apply before the state has accepted your articles. The IRS treats the EIN application as confirmation that the organization exists, and it starts a three-year clock for required annual filings. Missing three consecutive years of returns after the EIN issues triggers automatic revocation of tax-exempt status.11Internal Revenue Service. Automatic Revocation – How to Have Your Tax-Exempt Status Reinstated
Apply for 501(c)(3) Status
Federal tax-exempt status under Section 501(c)(3) is what lets donors deduct their contributions and what most grantmakers require. You apply through Pay.gov using either Form 1023 or the streamlined Form 1023-EZ. The user fee is $600 for the full Form 1023 and $275 for the 1023-EZ.12Internal Revenue Service. Form 1023 and 1023-EZ: Amount of User Fee
Which Form You Can Use
Form 1023-EZ is available to organizations that project gross receipts of $50,000 or less per year for the next three years, have not exceeded $50,000 in any of the past three years, and hold total assets valued at $250,000 or less.13Internal Revenue Service. Instructions for Form 1023-EZ (Rev. January 2025) Most brand-new nonprofits qualify. The 1023-EZ is processed in weeks; the full Form 1023 can take months and requires a detailed narrative of your activities plus three years of financial projections.14Internal Revenue Service. Instructions for Form 1023 (Rev. December 2024)
Public Charity or Private Foundation
Every 501(c)(3) is classified as either a public charity or a private foundation, and the default is private foundation.15Internal Revenue Service. EO Operational Requirements: Private Foundations and Public Charities Private foundations face stricter operating rules and excise taxes, so most new nonprofits want to qualify as public charities. That means showing that a substantial share of funding comes from public sources like donations, grants, and program revenue rather than a small group of individuals or investment income. Your Form 1023 or 1023-EZ asks you to select the public charity classification you’re claiming.
The Determination Letter
Once the IRS approves the application, it issues a determination letter confirming your 501(c)(3) status.16Internal Revenue Service. Exempt Organizations Rulings and Determinations Letters Keep the letter permanently. Grant applications, donor acknowledgments, bank accounts, and state tax exemption filings will all reference it.
Claim Indiana Tax Exemptions
After the IRS recognizes your nonprofit, apply for Indiana’s sales tax exemption using Form NP-20A through the Department of Revenue’s INTIME portal at intime.dor.in.gov.17Indiana Department of Revenue. Nonprofit Tax Forms Approval lets the organization buy goods and services without paying Indiana’s 7% sales tax, which adds up quickly on supplies, equipment, and program materials. You’ll need the EIN and the IRS determination letter to complete the application.
If the nonprofit owns or uses real property in Indiana, you can apply for a property tax exemption by filing with the county assessor before April 1 of the assessment year.18DLGF. Exemptions The property has to be owned, occupied, and used for charitable, educational, religious, or similar exempt purposes. Once granted, the exemption generally needs to be refiled every even year, though certain qualifying organizations may be exempt from refiling.
Organizations recognized under Section 501(c)(3) are also exempt from federal unemployment tax on employee wages,19Internal Revenue Service. Section 501(c)(3) Organizations – FUTA Exemption though you still have to withhold Social Security and Medicare taxes.
Know the Fundraising Rules Before You Solicit
Indiana does not require charitable organizations that use their own employees or volunteers to solicit donations to register with the Attorney General.20Office of the Indiana Attorney General. Consumer Protection Division: Charitable Fundraisers If your board and volunteers handle fundraising themselves, you can start once the determination letter is in hand.
The rules shift the moment you hire outside help. Any professional fundraiser or solicitor who solicits donations on your behalf must register with the Attorney General’s Consumer Protection Division and pay a $1,000 registration fee before starting work.21Indiana General Assembly. Indiana Code 23-7-8-4 – Registration Fees; Disposition; Update to Registration You also have to sign a written contract specifying what percentage of contributions the nonprofit will actually receive, and that contract must be filed with the state before the fundraiser begins soliciting. Vet any fundraising firm carefully before signing.
Stay Compliant After Formation
Incorporation is the beginning. Indiana and the IRS both impose recurring filings, and missing them can cost you tax-exempt status or good standing with the state.
Indiana Filings
Indiana nonprofit corporations file a Business Entity Report with the Secretary of State every two years through INBiz. The first report is due two years after the date of incorporation, and the fee is $22 online.22INBiz. Business Entity Reports Failure to file can lead to administrative dissolution.
Separately, the Department of Revenue requires nonprofits holding a sales tax exemption to file Form NP-20R by May 15 every five years to maintain their registration.17Indiana Department of Revenue. Nonprofit Tax Forms This replaced the old annual Form NP-20. Put both deadlines on the calendar the day you incorporate.
Federal Filings
Almost every 501(c)(3) has to file an annual return with the IRS, and the version depends on the organization’s size:23Internal Revenue Service. Instructions for Form 990 – Return of Organization Exempt From Income Tax
- Form 990-N (e-Postcard) for organizations that normally have gross receipts of $50,000 or less, filed electronically at no cost.
- Form 990-EZ for organizations with gross receipts under $200,000 and total assets under $500,000.
- Form 990 for organizations with gross receipts of $200,000 or more, or total assets of $500,000 or more.
Most new nonprofits start with the 990-N and graduate to fuller filings as they grow. Miss any required version for three consecutive years and the IRS automatically revokes tax-exempt status. Reinstatement is possible, but it requires refiling the full exemption application with a new user fee. This is the single most common way small nonprofits lose their status, and it is entirely preventable with a calendar and one committed board member.