Starting a Nonprofit in Louisiana

As a Business Consultant/Start Specialist I've met a vast amount of aspiring entrepreneurs in the state of Louisiana who desire to start a nonprofit, but seem to struggle with start up, financing, and registration. Starting a nonprofit doesn't have to be as stressful or as costly as you may think.

The two most popular nonprofit filing options are the 501(c)(3) 1023 and the 1023-EZ.

The cost for filing 1023-EZ is $275 and has a relatively short processing time, it doesn't allow the nonprofit to exceed over $50,000 in gross revenue in one year for the next 3 years, but there are less IRS stipulations and involvement which has it's own pros and cons.

The cost for filing 1023 is $600. This filing has a longer processing time, requires more detailed information during the application process, but gives nonprofits room to earn more revenue and accept more donations than those that file 1023-EZ.

Aspiring entrepreneurs are feeling a sense of discouragement because they are under the impression it's a requirement to have 501(3)(c) status to operate as nonprofit and are left with the dilemma of whether to go with the low cost tax exempt option that limits the growth of their business for the next 3 years, or the more costly and timely option. I encourage you to start where you can, when you can.

The first step to starting any business is searching to see if the desired name of your business is already in use. In the state of Louisiana you would search the Secretary of State website for this information. Once you've ensured your desired name isn't taken, the next step is to apply for an Employer Identification Number (EIN). This number is necessary to incorporate any business and it's what you as the business owner will need when filing taxes. The EIN application is free and can be found at IRS.gov. EIN retrieval is instant, however, in some cases you may not get approved and the system may direct you to call for more information on why it wasn't approved. In many cases it's simply because the business name you're requesting an EIN for is already taken, probably by someone in a different state. If you have no problem retrieving your EIN, the next step is to file your articles of incorporation. Log onto or create a GeauxBiz account and file your business as a Nonprofit. The fee is $75 plus a processing fee of $5. The turnaround time for articles of incorporation approval is usually quick (days maybe a week).

Your Nonprofit Articles of Incorporation Have Been Approved. Congrats! Now What?

Now that your nonprofit is registered with the State of Louisiana you can operate your business, open a nonprofit bank account, apply for state and local grants, certain federal grants, accept donations that can go towards your desired 501(c)(3) status, and get discounts on necessary permits and occupational licenses in your state/city. Most grantors however, do require nonprofits with pending 501(c)(3) status to have a fiscal sponsor or a fiscal agent. This is an existing 501(c)(3) nonprofit that agrees to assume financial responsibility for your nonprofit and shows grantors that you possess some stability. Since your nonprofit isn't 501(c)(3) tax exempt, you will still have to pay taxes, but you are still eligible for other benefits. To obtain tax exempt status you will need to apply on the IRS website.

Starting a nonprofit doesn't have to be hassle and assistance is always available. If you'd like to start a nonprofit or need other business services, book a consultation with LivCon Solutions for quality work, transparency, and flexible prices.

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