How to Form a Nonprofit in Colorado

Naming your nonprofit

The name you choose for your nonprofit organization should reflect your organization’s overall mission. This name will help draw people towards supporting your cause while being unique and memorable. 

If you are currently undergoing the incorporation process, you can choose to reserve your company name. Colorado holds business names for up to 120 days for a small fee of $25.

Choosing your directors

Colorado requires nonprofits to have a board of at least three directors. The directors do not have to be residents of Colorado, but they must agree with the organization’s mission. These directors will oversee the company’s financial and operational activities.

Filing the Articles of Incorporation

One of the most important documents your company must complete is the Articles of Incorporation. This document has a filing fee of $50 as of 2024 and includes information about the organization’s name, address, and mission. You must also state that the organization will not distribute or profit from its donations or other fundraising activities.

The company will be officially established once your Articles of Incorporation are accepted.

Create and adopt bylaws for your nonprofit

Now that the business is established, it’s time to determine how to run it. Bylaws are the rules that govern how your nonprofit makes decisions. Colorado does not legally require them, but it is still recommended that you create them.

To apply these bylaws to the organization, the board of directors must first accept them. Meeting with these directors is essential for adopting bylaws and electing officers.

Receive your Employer Identification Number (EIN)

Your nonprofit needs a nine-digit EIN from the IRS to complete a nonprofit organization’s setup. With this number, business owners can hire employees, file taxes, apply for grants, and do other vital activities.

Apply for Federal Tax-Exempt status

Did you know that nonprofits are not automatically exempt from taxes? The IRS requires that they file Form 1023-EZ or Form 1023 to receive their tax-exempt status. As of 2024, the application fee for these forms is $275 for Form 1023-EZ and $600 for Form 1023.

Form 1023-EZ can provide more benefits to the company but is more strict with eligibility. To check if your company can file this form, view the Eligibility Worksheet at the end of Form 1023-EZ.

Figure out what licenses and permits you need

Nonprofits in Colorado may be required to obtain specific licenses or permits. Local governments may require all companies to apply for a generic business license. Fundraising events that involve large gatherings, alcohol, or raffles will also need specific permits.

Visit Colorado’s Department of Regulatory Agencies website for more information on licenses you may need to apply for.

• Tax benefits: Nonprofits who are tax-exempt will not have to pay federal income taxes. Donations are also tax-deductible, which benefits your donors as well.
• Easier access to funding: Various grants and funding opportunities are only available to incorporated nonprofits. These extra funds can help boost your company’s ability to help the community.

• Limited Liability Protection: The law will protect the company’s owner from having their assets seized if the company faces legal trouble. 
• Trustworthiness: Donors will likely be more willing to support a nonprofit they know they can trust. Incorporation can prove that the company is not being used to steal money or scam others.