<aside> What’s this about? Your organization must be registered in a specific US state. In addition to federal regulations, your organization may therefore be subject to state-specific regulations (or advantages).
What do I need to do? Decide in which state it makes most sense to register your organization. The most common consideration for nonprofits are where you’re located.
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Further reading
Databases
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Your choice of location determines the taxes, regulations, and costs of doing business that your organization will be subject to.
In the US, your company will be domesticated in one state, but can register as a foreign (e.g. from another state) corporation in other states. Many new nonprofits incorporate in Delaware, due to its relatively low legal overhead. Other states, especially California and New York, are regarded as having a higher regulatory burden for nonprofits. You don’t need to personally reside in the state that you choose to register in.
The following table shows how some of these considerations vary by state — in particular, taxes, regulation, and the cost of doing business.
As a founder, could I use my own address as the business address initially to keep it simple?
Yes, you can. If you has a residential lease, note that your lease may prohibit this and it’s likely good to get permission from your landlord even if it is allowed.
Do I need to incorporate where I live?
No, you don’t, and often, it might not be a good idea to. You should instead focus on questions like where your organization might have an office or regulatory compliance requirements. If you register elsewhere, you can use registered agent as your official address in that state (though it won’t receive mail in that location).
Within my chosen state, do I need to worry about the specific city or neighborhood?
For most nonprofits, this will only matter if they open an office. Then, there might be considerations around local taxes or zoning laws. Your employees will often need to pay local taxes in the location that they live and work, but your payroll provider will typically handle these.
If so many organizations adhere to Delaware’s business regulations, shouldn’t they all have Delaware addresses? Why don’t they?
Many businesses are legally registered in Delaware because of its business-friendly laws. This means that they will have a registered address in Delaware, even if it’s not their central contact address. Registered agents typically only handle mail from the Secretary of State. So, organizations will use a different address for general purposes.
Delaware is a popular state for incorporation with for-profits. Is there an equivalent state for non-profits?
There isn’t an equivalently popular state for nonprofits, which typically benefit less from state-specific business regulations. But, Delaware has lower compliance requirements than other states, and doesn’t have state charitable solicitation registration requirements, so is still a popular choice for nonprofits.
What are the pros and cons of incorporating in California?
Pros:
Cons: