Forming a Nonprofit Organization in Arizona

By Sarah Weber

This is intended to provide an overview of the key steps needed to form a nonprofit organization in Arizona. There are additional activities not covered here that will be needed to develop and grow the organization specific to its intended mission and vision including marketing, fundraising, and education and awareness.

Step 1: Create a Mission
A nonprofit mission statement should be one or two sentences that describe why the organization exists, what it will do, and who it will serve. It will be used for internal purposes to motivate team members and for external stakeholders as a window into the organization so it is important to craft one that evokes interest.

Step 2: Create a Vision Statement
A vision statement should describe the ideal future if the organization achieved all its goals. It should feel like a reach.

Step 3: Form a Board
Arizona requires at least one director to form a nonprofit. However, it is recommended to have more than one to encompass a diverse range of skillsets. Board members should be committed and resourceful.

Step 4: Appoint a Registered Agent
Every nonprofit in Arizona must have an agent for service of process that lives in the state. This person agrees to accept legal papers on behalf of the nonprofit. The agent must have a physical address, not a P.O. Box.

Step 5: Choose a Name
First,  check the entity name on the Arizona Corporation Commission (ACC) website to ensure it is unique and not being used by another entity in Arizona. Go to http://ecorp.azcc.gov/ under File, then Name, and Check Name Availability. As an additional step, use Google or another search engine to see if the name or a similar name is being used elsewhere. If others are using the same or similar name, there may be legal consequences.

Step 6: File with the Arizona Corporation Commission Corporations Division
Submit the formation documents (Articles of Incorporation) with the ACC. The fastest and most convenient way to submit is by using the ACC website. The entity's formation documentation will be reviewed and approved by ACC staff. If approved, an approval letter will be provided with additional instructions. If rejected, the letter will provide instructions on how to resubmit the paperwork. Note: The ACC will not accept temporary checks that do not have a pre-printed name and address on them. The filing fees should be paid through an established account.

Step 7: Obtain an Employer Identification Number (EIN)
An EIN can be obtained online, by phone, or by mail.

Step 8: Open a Bank Account
To open a business account, the EIN and copies of the incorporation documents will be needed.
 
Step 9: Create Bylaws
Bylaws are legally required in Arizona. The bylaws should outline how the nonprofit will be governed from how records will be maintained to how new directors will be brought on. To be in compliance with Arizona state laws, a nonprofit organization should have by laws in place by the first organizational board of directors meeting.

Step 10: Hold an Organizational Meeting
Hold the first meeting of the board of directors to approve the bylaws and elect officers. The meeting minutes should be recorded.

Step 11: File for Tax-Exempt Status
To apply for recognition of 501 (c)(3) tax exemption, complete and submit IRS Form 1023. This is a lengthy and complex form. Many law offices offer IRS Form 1023 preparation services to help with the process. 

While many states have broad tax exemptions for nonprofit organizations, Arizona does not. Rather, the Arizona Revised Statutes define certain exemptions for nonprofits under various business clarifications. Organizations should contact their city for information about exemptions from city privilege and use taxes.

Step 12: Develop Operational Plans
The organization should create plans for operating including fundraising, managing finances, and other activities to carry out the mission. This should also include a record-keeping system to store all important documents such as Articles of Incorporation, bylaws, meeting minutes, and EIN confirmation. An accounting system will also need to be established.

References
Ten Steps to Starting a Business in Arizona. (n.d.). Arizona Corporation Commission. https://azcc.gov/corporations/ten-steps-to-starting-a-business-in-az.



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