How to Start a Nonprofit in California

Step 1: Appoint Your Initial Board of Directors

California Corporations Code § 200 requires a minimum of one director for any nonprofit corporation. Directors need not be California residents and need not be members of the organization. You may appoint as many directors as your bylaws specify, but most small nonprofits start with three to five.

You have two options for appointing your initial board. You can name directors in your Articles of Incorporation when you file with the Secretary of State, or you can appoint them after incorporation at your first organizational meeting. Either approach is valid under California law.

Directors have fiduciary duties to the organization. Under California law, they must act in good faith, in the best interests of the corporation, and with the care an ordinarily prudent person would exercise. California law permits indemnification of directors for expenses and judgments if they acted in good faith and reasonably believed their conduct served the organization's best interests (Cal. Corp. Code § 317).

Step 1: File Articles of Incorporation with the California Secretary of State

The Articles of Incorporation is your nonprofit's foundational document. You must file it with the California Secretary of State at https://bizfileonline.sos.ca.gov/ or by mail to 1500 11th Street, Sacramento, CA 95814. The filing fee is $100.00.

Your Articles must include your organization name (with required corporate designator), a purpose statement confirming the corporation is organized exclusively for charitable, educational, religious, scientific, or social purposes, and your street address of principal office in California. Include the name and street address of your initial agent for service of process—a person or entity authorized to receive legal documents on your behalf.

Add a statement that the corporation is a nonprofit public benefit corporation (or mutual benefit corporation, if applicable) and confirmation that no part of net income will be distributed to members, directors, or officers.

You can file online through the Secretary of State's BizFile system or submit a paper form. Online filing is faster and recommended. The Secretary of State will issue a Certificate of Incorporation once your filing is accepted, typically within 1–2 weeks. Keep multiple certified copies on file; you'll need them to open a bank account and apply for an EIN.

Step 1: Adopt Bylaws

Bylaws are your internal operating rules governing how your board makes decisions, when meetings occur, and who holds what positions. While not filed with the state, bylaws are essential and legally binding. The IRS requires bylaws for 501(c)(3) tax-exempt status.

Your bylaws must address board composition and election procedures (how many directors, terms of office, election methods), meeting requirements (frequency, notice periods, quorum), and officer roles and duties (president, secretary, treasurer, and any others). If your nonprofit has members, include member rights and voting procedures. Include a conflict of interest policy required for 501(c)(3) organizations and amendment procedures.

California law does not prescribe specific bylaw language, but the IRS requires certain provisions for 501(c)(3) status. Many nonprofits use model bylaws from nonprofit legal resources or consult an attorney. Bylaws are typically adopted by the initial board of directors at your first board meeting by majority vote.

Document the adoption in your meeting minutes and provide a copy to all directors. Keep the original in your corporate records. You can amend bylaws later following the amendment procedure you established in the original bylaws.

Step 1: Obtain an Employer Identification Number (EIN)

An EIN is a federal tax identification number issued by the IRS. You need an EIN to open a nonprofit bank account, hire employees, and file federal tax returns. Apply for an EIN free of charge at https://www.irs.gov/ein or by calling the IRS at 1-800-829-4933.

You can apply online immediately and receive your EIN the same day. Have your Articles of Incorporation and state filing confirmation available when applying. If you plan to hire employees or operate a payroll, the EIN is mandatory. Even if you have no employees, most banks require an EIN to open a nonprofit account.

Apply for your EIN within two weeks of incorporating. This allows time to open a business bank account and establish financial systems before applying for 501(c)(3) status.

Step 1: Apply for Federal 501(c)(3) Tax-Exempt Status

After incorporating your nonprofit corporation in California, you must apply for federal 501(c)(3) tax-exempt status with the Internal Revenue Service. This federal designation exempts your organization from federal income tax and allows donors to claim charitable deductions. California recognizes the federal determination, so obtaining 501(c)(3) status is essential for operating as a true nonprofit in the state.

You must file Form 1023 (full application) or Form 1023-EZ (simplified application for smaller organizations) with the IRS. Form 1023-EZ is available if your organization expects less than $50,000 in annual gross receipts and meets other eligibility criteria; the filing fee is $125. Form 1023 is required for larger organizations or those not qualifying for Form 1023-EZ; the filing fee is $275.

Your application must demonstrate that your organization operates exclusively for charitable, educational, religious, scientific, or social purposes, does not distribute net income to members, directors, or officers, does not engage in substantial lobbying or political activity, has a conflict of interest policy, and maintains proper financial records. Include a copy of your California Articles of Incorporation and bylaws with your application.

Processing typically takes 2–4 weeks for Form 1023-EZ and 2–8 weeks for Form 1023. During this period, you can operate as a nonprofit, but you will not have tax-exempt status until the IRS approves your application. Once approved, the IRS will issue a determination letter confirming your 501(c)(3) status.

The IRS allows you to apply for 501(c)(3) status up to 27 months after your incorporation date, but filing sooner protects your tax-exempt status retroactively to your incorporation date.

Step 1: Apply for California State Tax-Exempt Status

California automatically grants state income tax exemption to nonprofits that receive federal 501(c)(3) status. You do not need to file a separate state application. Once you receive your IRS determination letter, provide a copy to the California Franchise Tax Board (FTB) at https://www.ftb.ca.gov/ or include it with your first state tax return.

Nonprofits are exempt from California corporate income tax. You are also exempt from the $800 minimum franchise tax that applies to for-profit corporations. However, you must still file an annual information return (Form 199) with the FTB if you have gross receipts over the filing threshold (currently $50,000; verify with FTB for 2026 updates).

Register with the California Franchise Tax Board for a state tax identification number. This registration is free and can be completed online or by mail. Keep your FTB registration number for all future state filings and correspondence.

Step 1: Register for Charitable Solicitation (If Applicable)

If your nonprofit solicits charitable contributions in California, you must register with the California Attorney General's Registry of Charitable Trusts. Registration is free and required before you solicit donations. This includes online fundraising, direct mail campaigns, grant applications to foundations, and public events where donations are requested.

File your registration through the Attorney General's online system or by mail. You must renew your charitable solicitation registration annually by June 30. Failure to register can result in fines and loss of the ability to solicit funds. Even if you do not actively solicit, if you accept donations, registration is prudent to ensure compliance.

Contact the California Attorney General's office at https://oag.ca.gov/charities for current registration forms, deadlines, and renewal procedures. Keep copies of all registration confirmations for your records.

Step 1: Obtain Required Local Licenses and Permits

California has no statewide general business license for nonprofits. However, you must obtain licenses from your city and/or county depending on your activities. Requirements vary significantly by location.

City business license is required in most California cities; fees range from $50–$500+ depending on location and activity. Contact your city or county clerk's office to determine the specific application process and fee for your jurisdiction.

Seller's permit is required if you sell tangible goods. Apply to the California Department of Tax and Fee Administration at https://www.cdtfa.ca.gov/. The permit is free and typically issued immediately upon approval.

Health permits are required if you operate a food service, childcare, or health-related program. Contact your county health department to determine which permits apply to your activities.

Building and zoning permits are required if you occupy a physical location or conduct activities that require zoning approval. Submit your nonprofit's Articles of Incorporation, a site plan, and a description of your intended use to your local planning department.

Home occupation permit is required if you operate from a residential address. Check your city's zoning ordinance or contact your planning department to determine if a permit is required.

Use CalGold (https://www.calgold.ca.gov/) to identify required licenses for your specific nonprofit activities and location. Enter your zip code and activity type to receive a customized list of licenses and permits with links to application forms, fees, and contact information.

Step 1: File Annual Reports and Maintain Compliance

California requires nonprofits to file annual reports with the Secretary of State. The annual report fee is $25.00, due by April 15 each year. You must file by the anniversary date of your incorporation each year.

Additionally, you must file Form 199 with the California Franchise Tax Board (annual information return; required if gross receipts exceed the threshold). Renew charitable solicitation registration with the Attorney General by June 30 each year if applicable. File Form 990-N, 990-EZ, or 990 with the IRS annually depending on gross receipts; Form 990-N is e-filed if gross receipts are under $50,000.

Maintain accurate records of board meetings, including minutes documenting decisions, votes, and attendance. California law requires nonprofits to preserve financial records, member records, and governance documents for at least three years. These records must be available for inspection by members and the state upon request.

Failure to file annual reports can result in administrative dissolution of your nonprofit, loss of liability protection, and penalties. If your nonprofit's address, registered agent, or principal officers change, file an amendment with the California Secretary of State at https://bizfileonline.sos.ca.gov/.

Key Differences: Nonprofit Corporation vs. LLC

A nonprofit corporation in California is organized exclusively for charitable, educational, religious, scientific, or social purposes, and no owners or members receive distributions of net income. An LLC is organized to generate profit for members who receive distributions of net income. This fundamental distinction shapes every operational and tax decision you'll make.

Nonprofit Corporation:

Organized exclusively for charitable, educational, religious, scientific, or social purposes
No owners or members receive distributions of net income
Directors have fiduciary duties to the organization
Eligible for federal 501(c)(3) tax exemption and California state income tax exemption
Must file annual reports with the Secretary of State and the IRS
Requires bylaws and a board of directors
Perpetual existence (continues even if directors change)

For-Profit LLC:

Organized to generate profit for members
Members receive distributions of net income
Members have limited liability but fewer fiduciary duties than nonprofit directors
Subject to California corporate income tax and $800 minimum franchise tax
May elect S-Corp or C-Corp tax treatment federally
Operating agreement governs internal structure (bylaws not required)
More flexible management structure (member-managed or manager-managed)

If your goal is to operate a charitable or educational mission without distributing profits, a nonprofit corporation is the correct choice. If you intend to generate profit for owners, an LLC is appropriate.

Contact Information for California Secretary of State

The California Secretary of State is your primary filing authority for nonprofit incorporation.

Website: https://www.sos.ca.gov/

Online Filing: https://bizfileonline.sos.ca.gov/

Business Search: https://bizfileonline.sos.ca.gov/search/business

Phone: (916) 657-5448

Mailing Address: California Secretary of State 1500 11th Street Sacramento, CA 95814

You can file formation documents directly through the Secretary of State's online portal. This system allows you to submit your Articles of Incorporation, pay filing fees, and track your application status without visiting an office in person. Call (916) 657-5448 if you have questions about filing requirements or need clarification on form instructions.

Before filing, search the Secretary of State's database at https://bizfileonline.sos.ca.gov/search/business to verify that your proposed business name is available and to research existing entities.

Timeline and Cost Summary

Starting a California nonprofit typically takes 4–12 weeks from filing to full operational status, depending on IRS processing time for 501(c)(3) approval.

Week 1–2: Preparation and Filing Prepare your Articles of Incorporation and file them with the California Secretary of State. Online filing through BizFile typically processes within 1–2 business days.

Week 2–3: EIN and State Registration Apply for a federal Employer Identification Number (free, issued same day) and register with the California Franchise Tax Board (free).

Week 3–6: 501(c)(3) Application The IRS processes Form 1023 or Form 1023-EZ within 2–4 weeks. This step determines your federal tax-exempt status.

Week 4–6: Local Registration Simultaneously, register with your city or county for a local business license and, if applicable, register as a charitable solicitor with the California Attorney General.

Estimated Costs

State-Level Fees:

Articles of Incorporation filing fee: $100
Annual report (Secretary of State): $25

Federal Costs:

EIN (IRS): Free
Form 1023 (501(c)(3) application): $275 (or $125 for Form 1023-EZ)

California State-Specific Costs:

Charitable solicitation registration: Free
Franchise Tax Board registration: Free

Local Costs:

City/County business license: $50–$500+ (varies by location)

Optional Professional Costs:

Attorney fees: $500–$2,000+
Accounting/bookkeeping setup: $300–$1,000+

Total Estimated Cost Range

Category	Low	High
State filing (Articles + annual report)	$125	$125
Federal 501(c)(3) application	$125	$275
Local business license	$50	$500
Attorney fees (optional)	$0	$2,000
Total (without attorney)	$300	$900
Total (with attorney)	$800	$2,900

Key Deadlines and Compliance Dates

Initial Filing: File your Articles of Incorporation as soon as you're ready to form.

EIN Application: Within 2 weeks of incorporation, before opening a business bank account.

Form 1023 Submission: Within 27 months of incorporation (filing sooner protects your tax-exempt status retroactively).

Annual Report: Due April 15 each year to the California Secretary of State ($25 fee).

Charitable Solicitation Annual Report: Due by June 30 to the California Attorney General