How to Start a Nonprofit Organization in New Jersey

New Jersey has over 50,000 registered nonprofit organizations, and forming a new one requires coordination between state and federal agencies. The process is not complicated, but the steps need to be done in the right order. Missing a filing or submitting the wrong form can delay your launch by months.

This guide covers the entire process from choosing a name through charitable registration. If you are also considering forming a nonprofit in New York, we have a separate guide covering that process: How to Start a Nonprofit in New York.

Before You File Anything

Before spending time on paperwork, it is worth asking whether a new nonprofit is actually the right approach. If another organization in your area is already doing similar work, partnering with them or operating under their umbrella as a fiscal sponsorship may be a faster and cheaper path to the same goal. Forming and maintaining a nonprofit costs money every year, and the compliance obligations do not go away once the organization is up and running.

If you have confirmed that a new entity is the right move, gather a few things before starting. You will need at least three unrelated individuals willing to serve as directors. You will also need a clear written description of the organization's charitable purpose, because this language will appear in your formation documents and your IRS application. Getting this language right the first time saves significant headaches later.

Choosing a Name

Your nonprofit's legal name must be distinguishable from every other entity registered with the State of New Jersey. You can search the state's business records database through the New Jersey Division of Revenue and Enterprise Services to check whether the name you want is available.

Under New Jersey law, the name must include a corporate designator such as "incorporated," "corporation," "inc.," or "corp." It can also include the phrase "a New Jersey nonprofit corporation." Certain words are restricted and require additional approvals, so avoid terms that suggest government affiliation or regulated industries unless you have the appropriate licensing.

Once you find an available name, you can reserve it while you prepare the rest of your documents. The reservation holds the name for 120 days.

Appointing a Registered Agent

Every New Jersey corporation, including nonprofits, must designate a registered agent. This is the person or company authorized to receive legal notices and official state correspondence on the organization's behalf. The registered agent must have a physical street address in New Jersey and must be available during normal business hours. A P.O. box does not qualify.

You can serve as your own registered agent, appoint a board member, or hire a registered agent service. Many attorneys who assist with nonprofit formation also serve as registered agent for their clients.

Filing the Certificate of Incorporation

To legally form the nonprofit, you file a Certificate of Incorporation with the New Jersey Department of the Treasury, Division of Revenue. The filing fee is $75 for most nonprofit corporations. Religious organizations following Title 16 procedures pay a reduced fee of $5.

The Certificate of Incorporation must include the organization's name, its registered agent and office address, the name and address of each incorporator, and a statement of the organization's purpose. You need at least one incorporator who is at least 18 years old. There is no requirement that the incorporator be a New Jersey resident or a U.S. citizen.

Here is where many people run into trouble: the state's minimum requirements for the Certificate of Incorporation are not the same as what the IRS requires. If you plan to apply for 501(c)(3) status, your formation documents need to contain specific language about the organization's exempt purpose and what happens to assets if the organization dissolves. Filing a bare minimum certificate with the state and then discovering the IRS needs different language means you will have to go back and amend, which adds time and cost. It is much better to get the language right the first time.

Obtaining an Employer Identification Number

After incorporation, you need a Federal Employer Identification Number from the IRS. This is the organization's tax ID, similar to a Social Security number for an individual. You need an EIN even if the nonprofit will not have employees. Banks require it to open an account, and you will need it for your tax exemption application.

Applying for an EIN is free. You can do it online through the IRS website and receive the number immediately. The application is IRS Form SS-4.

Drafting Bylaws and Holding the First Board Meeting

Bylaws are the internal rules that govern how your nonprofit operates. They cover things like how board meetings are called and conducted, how directors are elected and removed, what officers the organization will have and what their responsibilities are, and how the bylaws themselves can be amended.

New Jersey does not require you to file bylaws with the state. However, the IRS requires a copy of your bylaws when you apply for 501(c)(3) status using Form 1023. Even if you use the streamlined Form 1023 EZ, having well drafted bylaws protects the organization and its directors.

At your first board meeting, the directors should formally adopt the bylaws, appoint officers, adopt a conflict of interest policy, and authorize the filing of the tax exemption application. Keep minutes of this meeting. The IRS may ask to see them.

Applying for Federal Tax Exempt Status

This is the step that takes the longest and requires the most preparation. To obtain recognition as a 501(c)(3) organization, you file either Form 1023 or Form 1023 EZ with the IRS.

Form 1023 EZ is a streamlined application available to smaller organizations. You can use it if the organization expects to have gross receipts of $50,000 or less in each of the next three years and total assets of $250,000 or less. The filing fee is $275, and approval typically comes within a few weeks. You must complete the IRS eligibility worksheet to confirm your organization qualifies for the streamlined form.

If your organization does not qualify for the 1023 EZ, you file the full Form 1023. The filing fee is $600. This application is more detailed and requires a narrative description of the organization's activities, financial projections, and copies of your governing documents. Processing time for the full Form 1023 can range from three to six months, and the IRS may follow up with additional questions.

A word of caution on the 1023 EZ: just because your organization is eligible to use it does not always mean you should. The streamlined form asks fewer questions and provides less opportunity to explain your organization's activities. Some practitioners have found that organizations approved through the 1023 EZ face more scrutiny during later audits because the IRS had less information at the time of approval. For organizations with any complexity in their structure or operations, the full Form 1023 may be the safer choice.

New Jersey State Tax Exemption

Once you receive your IRS determination letter confirming 501(c)(3) status, you can apply for New Jersey state tax exemptions. Nonprofits that are properly incorporated and operated as nonprofit corporations in New Jersey are automatically exempt from the New Jersey corporation business tax. However, you will want to obtain written confirmation of this from the Division of Taxation's Regulatory Services Branch.

Sales and use tax exemption is a separate process. If your organization qualifies under IRC Section 501(c)(3), you can apply for a sales tax exemption certificate by filing Form REG-1E with the New Jersey Division of Taxation. Until you receive the Form ST-5 Exempt Organization Certificate, the organization is responsible for paying sales tax on its purchases. The exemption is not retroactive, so file promptly after receiving your IRS determination letter.

Charitable Registration

Before your nonprofit can solicit donations in New Jersey, it must register with the Charities Registration and Investigation Section of the Attorney General's office. This requirement applies whether you are soliciting in person, by mail, by phone, or online.

The registration form you use depends on the organization's size. Organizations with gross contributions under $25,000 use Form CRI-200. Organizations with gross contributions of $25,000 or more use Form CRI-150-I and must include audited financial statements. New organizations that have not yet completed a fiscal year file Form CRI-300R for initial registration.

You can file online through the New Jersey Attorney General's portal or by mail. The organization will receive a charities registration number, which is separate from both the EIN and the state corporate ID number.

Annual Compliance Requirements

Forming the nonprofit is only the beginning. Maintaining it requires several recurring filings.

On the federal level, most 501(c)(3) organizations must file an annual information return with the IRS. The specific form depends on the organization's size: Form 990-N (the "e-Postcard") for organizations with gross receipts of $50,000 or less, Form 990-EZ for organizations with gross receipts under $200,000 and total assets under $500,000, and the full Form 990 for larger organizations. Failing to file for three consecutive years results in automatic revocation of tax exempt status.

At the state level, New Jersey requires an Annual Report filed with the Division of Revenue. The filing fee is $25. Corporations that fail to file for two consecutive years will have their New Jersey business charter revoked.

The charitable registration with the Attorney General's office must also be renewed annually. The renewal form and requirements depend on the organization's gross contributions for the completed fiscal year.

Property Tax Exemption

If your nonprofit owns or leases property in New Jersey, it may qualify for a property tax exemption. This is a municipal level process, and each municipality handles it differently. You will generally need to file Form I.S. (Initial Statement) with the local tax assessor's office and demonstrate that the property is used exclusively for the organization's exempt purpose. Property tax exemption is not automatic and must be applied for separately from the state and federal tax exemptions.

Common Mistakes to Avoid

The most frequent issue we see is organizations that file their Certificate of Incorporation using generic language that satisfies the state but does not meet IRS requirements. This forces them to go back, amend the certificate, and refile, adding weeks or months to the timeline.

Another common problem is starting to solicit donations before completing the charitable registration with the Attorney General. This can result in penalties and creates credibility issues with potential donors who check the registry before giving.

Finally, many new nonprofits underestimate the ongoing compliance burden. Between the IRS annual return, the state annual report, the charitable registration renewal, and any applicable property tax filings, there are multiple deadlines to track every year. Missing even one can trigger penalties or loss of status.

When to Work with an Attorney

Some founders handle the incorporation and 1023 EZ process on their own without issues. But if your organization has any complexity, working with an attorney from the start can save time and prevent costly corrections later. This is especially true for organizations that will have employees, enter into contracts, apply for grants from government agencies, or have activities that blur the line between charitable and commercial.

Agarunov Law Firm assists nonprofit founders in New Jersey and New York with entity formation, drafting governing documents, preparing IRS tax exemption applications, charitable registration, and ongoing compliance. If you are considering starting a nonprofit, we offer free initial consultations to help you understand the process and what it will involve for your specific situation.

Call (212) 920-5989 or visit our contact page to schedule a consultation. You can also read more about our business law services for additional information on entity formation and corporate governance.