How to Start a Nonprofit in California

Starting a nonprofit is overwhelming. We make it simple. California adds more moving parts than almost any other state: a Statement of Information, a separate Franchise Tax Board exemption, an Attorney General charity registration with its own annual renewal, and an $800 minimum franchise tax that quietly accrues until your state exemption is granted.

None of it is difficult on its own. The problem is that four different agencies each want something, on four different clocks. Here is the order to do it in.

The California steps at a glance

1. Check and, if needed, reserve your name with the Secretary of State.
2. File Articles of Incorporation on Form ARTS-PB-501(c)(3), including the IRS purpose and dissolution language.
3. File the Statement of Information (Form SI-100) shortly after incorporating, then every two years.
4. Adopt bylaws and a conflict-of-interest policy and hold your organizational meeting.
5. Get your federal EIN.
6. Apply for federal 501(c)(3) status on Form 1023-EZ or the full Form 1023.
7. Apply for California exemption with the Franchise Tax Board — Form 3500A once your federal letter is in hand, or Form 3500 if it is not.
8. Register with the Attorney General's Registry of Charities on Form CT-1 within 30 days of first receiving assets, then renew annually on Form RRF-1.

Step 1: Name your California nonprofit

Your name must be distinguishable upon the record from names already registered in California. Differences that come down only to the entity ending, capitalisation, punctuation, spacing, or "&" versus "and" do not make a name distinguishable.

Some words need a regulator's blessing before the Secretary of State will file: bank, trust, trustee, credit union, cooperative, insurer and insurance. If your working name includes one of those, sort that out first.

Search free on bizfileOnline — but read the Secretary of State's own warning: it is "only a preliminary search". The binding decision is made when your actual filing is reviewed. A name reservation costs $10 and holds for 60 days; it can be renewed, but not back-to-back, so at least one day has to lapse between reservations.

Step 2: Directors, officers and the 49% rule

Directors. California's Nonprofit Corporation Law sets no statutory minimum board size for a public benefit corporation — the number is fixed in your articles or bylaws, and a single director is technically legal. It is also a reliable way to draw IRS scrutiny on private benefit and control. Three unrelated directors is the practical floor.

Officers. Corporations Code section 5213 requires a chair of the board or a president (or both), a secretary, and a treasurer or chief financial officer (or both). One person may hold multiple offices with one exception: the secretary, treasurer or CFO cannot simultaneously be president or board chair.

The 49% interested-persons rule. This one is genuinely California-specific and it catches people. Under Corporations Code section 5227, no more than 49% of your board may be "interested persons" — anyone the corporation has compensated for services in the past twelve months, whether as a director or otherwise, plus certain family members of such a person. Pay your executive director and their spouse, seat them both, and a three-person board is instantly out of compliance.

Agent for service of process. Either a natural person residing in California, with a street address (no P.O. boxes), or a qualified corporate agent.

Step 3: File your Articles of Incorporation

Use Form ARTS-PB-501(c)(3), Articles of Incorporation of a Nonprofit Public Benefit Corporation. The filing fee is $30, plus a non-refundable $15 counter fee if you hand-deliver it. The temporary fee waiver California ran in 2022–2023 has expired.

The Secretary of State publishes a live "current processing dates" page showing exactly which day's submissions staff are working on. It moves daily, so check it rather than planning around a fixed number of weeks.

The good news, and it is a real advantage over most states: California's official nonprofit template already contains the IRS purpose and dissolution language. The form limits the corporation to section 501(c)(3) purposes and irrevocably dedicates its property, distributing remaining assets on dissolution to another 501(c)(3). Do not "tidy up" that wording. Founders who rewrite Articles 2 and 3 in their own words are the ones who end up amending them mid-application.

Step 4: File the Statement of Information

Form SI-100, $20, filed with the Secretary of State shortly after you incorporate and then every two years in your registration month and the five months preceding it. It lists your officers, directors, principal address and agent for service of process.

It is a small filing that people forget, and forgetting it can push the corporation into delinquent or suspended status — which then cascades into problems with the Franchise Tax Board and the Attorney General. Confirm the current first-filing deadline and any late penalty on the Secretary of State's SI-100 instructions when you file.

Step 5: Bylaws, policies and your first board meeting

Your bylaws need to reflect the two California rules above — the required officer slate and the 49% cap — not a generic template pulled from another state. Adopt a conflict-of-interest policy at the same time; Form 1023 asks about it directly and the IRS publishes a model.

Hold an organizational meeting to adopt the bylaws and policy, elect officers, set the fiscal year, and authorize the EIN application and bank account. Keep minutes: California nonprofits are required to keep adequate books, records and minutes, and directors have inspection rights.

Step 6: Get your EIN

Free, immediate, and directly from IRS.gov. California does not issue a separate state EIN for a nonprofit corporation. See our EIN guide if you have not done this before.

Step 7: Apply for 501(c)(3) status

Identical in every state. Most small California nonprofits use Form 1023-EZ ($275 user fee); larger or more complex organizations must use the full Form 1023 ($600). The IRS issues 80% of 1023-EZ determinations within 22 days and 80% of full Form 1023 determinations within 191 days.

Our Form 1023 vs 1023-EZ guide covers eligibility, and our approval timeline guide has the current IRS numbers.

Step 8: California tax exemption and the $800 problem

Federal exemption does not exempt you in California. You apply separately to the Franchise Tax Board, and there are two routes:

• Form FTB 3500A — the short form, used when you already hold a favourable IRS determination letter. This is the path most organizations take.
• Form FTB 3500 — the full application, used when you have no federal determination letter yet, or when the FTB previously revoked your California exemption.

Both are now free; the $25 application fee was eliminated for filings on or after 1 January 2021 under SB 934.

Here is the part nobody warns founders about. Until the FTB grants your exemption, your corporation is a taxable California corporation — and every non-exempt corporation incorporated in California owes at least the $800 minimum franchise tax each year. So the gap between "we incorporated" and "the FTB granted exemption" is not free. File Form 3500A the moment your IRS letter arrives, and if you expect a long federal wait, look at Form 3500 rather than sitting on it. Whether any of that $800 can be relieved retroactively is not clearly addressed in the FTB's public material, so ask the FTB or your CPA about your specific facts.

Step 9: Register with the Attorney General

The Attorney General's Registry of Charities and Fundraisers requires nearly every California charity to register and file annually.

• Initial registration: Form CT-1, $50, due within 30 days after you first receive assets — cash or property. The clock starts at the first dollar in, not at incorporation and not at your IRS determination. Attach your endorsed Articles, current bylaws, and your Form 1023 and determination letter if you have them.
• Annual renewal: Form RRF-1, due four months and fifteen days after your fiscal year end — 15 May for a calendar-year organization. IRS extensions are honoured.

The renewal fee is tiered by total revenue:

Organizations with total revenue over $2 million must also have audited financial statements prepared by an independent CPA under GAAP. Falling delinquent can cost you your exemption and put you back on the hook for the $800 minimum franchise tax, on top of penalties.

Sales tax and property tax

Sales tax: there is no nonprofit exemption. The CDTFA is explicit — although many nonprofits are exempt from income tax, "there is no similar broad exemption from California sales and use tax". Narrow exemptions exist for certain relief-of-poverty charities, cultural organizations, religious and veterans' organizations selling specific meals, youth and school-related groups, and qualifying thrift stores. If you sell anything tangible, even occasionally, you generally need a seller's permit.

Property tax: the welfare exemption, and it runs through two agencies. First the Board of Equalization issues an Organizational Clearance Certificate confirming the organization qualifies. Then the county assessor decides whether the specific property's actual use qualifies — and cannot grant the claim without a valid certificate already in hand. The annual claim is generally due to the county assessor by 15 February.

California fees at a glance

A small California nonprofit filing the 1023-EZ realistically spends around $375 in filing fees — assuming the state exemption comes through before the $800 franchise tax bites. Compare the states in our 50-state registration fee guide.

How long the whole thing takes

Realistically: four to eight weeks to be incorporated and organized in California, then three weeks to four months more for the IRS determination on a 1023-EZ. Organizations on the full Form 1023 should plan for six to nine months end to end.

Your annual compliance calendar

Three of the four share one due date — 15 May for calendar-year organizations. Put it in the calendar once and handle all three together. Our Form 990 guide explains which federal version applies to you.

Six mistakes California founders make

1. Rewriting the purpose or dissolution clause in the state template. California hands you IRS-compliant language for free. Editing it is how a clean application becomes an amended one.
2. Sitting on the FTB exemption. Every year you are not exempt, you are a taxable California corporation with an $800 minimum franchise tax bill.
3. Missing the 30-day CT-1 deadline. It runs from the first assets received, which is often months before your IRS determination arrives.
4. Breaching the 49% rule without noticing. Compensating a director, or a director's family member, converts them into an interested person for twelve months.
5. Assuming nonprofit means sales-tax-free. It does not in California, and a merchandise or ticketing programme without a seller's permit creates real liability.
6. Treating the biennial SI-100 as optional. A missed filing can suspend the corporation, which then jeopardises FTB and Attorney General standing at the same time.

Starting a nonprofit in another state?

The federal steps are the same in all 50 states; only the state incorporation, tax exemption, and charitable registration details differ. See our guides for Texas, Florida, New York, or browse all our guides. Book a free call and we will map the exact steps and current fees for your state.

This is general information, not legal or tax advice. Rules and fees change, so confirm current requirements with California's agencies and the IRS, or with a qualified professional, before you file.