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How to Form an Arizona Nonprofit Corporation

by Richard Keyt

To form an Arizona nonprofit corporation, you merely:

Despite this relatively easy three-step process, there are a number of tasks the must be performed to incorporate in Arizona.  The following is a checklist and explanation from A to Z of the tasks necessary to form an Arizona nonprofit corporation.  If you want to form an Arizona for profit corporation, see my article entitled "How to Incorporate in Arizona."

For a summary of the characteristics of the seven types of entities commonly used in Arizona to operate businesses and hold assets, see "Types of Entities for New Arizona Companies."  See also KEYTLaw's Arizona Nonprofit Corporation Formation Services for information about our fees to form your nonprofit corporation and our Corporate Meeting Service for information about Arizona law with respect to meetings of members and directors and our inexpensive minute preparation service.  See below for information about KEYTLaw's IRS Application for Tax Exemption Preparation Service.

1.  Select the Name of the Corporation

a.  Trademarks & Service Marks

Finding a good name for your new Arizona corporation can sometimes be the most difficult piece of the formation puzzle.  Ideally, you want a name that: (i) will afford strong federal trademark protection, but will not infringe on anybody's trademark or service mark, (ii) will be easy for your customers to remember, (iii) will describe your products or services, and (iv) will allow you to obtain .com, .net., .org, .biz, .info and .us domain names.  For information on obtaining domain names, see How to Obtain a Domain Name that Does Not Infringe on a Trademark.

One way to check if your desired corporate name will infringe on a federally registered trademark or service mark is to search your prospective name and variations thereof on the searchable database of the United States Patent & Trademark Office.

Unfortunately, obtaining a strong trademark that describes your product or services is frequently not possible.  These two goals are in conflict.  Most clients of trademark lawyers want a trademark that describes their products or services.  For example, if I have a bar and grill called Rick's Bar & Grill, it describes my business, but federal trademark law grants a lower level of protection to marks that are merely descriptive of the products or services.  People like descriptive trademarks because they are descriptive.  Trademark lawyers prefer marks that are arbitrary such as Apple® when used to identify computer products or fanciful marks such as Xerox® because these types of marks provide the highest level of trademark protection.  For more information about trademarks and service marks, see the KEYTLaw feature called "Trademarks & Service Marks."

b.  Arizona Corporation Commission Name Approval

When you have selected at least one possible name for your corporation, you should perform a Preliminary Name Search on the ACC's website to see if you can find any Arizona entities or tradenames that are exactly the same as or too similar to the name you have chosen for your corporation. 

Corporate names must satisfy the requirements of Arizona Revised Statutes Section 10-3401.  An Arizona nonprofit corporation must be distinguishable from other registered Arizona entities and may not contain language that states or implies that the corporation is organized for a purpose other than the purpose permitted by A.R.S. Section 10-3301 and in its articles of incorporation.

2.  Prepare the Articles of Incorporation

You must prepare your new Arizona nonprofit corporation's articles of incorporation and have it signed by all incorporators. The articles of incorporation must contain the following information:

The ACC provides two sample form articles of incorporation for: (i) a tax-exempt nonprofit corporation that is to be exempt from federal income tax., and (ii) a tax-paying nonprofit corporation that will pay federal income taxes.  These forms are in .pdf format, which requires the Adobe® Acrobat® Reader® software.  You can download the software for free from Adobe®.

3.  Tax Exempt v. Tax Paying Nonprofit Corporations

An Arizona nonprofit corporation can be either a taxpaying entity or a nontaxpaying entity for federal income tax purposes.  Before preparing and filing the Articles of Incorporation, the incorporator(s) must decide if the corporation will pay federal income taxes or seek to become exempt from federal income tax because the Articles of Organization of each type on nonprofit corporation are different.

Nonprofit Does Not Mean Exempt from Federal Income Tax

Nonprofit status is a state law concept, not a federal income tax concept.  Nonprofit status may make an organization eligible for certain state benefits, such as state sales, property, and income tax exemptions.  Although most federal tax-exempt organizations are non-profit organizations, organizing as a non-profit organization at the state level may not automatically grant the organization exemption from federal income tax.  To qualify as tax-exempt from federal income taxes, an organization must meet requirements set forth in the Internal Revenue Code (" IRC").  See Types of Tax-Exempt Organizations or Publication 557 for more information.

A popular misconception is that a nonprofit corporation formed under the Arizona Nonprofit Corporation Act is automatically exempt from federal income taxes and that contributions to the corporation are deductible on donors' federal income tax returns.  Incorporation under Arizona's nonprofit laws merely creates an entity that does not have an intent to operate to make profits.  Unless the nonprofit corporation obtains an exemption from federal income taxation from the Internal Revenue Service, the nonprofit corporation must file federal and state income tax returns, pay any taxes arising from its income, and donations to the corporation may not be deducted by the donors on their federal income tax returns.

To obtain an exemption from federal taxation, a nonprofit corporation must apply for recognition by the IRS of exempt status and receive a favorable determination from the IRS approving the application.  The application forms are Package 1023, Application for Recognition of Exemption (for charitable organizations); and Package 1024 , Application for Recognition of Exemption (for other tax-exempt organizations).  See below for information about KEYTLaw's IRS Form 1023 - Application for Recognition of Exemption Under Section 501(c)(3) Preparation Service.

Certain types of organizations may be exempt from federal income tax without the need to file an IRS Form 1023 and obtain a favorable determination from the IRS.  The following types of organizations may be considered tax-exempt under Section 501(c)(3):  (i) churches, (ii) integrated auxiliaries of churches, and conventions or associations of churches, or (iii) any organization that: (a) is not a private foundation (as defined in section 509(a)), and (b) has gross receipts in each taxable year of normally not more than $5,000. 

Even if the above organizations are not required to file Form 1023 to be tax-exempt, these organizations may choose to file Form 1023 to receive a determination letter from the IRS that recognizes their Section 501(c)(3) status.  Section 501(c)(3) status provides certain incidental benefits such as: (i) public recognition of tax-exempt status, (ii) advance assurance to donors of deductibility of contributions, (iii) exemption from certain state taxes, (iv) exemption from certain federal excise taxes, and (v) nonprofit mailing privileges.

The IRS applications for tax exemption are complex documents that require a lot of thought, information and time to complete properly.  For example, new organizations must give financial statements for the current year and proposed budgets for the next two years, including a detailed breakdown of revenue and expenses.  See the IRS' Top Ten Reasons for Delays in Processing Exempt Organization Applications.  The application must be completed fully and accompanied by a fee of $150 (for new corporations that anticipate gross receipts averaging less than $10,000 the first four years) or $500 (for new corporations that anticipate gross receipts averaging more than $10,000 the first four years).  See IRS Form 8718.  For information about the annual IRS reporting requirements for exempt organizations, see the IRS' FAQs regarding the Annual Reporting Requirements. 

To qualify for exemption from federal income taxation, a nonprofit corporation must be organized for one or more of the purposes set forth in the IRC.  The most common type of nonprofit corporation exempt from federal income taxation is a charity that complies with IRC Section 501(c)(3).  To be tax-exempt as an organization described in IRC Section 501(c)(3) of the Code, an organization must be organized and operated exclusively for one or more of the purposes set forth in IRC Section 501(c)(3) and none of the earnings of the organization may inure to any private shareholder or individual. In addition, it may not attempt to influence legislation as a substantial part of its activities and it may not participate at all in campaign activity for or against political candidates.  For more information about  Section 501(c)(3) entities, see IRS Tax Exempt Requirements for Charities & Nonprofit Corporations.

The exempt purposes set forth in IRC Section 501(c)(3) are charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and the prevention of cruelty to children or animals. The term charitable is used in its generally accepted legal sense and includes relief of the poor, the distressed, or the underprivileged; advancement of religion; advancement of education or science; erection or maintenance of public buildings, monuments, or works; lessening the burdens of government; lessening of neighborhood tensions; elimination of prejudice and discrimination; defense of human and civil rights secured by law; and combating community deterioration and juvenile delinquency.

Effective Date of Charitable Organization Tax Exempt Status

Unless it is automatically exempt from federal income tax, a new corporation must file IRS Form 1023 and obtain IRS approval to be recognized as a tax exempt organization described in Section 501(c)(3).  Generally, if a corporation files its application within fifteen months after the end of the month in which it was formed, and if the IRS approves the application, the effective date of the corporation’s Section 501(c)(3) status will be the date it was organized.  Generally, if a corporation does not file its application (Form 1023) within fifteen months after the end of the month in which it was formed, it will not qualify for exempt status during the period before the date of its application. 

Donations to the corporation are not deductible by donors before the effective date of the corporation’s Section 501(c)(3) tax exemption.  However, if the organization files a timely IRS Form 1023 after its formation and obtains a tax exemption, the effective date of the exemption will be retroactive to the date the organization was formed.

Public Disclosure of Information of Tax Exempt Organizations

Certain information of tax exempt organizations is open to the public.  Whether an organization is tax exempt and eligible to receive tax-deductible contributions can be determined by reviewing IRS Publication 78 (a partial list) (see also the online version of Publication 78) or by calling IRS Customer Service at 877-829-5500.  A contributor can also check an organization's exemption letter, which states the Code section that describes the organization and states whether or not contributions made to the organization are deductible. 

A tax-exempt organization is required to provide copies of its three most recent information returns, its exemption letter, and its approved application with supporting documentation, without charge (other than a reasonable fee for any reproduction and mailing costs), to persons requesting copies (with certain exceptions), unless it has made these forms widely available by publishing them on the Internet in accordance with IRS regulations. For more information, see the IRS'  FAQ on Returns Disclosure , the final regulations published in IR Bulletin 1999-17 , or download the IRS' Disclosure Requirements.

The public may also obtain copies of exemption letters from either a local IRS Disclosure Office or the IRS, Chief, FOIA Branch, c/o Ben Franklin Station, P.O. Box 795, Washington, DC 20044.  A fee is charged for reproduction and mailing costs.

Exempt organizations must file an annual information return on IRS Form 990.  Applications for tax exemption (Form 1023 or 1024) and annual returns (Form 990) are generally subject to public disclosure, both by the IRS and by the organizations that filed them.  The annual information return (Form 990) and its attachments (except donor lists), and the approved application for recognition of exemption and supporting documents, and any letters issued to the organization can be inspected at the organization's place of business.  Information about donors is specifically excluded from the information available for public inspection, except for donors to private foundations and political organizations.

If a 501(c) tax exempt organization does not disclose information that it is required by law to disclose, the person seeking the information may write to IRS Examination Division, 1100 Commerce Street, ATTN: T:EO:E, Dallas, TX 75242 and give the name and address of the organization that refuses to allow public inspection or provide copies of its return, and request that the return be made available for public inspection.  The Tax Exempt/Government Entities Division of the IRS will contact the organization and arrange a time during which the return may be inspected.  If the organization fails to provide the return at the agreed upon time, statutory penalties will be assessed.  For more information on forced disclosure, see the IRS' frequently asked questions, the final regulations published in IR Bulletin 1999-17, or download the IRS' Disclosure Requirements.

Members of the public who believe that an exemption organization's activities or operations are inconsistent with tax exemption may file a complaint with the Exempt Organizations Examination Division, 1100 Commerce Street, ATTN: T:EO:E, Dallas, TX 75242. The complaint should contain all relevant facts concerning the alleged violation of tax law.  The IRS will not advise the complainant of any action it has taken or may take in response to a complaint. The confidentiality and disclosure provisions of the Internal Revenue Code preclude the Service from discussing matters relating to any activity it might undertake regarding the tax-exempt status of an entity with anyone other than the principal officers or authorized representatives of that entity.  The IRS maintains an active examination program to ensure that tax-exempt organizations, as well as taxpayers, meet the requirements imposed on them by the Internal Revenue Code.

Direct your technical and procedural questions concerning charities and other non-profit organizations to IRS Customer Account Services at (877) 829-5500. The call center is open 8:00am to 6:30pm Eastern Time.  You may also write to the IRS at: Internal Revenue Service, TE/GE Division, Customer Service, P.O. Box 2508, Cincinnati, OH 45201.

4.  Membership v. Nonmembership Nonprofit Corporations

Members

The Articles of Incorporation must state whether or not the corporation will have members.  An Arizona nonprofit corporation is not required to have members. The choice to have members or not have members is a decision for the founders and depends on the nature of the proposed activities and the desires of the founders.  Nonprofit corporations without members are governed by the corporation's board of directors.

If the corporation will have members, the articles of incorporation or bylaws may establish criteria or procedures for admission of members and continuation of membership.  Unless otherwise provided in the articles of incorporation or bylaws, a corporation with members shall hold a membership meeting annually at a time stated in or fixed in accordance with the bylaws.  A member of a nonprofit corporation is not personally liable for the acts, debts, liabilities or obligations of the corporation.

All members have the same rights and obligations with respect to voting, dissolution, redemption and transfer, unless the articles of incorporation or bylaws establish classes of membership with different rights or obligations or otherwise provide. All members have the same rights and obligations with respect to any other matters, except as set forth in or authorized by the articles of incorporation or bylaws.

A nonprofit corporation shall notify voting members of the date, time and place of each annual, regular and special members' meeting at least ten days but not more than sixty days before the meeting date.

Directors

All corporate powers are exercised by or under the authority of and the affairs of the corporation are managed by its board of directors, subject to any limitation set forth in the articles of incorporation.

If a nonprofit corporation has members, the members elect all the directors (except the initial directors) at the annual meeting of members, unless either: (i) the articles of incorporation or bylaws provide some other time or method of election, or (ii) the articles of incorporation or bylaws provide that some of the directors are appointed by some other person or some of the directors are designated.

If the corporation does not have members, all the directors except the initial directors are elected, appointed or designated as provided in the articles of incorporation or bylaws.  If no method of designation or appointment is set forth in the articles of incorporation or bylaws, the board of directors shall elect the directors (other than the initial directors).

Officers

A nonprofit corporation shall have the officers described in its articles of incorporation or bylaws or appointed by the board of directors in accordance with the articles of incorporation or bylaws.  The bylaws or the board of directors shall delegate to one of the officers responsibility for preparing minutes of the directors' and members' meetings and for authenticating records of the corporation.  The same individual may simultaneously hold more than one office in the corporation.

Governance Issues

The general rule is that a nonprofit corporation may not make any distributions.  It must keep as permanent records minutes of all meetings of its members and board of directors, a record of all actions taken by the members or board of directors without a meeting and a record of all actions taken by a committee of the board of directors on behalf of the corporation.  The corporation shall maintain appropriate accounting records.  The corporation or its agent shall maintain a record of its members in a form that permits preparation of a list of the names and addresses of all members and in alphabetical order by class of membership showing the number of votes each member is entitled to cast and the class of memberships held by each member. 

Without the consent of the board of directors, no person may obtain or use a nonprofit corporation's membership list or any part of the membership list for any purpose unrelated to a member's interest as a member.  Without the consent of the board of directors, the membership list or any part of the membership list shall not be:

Each year a nonprofit corporation must pay a $10 fee and file an annual report with the ACC that sets forth the following information that becomes available to the public:

5.  Select the Corporation's Statutory Agent

Every nonprofit corporation formed in Arizona or qualified to do business in Arizona must have and maintain a statutory agent located in Arizona.  The purpose of a statutory agent is to give notice to the public of a person or entity authorized by the corporation that can be served with legal documents as the agent of the corporation.  The statutory agent is the person or entity that can be served with a summons and complaint filed in a lawsuit.

The statutory agent must be one of the following:

The corporation must notify the ACC if it changes its known place of business or statutory agent.  If the statutory agent changes its street address, the statutory agent must give written notice to the corporation of the change and sign, either manually or in facsimile, and deliver to the ACC for filing a statement that includes the new address and that recites that the corporation has been given written notice of the change.

6.  Prepare a Cover Sheet

When you file the articles of incorporation with the ACC, you must also submit a completed cover sheet (pdf). 

7.  Prepare a Certificate of Disclosure

When you file the articles of incorporation with the ACC, you must also submit a completed certificate of disclosure (pdf) for nonprofit corporations.  All incorporators and all people who are officers, directors or trustees at the time the articles of incorporation are filed must sign an initial certificate of disclosure and file it with the ACC.  Signatures must be dated within 30 days of delivery to the ACC.  When completing the certificate of disclosure:  (i) check yes or no for question A, but if you check yes, you must attach to the certificate of disclosure all information requested in question B.  Check yes or no for question C.  If you check yes, you must attach to the certificate of disclosure all information requested in question C. 

If within sixty days after delivering the articles of incorporation to the ACC any person becomes an officer, director or trustee of the corporation and the person was not the subject of the disclosures set forth in a certificate of disclosure previously filed with the ACC, the incorporator or incorporators or, if the organization of the corporation has been completed, the corporation shall sign and deliver to the ACC within the sixty day period a declaration, sworn to under penalty of law, setting forth all information required by A.R.S. Section 10-3202.D(1), regarding the person.  If the incorporator or incorporators or, as applicable, the corporation do not comply with this requirement, the ACC may administratively dissolve the corporation.

8.  File the Incorporation Documents with the ACC

When you are ready to file the incorporation documents, hand deliver or mail the following to the ACC:

9.  Pay the Filing Fee

When you submit your articles of incorporation, the cover sheet and the certificate of disclosure, you must also pay the appropriate filing fee, which is $40 for a nonprofit corporation. You can pay the fee with cash or your check. 

You may also pay an extra $35 for expedited review service.  I recommend that you pay the extra $35, which will cause the ACC to review your articles of incorporation within the shortest time period possible.  If you do not pay the extra $35 it could take up to a month for the ACC to approve or reject your articles of incorporation.  When the articles are approved, the date of approval reverts back to the date the articles were filed.  The problems with using regular review service rather than the expedited review are: (i) it can substantially reduce the time remaining to publish the articles of incorporation and deliver the affidavit of publication to the ACC, and (ii) you may have to wait a month to find out that your articles were rejected.

10. Where to File the Incorporation Documents

File your articles of incorporation, the certificate(s) of disclosure and the cover sheet and pay the filing fee at either of the following ACC locations:

Phoenix office:  1300 W. Washington, 1st Floor, Phoenix, AZ 85007.

Tucson office:  400 W. Congress St., Tucson, AZ 85701

ACC offices are open Monday - Friday, 8:00 a.m. to 5:00 p.m., except holidays.  You may mail all the incorporation documents with a cover letter and a check for the filing fee to either ACC office.  The ACC does not accept credit cards.

11.  Obtain a Copy of the Articles of Incorporation

It goes without saying that you should make a copy of all the documents you submit to the ACC and retain them in your corporate file.  I recommend that when you file your articles of incorporation, you submit an extra copy and ask the ACC to stamp the extra copy to show the date the ACC received the articles of incorporation.  This extra copy can be shown to other parties (such as a bank when you open a bank account) before you receive the final approved articles of incorporation from the ACC.

12.  Approval or Rejection of the Articles of Incorporation

After the ACC reviews your articles of incorporation, it will mail to the corporation's place of business a notice of approval or rejection of the articles of incorporation.  If the articles of incorporation were rejected, your corporation was created as of the date the articles were filed, but it terminated as of the date and time the ACC completes its determination.  The ACC will notify you in a letter why the articles were rejected.  You may then correct the problem and resubmit another set of incorporation documents.  However, you will not be able to recover your filing fee.

If your articles of incorporation were approved, the corporation was created ("born") as of the date the articles of incorporation were filed with the ACC (or a later date set forth in the articles). 

13.  Publish the Articles of Incorporation

Within sixty days after the date the articles of incorporation were filed with the ACC, you must publish the entire articles of incorporation for three consecutive publications in a newspaper of general circulation in the county of the corporation's known place of business in Arizona.    However, IF YOU FILE THE ARTICLES OF INCORPORATION ON A NON-EXPEDITED BASIS, THE ACC WILL APPROVE OR REJECT THE ARTICLES MORE THAN THREE MONTHS AFTER FILING SO YOU MUST PUBLISH THE ARTICLES BEFORE APPROVAL.  IF YOU WAIT FOR ACC APPROVAL, IT WILL COME AFTER THE DEADLINE TO PUBLISH AND RETURN THE AFFIDAVIT OF PUBLICATION TO THE ACC.

See the ACC's list of Arizona newspapers of general circulation by county, which list also includes newspapers from which the ACC will not accept publications.  The cost to publish the articles of incorporation depends on the newspaper and the length of the articles, but you should budget $100 - $175, unless the corporation's place of business is in Yuma County where the publication costs are three times higher than in Maricopa County.

Within ninety days after filing the articles of incorporation, you must file with the ACC an affidavit evidencing the publication of the articles as required by Arizona law.  Confirm with your newspaper that it will automatically as part of its publication service prepare and file the affidavit with the ACC.  If your newspaper does not mail the affidavit directly to the ACC, you must make sure you obtain the affidavit and deliver it to the ACC within the ninety day deadline.

If you fail to timely publish the articles of incorporation or file the affidavit of publication, the ACC may revoke the charter of the corporation, which causes it to cease to exist. 

14.  Prepare the Bylaws

The board of directors of a corporation must adopt initial bylaws for the corporation.  The bylaws of a corporation may contain any provision for regulating and managing the affairs of the corporation that is not inconsistent with law or the articles of incorporation.  Each initial director should sign the bylaws.

15.  Conduct an Organizational Board of Directors Meeting

After incorporating, the board of directors must hold an organizational meeting at the call of a majority of the directors to complete the organization of the corporation by appointing officers, adopting bylaws and carrying on any other business brought before the meeting.  This organizational meeting must be documented by corporate minutes signed by all the directors.

16.  Obtain a Minute Book Kit

All corporations should follow the formalities of corporate organization, which include the following: 

I recommend that all new corporations purchase a corporate kit immediately after being incorporated.  These kits contain the basic corporate materials needed by new corporations such as the minute book.  You can also purchase kits that contain sample organizational minutes and bylaws.  I purchase my minute book kits from Attorneys Corporate Service. The kits start at $48.  The phone number is 800-462-5487.

17.  Obtain a Federal Employer Identification Number

Most newly formed corporations must obtain a federal employer identification number (FEIN).  If the nonprofit corporation intends to file an application to obtain exemption from federal income taxation, the corporation must obtain a FEIN.  Banks require this ID number for bank accounts.  If the corporation will have employees and pay wages, it must file payroll tax returns and pay payroll taxes using the FEIN.  A corporation obtains a federal ID number by completing IRS Form SS-4 (pdf), Application for Employer Identification Number, and filing it with the Internal Revenue Service.  See also the Instructions for Form SS-4 (pdf) and IRS Publication 1635 (pdf), Understanding Your EIN - Employer Identification Number.

You should apply for an EIN early enough to have your number when you need to open a bank account, file a tax return or make a tax deposit. You can get an EIN over the phone by calling the Tele-TIN phone number for your state, which for Arizona entities is 1-800-829-4933.  If you prefer, you can fax a completed Form SS-4 to the appropriate service center (215-516-3990 for Arizona), and they will respond with a return fax in about one week.  If you do not include a return fax number, it will take about two weeks.  If you apply by mail, send your completed Form SS-4 at least four to five weeks before you need your EIN.

You may also obtain a federal EIN online in a matter of minutes from the IRS website.  After submitting the completed Form SS-4 online, the IRS' system will immediately issue an EIN.  Online EINs are available 24/7 without the need to file any paper document with the IRS.  The online EIN is a provisional EIN, but it will be the permanent federal employer identification number for your business unless voided by the IRS.  The IRS may void an EIN obtained online if :  (i) the name and social security number of the principal officer do not match Social Security Administration records, or (ii) the business has already been assigned an EIN.  Keep a record of your application for an EIN.  Be sure to print your SS-4 application after the EIN is assigned and keep a paper copy for your records. You can do this by clicking the "Print Form" button after receiving your EIN.

Third parties may also request EINs via the internet on behalf of a taxpayer.  A third party who obtains an EIN for another party must retain a completed copy of the IRS Form SS-4 signed by the taxpayer and the signed statement authorizing the third party to file the online application.

18.  Obtain Arizona Department of Revenue Identification Numbers & Transaction Privilege Tax Licenses

If your corporation will engage in an activity that is taxable under the Arizona transaction privilege tax statutes, it must apply for a transaction privilege tax license for each business location before engaging in business.  If the corporation will pay wages to employees, it must an Arizona withholding number and an Arizona unemployment number.  To obtain a transaction privilege tax license, an Arizona withholding number or an Arizona unemployment number, the corporation must complete and file an Arizona Joint Tax Application with the Arizona Department of Revenue.  For licensing questions on transaction privilege or withholding call (602) 542-4576 or 1-800-634-6494 (from area codes 520 and 928).  For questions on unemployment tax call (602) 248-9396 or email the Arizona Department of Economic Security.

19.  Annual Meetings of Members & Directors

Arizona Revised Statutes Section 10-3701 requires that all Arizona nonprofit corporations with members hold an annual meeting of the members unless the articles of incorporation provide otherwise.  All meetings of the members should be evidenced by written minutes.  The board of directors has the responsibility to manage and direct the affairs of the corporation, subject to any limitation set forth in the articles of incorporation. 

A nonprofit corporation shall notify members of the date, time and place of each annual, regular and special members' meeting at least ten days, but not more than sixty days before the meeting date.  Unless the articles of incorporation or bylaws provide otherwise: (i) regular meetings of the board of directors may be held without notice of the date, time, place or purpose of the meeting, and (ii) special meetings of the board of directors shall be preceded by at least two days' notice of the date, time and place of the meeting.  The notice need not describe the purpose of the special meeting unless required by the articles of incorporation or bylaws.

Every Arizona nonprofit corporation should prepare minutes of all meetings of the members and directors.  The minutes should be approved by the appropriate parties, signed and added to the corporate minute book along with copies of the notices of the meetings sent to the members and directors.  Actions of members taken without a meeting must be approved by members holding at least a majority of the voting power, unless the articles of incorporation, bylaws or Arizona law require a different amount of voting power.  Actions of directors taken without a meeting must be evidenced by resolutions signed by all of the directors.

KEYTLaw Corporate Meeting Service

KEYTLaw provides an inexpensive Corporate Meeting Service available to all Arizona corporations to assist them in satisfying their obligations to hold meetings of members and directors and to document the meetings with minutes and resolutions.  The Corporate Meeting Services and costs are:

KEYTLaw Corporate Meeting Service takes the worry out of notifying members and directors of meetings and documenting the meetings with minutes or resolutions.  Let us send your notices and prepare your minutes.  Call 602-906-4953 and enroll in KEYTLaw's annual Corporate Meeting Services plan.

Reasons to Use KEYTLaw's Corporate Meeting Service:

1. Your minutes/resolutions and notices will be prepared.  In my experience as a business lawyer since 1980, most corporations do not hold annual meetings, prepare minutes and maintain minutes in the corporate minute book.  Everybody wants to do it, but most put the task on the back burner and it never gets done.  Three clients recently asked me to review their minute books and assist in getting them in order.  One client was getting a divorce and his divorce lawyer needed the minutes for his property settlement, but no minutes had been prepared for over five years, including years when a former shareholder owed stock.  The second client had been sued and the opposing counsel was trying to pierce the corporate veil.  This client had never held an annual meeting or prepared minutes of shareholders or directors.  The third client sold half of the stock to a new stockholder who insisted (prudently) that the minutes be current.  The reality is that few closely held corporations dot the "i"s and cross the "t"s when it comes to annual meetings and minutes.  If you use KEYTLaw's Corporate Meeting Service, your minutes will be prepared and notices mailed.  All you have to do is get the minutes signed and inserted into the minute book.

2. It's cheap!  The cost is only $250 the first year and $150 a year thereafter (plus postage and copy costs).  For that nominal amount you get:  (i) a notice of the annual meeting sent to members, (ii) a notice of the annual meeting sent to directors, (iii) minutes of the meeting of members, (iv) minutes of the meeting of directors, and (v) a document called a "Corporate Record Summary" each year that lists the names and addresses of all members, officers and directors, dates officers and directors took office and other important corporate information, all of which can be used to complete the annual report that must be filed with the Arizona Corporation Commission.

3. You probably will not do it!

20.  Additional Incorporation Considerations

Although it is relatively easy and inexpensive to incorporate a business in Arizona and the information in this article tells you how to do it, I recommend that you consult an Arizona corporate attorney when incorporating because there are many issues that may require legal advice and action.  A nonprofit corporation that intends to apply for an exemption from federal income tax must file articles of incorporation that contain certain specific provisions that are required by the Internal Revenue Service as a condition to obtaining tax-exempt status.  It may be advisable to file trademark applications with the U.S. Patent & Trademark office to protect your trademarks and/or service marks.  Forming the new corporation is just the "tip of the iceberg" with respect to operating a business in the corporate form.

21.  Arizona Resources

The following list contains links to web sites that have additional information about and resources related to forming a corporation in Arizona:

KEYTLaw's Arizona Nonprofit Corporation Formation Services

KEYTLaw has a special nonprofit corporate formation offer that is available to new clients who contact KEYTLaw via the internet. 

KEYTLaw's Arizona fixed fee nonprofit incorporation service includes the following services:

1. Preparing the Articles of Incorporation with provisions required by the Internal Revenue Service to obtain an exemption from federal income taxation as a IRC Section 501(c)(3) charitable organization.

2. Preparing By-Laws  with provisions required by the Internal Revenue Service to obtain an exemption from federal income taxation as a IRC Section 501(c)(3) charitable organization.

3. Preparing the organizational minutes or action by unanimous consent of the board of directors.

4. Preparing Certificates of Disclosure for the incorporators and initial officers and directors.

5. Giving you a six page letter that explains the Articles of Incorporation, the Certificate of Disclosure and important governance issues related to the By-Laws.

6. Preparing the ACC cover sheet needed to file the Articles.

7. Filing the Articles of Incorporation with the ACC on an expedited basis.

8. On the day I file your Articles with the ACC, I will send you a copy of the filed Articles with the ACC received stamp, which you need to open a bank account.

9. On the day I file your Articles with the ACC, I will also give you an 15 page letter that explains how to sign contracts, how to get a federal ID number, how to open a bank account, a general summary of how to comply with Arizona nonprofit corporation law, how to change the corporation's known place of business and how to get tax forms.

10. If your nonprofit intends to be a 501(c)(3) tax exempt organization, I will send you the following documents shortly after filing the Articles:

a.  a 12 page letter that contains general information about operating a 501(c)(3) charitable organization.

b.  an 10 page letter that contains general information about substantiation and disclosure requirements with respect to contributions made to a 501(c)(3) charitable organization.

c.  a sample substantiation letter to give to donors who contribute substantial contributions.

d.  a three page letter giving you an overview of Internal Revenue Code Section 4958, which provides for substantial penalties if a “disqualified person” receives an “excess benefit” from a the tax exempt organization.

11. Publishing the Articles of Incorporation in a newspaper in the appropriate county.

12. Delivering an Affidavit of Publication to the ACC.

13. Obtaining a corporate minute book kit with corporate seal.

14. Giving the corporation the application forms and instructions on how to obtain federal and state tax identification numbers so the corporation may submit the applications to the IRS and the Arizona Department of Revenue.

KEYTLaw provides all the above nonprofit corporation formation services for a fixed fee of $1,000 plus costs of approximately $335.  The costs include $75 for the ACC filing fee, $170 for the newspaper publication costs, $75 for a minute book and $15 for a messenger to deliver the Articles to the ACC for filing. 

To hire KEYTLaw to form your AZ LLC, complete the Nonprofit Corporation Incorporation Questionnaire online, sign it and send it to us with your check.

Call Rick at 602-906-4953 extension 101 if you have questions about forming an Arizona nonprofit corporation.

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This article entitled "How to Form an Arizona Nonprofit Corporation" was first published on April 12, 2003.

About the Author

All Documents Attorney Prepared - not Paralegal or Document Preparer Prepared

For a complete description or KEYTLaw's low price fixed legal fee nonprofit formation service and the 20+ tasks we will perform if you hire us to prepare your new Arizona nonprofit corporation, see the KEYTLaw Nonprofit Corporation Formation Service. 

To hire KEYTLaw to form your AZ LLC, complete the Nonprofit Corporation Incorporation Questionnaire online, sign it and send it to us with your check.

Call Rick at 602-906-4953 extension 101 if you have questions about forming an Arizona nonprofit corporation.

This page was last modified on April 10, 2008.

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