Our 28 Arizona Nonprofit Corporation Formation Services

Thinking about forming an Arizona nonprofit corporation? Most people who start a nonprofit have a cause they care about, not a law degree. They assume forming the corporation means filling out a one-page form from the Arizona Corporation Commission and paying a small filing fee. That form will create a corporation, but it will not create a corporation that is ready to become a 501(c)(3) tax-exempt charity, and it will not give your directors the documents and policies they need to run the organization correctly.

This article explains what Arizona law requires to form a nonprofit corporation, the mistakes that trip up do-it-yourselfers, the documents a well-formed nonprofit should have, and the 28 services Arizona nonprofit corporation attorneys Richard Keyt and his son, attorney and former CPA Richard C. Keyt, provide when they form an Arizona nonprofit corporation for a flat fee of $1,297.

A Nonprofit Corporation Is Not Automatically a 501(c)(3) Charity

Becoming a tax-exempt charity is a two-step process, and many founders do not realize the steps are separate.

• Step 1 is state law. You form a nonprofit corporation by filing Articles of Incorporation with the Arizona Corporation Commission (ACC). The ACC's approval creates the legal entity. It does not make the corporation exempt from federal income tax, and it does not make donations tax deductible.
• Step 2 is federal law. After the corporation exists, it applies to the IRS for recognition of exemption under Internal Revenue Code Section 501(c)(3) by filing IRS Form 1023 or the shorter Form 1023-EZ.

Here is why that matters at formation: the IRS will not grant 501(c)(3) status unless the corporation's Articles of Incorporation contain specific language limiting its purposes to charitable purposes and dedicating its assets to charity if it ever dissolves. If your Articles leave that language out, you must amend them before the IRS will approve your application. The time to get it right is before you file.

What Arizona Law Requires to Form a Nonprofit Corporation

Arizona's nonprofit corporation laws are in Title 10, Chapters 24 through 40, of the Arizona Revised Statutes. Forming a nonprofit corporation that complies with those laws involves the following pieces.

Articles of Incorporation

Under A.R.S. §10-3202, the Articles must state the corporation's name, a brief statement of the affairs it initially intends to conduct, the names and addresses of the initial directors, the name, street address and signature of its statutory agent, its known place of business (if different from the statutory agent's address), the names and addresses of the incorporators, and whether or not the corporation will have members. The Articles may also include optional provisions, such as limiting directors' personal liability and providing for indemnification of directors.

Certificate of Disclosure

Arizona is unusual in requiring a sworn Certificate of Disclosure with the Articles. It discloses whether any officer, director, trustee or incorporator has certain recent felony convictions or court orders involving securities, fraud or antitrust violations, and whether any of them served with another corporation that went through bankruptcy or receivership. Knowingly making a false statement in the certificate is a class 6 felony under the same statute.

Statutory Agent and Cover Sheet

Every Arizona nonprofit must have a statutory agent with an Arizona street address to receive legal papers on the corporation's behalf. The ACC also requires its cover sheet to accompany the filing.

Filing Fees

The ACC charges $40 to file nonprofit Articles of Incorporation, plus an optional $35 for expedited processing. We always pay for expedited processing. Saving $35 is not worth the much longer wait for approval, and your corporation cannot open a bank account or apply for its tax exemption until the ACC approves its Articles.

Bylaws and Organizational Resolutions

Arizona law requires the corporation to adopt Bylaws (A.R.S. §10-3206) and requires the initial board of directors to complete the corporation's organization (A.R.S. §10-3205). Bylaws for a nonprofit that intends to become a tax-exempt charity should be different from the Bylaws of an ordinary nonprofit corporation.

Federal Employer Identification Number (EIN)

The corporation needs its own EIN from the IRS to open a bank account, hire employees and apply for tax exemption.

Warning: Do Not Use the ACC's Form Articles if You Want Tax Exemption

We do not use the ACC's form for any nonprofit we form. Our custom Articles include the IRS-required purpose and dissolution provisions for organizations that will seek 501(c)(3) status, plus provisions attorneys recommend that the ACC form leaves out.

Many people form do-it-yourself Arizona nonprofits anyway. We do not recommend it, for the same reason we do not recommend that people who are not surgeons operate on themselves. If you decide to go it alone, read our Step-by-Step Guide to Creating an Arizona Nonprofit Corporation first.

The Newspaper Publication Trap Outside Maricopa and Pima Counties

Since January 1, 2017, a new Arizona nonprofit corporation whose known place of business is in Maricopa County or Pima County no longer has to publish its Articles of Incorporation in a newspaper. Nonprofits whose known place of business is in any of Arizona's other 13 counties still must publish their Articles in an ACC-approved newspaper in that county after the ACC approves them.

Those newspapers can charge a lot. We once published Articles for a nonprofit with a place of business in Yuma County, and the only approved newspaper there charged $585 after a 10% charitable discount. When a client's place of business is outside Maricopa and Pima counties, we list the corporation's initial known place of business in care of KEYTLaw at a Maricopa County address, which avoids the publication requirement entirely. The corporation can later file a change of address with the ACC.

The Seven Policies the IRS Wants Every Charity to Adopt

Most tax-exempt organizations must file an annual information return with the IRS. Small organizations whose gross receipts are normally $50,000 or less file the short electronic Form 990-N (e-Postcard). Larger organizations file Form 990-EZ or the full Form 990, and private foundations file Form 990-PF.

Part VI of Form 990 asks, in writing, whether the organization has adopted a conflict of interest policy, a whistleblower policy and a document retention and destruction policy, and whether it follows a documented process for setting compensation. Many knowledgeable people believe that a tax-exempt organization lacking these policies faces a higher risk of IRS scrutiny. When the corporation will be a tax-exempt charity, we prepare these seven policies:

1. Conflicts of Interest Policy
2. Whistleblower Policy (recommended to avoid violating criminal provisions of the federal Sarbanes-Oxley law)
3. Document Retention and Destruction Policy (also recommended because of Sarbanes-Oxley)
4. Gift Acceptance Policy
5. Travel and Expense Reimbursement Policy
6. Compensation Policy
7. Joint Venture Policy

If your nonprofit will not seek tax-exempt status, the IRS-recommended policies are optional, but we still recommend that every Arizona nonprofit adopt a Conflicts of Interest Policy. We prepare any or all of the policies on request.

Our 28 Nonprofit Formation Services for $1,297

If your nonprofit is important enough that you want it formed correctly, in compliance with Arizona law and federal tax law, and with directors who know how to operate it, here is what we do for our guaranteed flat fee of $1,297. The fee includes the ACC's $75 expedited filing fee.

Attorney Advice

1. Unlimited telephone consultations with Arizona nonprofit corporation attorneys Richard Keyt and Richard C. Keyt to answer your questions about forming and operating an Arizona nonprofit corporation and other incorporation-related issues.
2. If requested, advice about naming the corporation, how many directors and officers to have, the pros and cons of having members, and optional provisions to include in the Articles of Incorporation or Bylaws.

Articles of Incorporation and State Filings

3. Custom attorney-prepared Articles of Incorporation, never the ACC's fill-in-the-blank form.
4. Provisions in the Articles and Bylaws that allow the corporation to have members, if the founders want members.
5. For corporations that will apply for tax exemption, the provisions the IRS requires in the Articles before it will grant 501(c) exemption.
6. A Certificate of Disclosure as required by A.R.S. §10-3202.
7. The ACC Cover Sheet that must accompany the Articles.
8. Filing the Articles, Cover Sheet and Certificate of Disclosure with the ACC on an expedited basis.

Documents Arizona Law Requires After Filing

9. Bylaws as required by A.R.S. §10-3206, with provisions appropriate for tax-exempt organizations when the corporation will seek exemption.
10. Organizational Minutes and Resolutions of the initial board of directors as required by A.R.S. §10-3205. Our resolutions authorize the corporation to reimburse the organizers for the legal fees and other formation costs they paid, so you can get your formation money back.

IRS-Recommended Policies

11. Conflicts of Interest Policy
12. Whistleblower Policy
13. Document Retention and Destruction Policy
14. Gift Acceptance Policy
15. Travel and Expense Reimbursement Policy
16. Compensation Policy
17. Joint Venture Policy
18. Board Resolutions adopting the Conflicts of Interest Policy and any other policies the corporation requests.

Education for Your Directors

19. Nine email messages with links to nine instructional videos about important topics for nonprofits that intend to become 501(c)(3) charities.
20. On the day we file the Articles or the next business day, an email with a PDF copy of the Articles bearing the ACC's received stamp.
21. A federal employer identification number (EIN) for the corporation.
22. Our Arizona Nonprofit Corporation Operations Manual, which explains how to open the bank account, add or remove directors and officers, hold and document board meetings, comply with Arizona nonprofit law, operate a 501(c)(3) charity, satisfy the substantiation and disclosure rules for donations (including a sample donor acknowledgment), and avoid prohibited excess benefits to insiders under Internal Revenue Code Section 4958.
23. For corporations that will be 501(c)(3) organizations, letters explaining how to operate a 501(c)(3) charity, the substantiation and disclosure requirements for contributions, and the Section 4958 excess benefit penalties, plus a sample substantiation letter for donors who make substantial gifts.

Records, Publication Savings and Statutory Agent

24. The ACC's letter approving the Articles of Incorporation.
25. The Articles of Incorporation stamped "approved" by the ACC.
26. If the corporation's place of business is outside Maricopa and Pima counties, listing its initial known place of business in care of KEYTLaw in Maricopa County to avoid newspaper publication costs, which can save $100 to $485 or more depending on the county.
27. An up-to-date corporate minute book containing the approved Articles, Bylaws, Organizational Resolutions and Policies.
28. KEYTLaw, LLC, serves as the corporation's statutory agent free for the first year. After that the fee is $99 per year, and the corporation may replace us at any time.

After Formation: Applying for 501(c)(3) Status

Once the ACC approves your Articles and the corporation has its EIN, the next step for a charity is the IRS exemption application. Small organizations that meet the IRS eligibility test may file the streamlined Form 1023-EZ online. Everyone else files the full Form 1023, which requires a detailed description of the organization's activities, governance and finances.

Learn more in our articles about IRS Form 1023 and IRS Form 1023-EZ, and take our 1023-EZ eligibility test. We prepare IRS Form 1023 for a flat fee of $3,500. See how to hire us to prepare IRS Form 1023.

Frequently Asked Questions

Does forming an Arizona nonprofit corporation make it tax exempt?

No. Forming the corporation with the Arizona Corporation Commission creates the legal entity. Federal tax exemption under Section 501(c)(3) requires a separate application to the IRS on Form 1023 or Form 1023-EZ, and the corporation's Articles must contain IRS-required language before the IRS will approve it.

Can I use the Arizona Corporation Commission's form Articles of Incorporation?

You can if your nonprofit will never seek federal tax exemption. If it will, do not use the ACC form. The ACC's own instructions say the form lacks the language the IRS requires for tax-exempt status.

What does the Arizona Corporation Commission charge to form a nonprofit corporation?

The ACC charges $40 to file nonprofit Articles of Incorporation plus $35 for optional expedited processing. Our $1,297 flat fee includes the $75 expedited filing fee.

Does my Arizona nonprofit have to publish its Articles in a newspaper?

Only if its known place of business is in a county other than Maricopa or Pima. Nonprofits in those two counties have been exempt since January 1, 2017. When a client's place of business is in another county, we list the initial known place of business in care of KEYTLaw in Maricopa County to avoid the publication cost.

What is a Certificate of Disclosure?

It is a sworn statement Arizona requires to be filed with the Articles. It discloses whether any officer, director, trustee or incorporator has certain recent felony convictions or court orders involving securities, fraud or antitrust law, and whether any of them served with a corporation that went bankrupt or into receivership.

Why does a nonprofit need written policies?

IRS Form 990 asks whether the organization has adopted a conflict of interest policy, a whistleblower policy and a document retention policy, and whether it follows a documented process for setting compensation. Answering "no" may increase the risk of IRS scrutiny, so we prepare seven IRS-recommended policies for every nonprofit that will be a tax-exempt charity.

Can the founders get reimbursed for the cost of forming the nonprofit?

Yes, if the board authorizes it. The Organizational Resolutions we prepare authorize the corporation to reimburse the organizers for the legal fees and other incorporation costs they paid.

How long does it take to form an Arizona nonprofit corporation?

We file the Articles within one or two days after you approve your formation questionnaire and pay the fee. Because we always pay for expedited processing, the ACC reviews the filing in the shortest time it offers.

How to Get Free Answers or Hire Us

Arizona nonprofit corporation attorneys Richard Keyt and his son, attorney and former CPA Richard C. Keyt, have formed 550+ Arizona nonprofit corporations and 10,000+ Arizona limited liability companies. Richard Keyt has practiced law in Arizona since 1979. They do not charge for answering questions about forming an Arizona nonprofit corporation.

• Contact Richard Keyt (the father) at 480-664-7478 or rk@keytlaw.com or his son former CPA Richard C. Keyt at 480-664-7472 or rck@keytlaw.com.
• Book a free office, phone or Zoom video consultation.