All figures are indicative and change. Confirm against the state and IRS pages in sources.md before budgeting or filing.
Federal
| Step | Form | Cost (indicative) | Timing |
|---|---|---|---|
| Employer ID number | SS-4 | Free | Same day, online |
| 501(c)(3) exemption | Form 1023 | User fee in the high hundreds of dollars | Several months; longer if the IRS asks questions |
| 501(c)(3), small orgs | Form 1023-EZ | Lower user fee | Weeks — but eligibility is limited by projected receipts and assets, and it invites later scrutiny |
| 501(c)(6) exemption | Form 1024 | User fee comparable to 1023 | Months |
| Annual return, small | 990-N postcard | Free | 15th day of the 5th month after year end |
| Annual return | 990-EZ / 990 | Free to file; accountant cost is the real number | Same deadline; extensions available |
| Unrelated business income | 990-T | — | Filed alongside if UBIT applies |
| Lobbying election | 5768 (§ 501(h)) | Free | File it early; it is cheap insurance |
Missing the 990 for three consecutive years is automatic revocation of exemption. Reinstatement is possible but expensive and embarrassing to explain to funders. Put it in a calendar the day you incorporate.
For-profit federal
No exemption application. C-corps file Form 1120; multi-member LLCs file 1065 with K-1s; single-member LLCs are disregarded. If you want QSBS treatment under § 1202 you must be a C-corp and hold qualifying stock — talk to a tax adviser before, not after, the first issuance.
State-level, recurring
Expect all of the following, per state where you operate:
- Formation filing with the Secretary of State (articles of incorporation or organisation). Typically tens to low hundreds of dollars; nonprofit filings are usually cheaper than for-profit.
- Registered agent — required in every state you’re registered in. Roughly $50–$300/year per state commercially, or free if you have a real office and a person willing to be named publicly.
- Annual or biennial report — tens to a few hundred dollars. Delaware nonprofits pay a modest annual report fee; Delaware for-profits pay franchise tax that scales with authorised shares.
- Franchise / minimum tax — California’s $800 minimum is the one that catches people; Texas has a margin tax; Washington has B&O on gross receipts.
- State tax exemption application — separate from the IRS. California Form 3500/3500A; Texas via the Comptroller; New York for sales tax via Form ST-119.2. Property tax exemption is usually a county-level application.
- Charitable solicitation registration and renewal in every state where you fundraise — ~40 states, each with its own form and fee, some with audit thresholds tied to revenue.
Ongoing operating costs people forget
- Audit or review. Many states require an independent audit above a revenue threshold (commonly in the $250k–$1m range depending on state), and many funders require one regardless. Five figures annually.
- D&O insurance. Effectively mandatory to recruit a real board.
- Bookkeeping with restricted-fund tracking. Grant accounting is not the same as ordinary bookkeeping.
- Payroll registration in every state where an employee lives — remote hires create tax nexus.
- Legal for the formation package, conflict-of-interest policy, bylaws, and any inter-entity agreements.
Realistic first-year budget
- Single-state c3, DIY-heavy: low thousands (IRS fee, state filing, agent, basic legal review), plus your time.
- Single-state c3, lawyer-prepared: $5k–$15k all-in.
- c3 + LLC or c3 + c6 pair: roughly double, plus the cost-sharing agreement.
- Delaware C-corp/PBC with a home-state qualification: $1k–$3k to stand up, more if you want proper equity documents.