Field Notes to Registering Your Nonprofit in a Foreign State: Pennsylvania
By Frank DeVito
As an attorney working at Napa Legal, I have been tasked with registering our nonprofit entity in Pennsylvania. I have worked as an attorney for several years and, after a couple months at Napa Legal, have a good grasp of charitable registration laws, tax exemptions for nonprofit organizations, etc. Yet, when being asked to do the actual work of registering Napa Legal as a foreign business, completing the charitable solicitation registration, and determining whether Napa Legal needs to apply for a corporate income tax exemption, I reacted like many of you who run religious organizations: I dreaded the experience to come and wanted to put it off.
I did not put it off. I went through the process, because it is my job and I have to make sure Napa Legal is registered to do business in Pennsylvania. But I also wanted to provide an experience of the process in real time, so that you might be less intimidated by the registration and exemption processes that will help and protect your organization. So follow my lead and don’t put it off. Let’s protect your organization and make you more compliant with the applicable laws!
Just a brief note: this is an overview of my own experience going through the registration process for a foreign business in Pennsylvania. This is not legal advice for your organization. As always, if you need specific legal advice, please consult an attorney.
1. Foreign Business Registration
In Pennsylvania, a foreign (out-of-state, in this case) business is required to register with the state in order to do business there. If your organization has any business in Pennsylvania, you may need to register. There are several exclusions that do not require you to register. Review the exclusions here and see if they apply to your organization. In my case, the organization did not fit the exclusions, so I had to proceed to the foreign business registration.
You can find the requirements to register as a foreign business in Pennsylvania here. Most of the requirements are rather simple: the form asks for basic information about your organization that you likely have at your fingertips.
One thing to note: if you are registering as a foreign business, you need to provide a proposed registered address in the state in which you are registering. Depending on the nature of your organization, perhaps you have an employee who works in the state, and you want to use his address. But, you may also have good reasons to protect the privacy of your employees. In many cases, it might make sense to register an address through a commercial registered office provider. Many states allow this practice, where you pay a professional business to provide an address in the state and accept service of process on your behalf. This protects your privacy while giving you a registered address in the state. This commercial registered office provider service cost our organization $99 per year.
Once the registered address has been sorted out, the registration process is quite simple. The form is available here; there is an option to submit online. It is only a two-page form (plus instructions). Fill it out and be sure to read the instructions to determine what additional documents you may need to attach.
In Pennsylvania, a docketing statement is required, and some additional documents may be required depending on your situation. Submit the form with all necessary attachments and include the filing fee. Page 1 of the form lists the filing fee as $250.
One final note for your business registration: the law in Pennsylvania requires that you publish notice in two newspapers of general circulation (the Secretary of State website states that one should be a law journal if possible). You do not need to send proof of these newspaper advertisements to the state; you just need to keep the proof in your organization’s records. Publication in one local newspaper and one county law journal cost our organization about $165.
That’s it! You should receive a foreign registration statement back from the Secretary of the Commonwealth, which will be sent to the address you provide on the first page of the application.
2. Charitable Solicitation Registration/Exemption
Depending on what state you are looking to do business in, you may need to complete a charitable solicitation registration before you can solicit/accept donations from that state. Even if your organization may be exempt from the registration requirement, you may need to complete an application to receive the exemption. Check the Napa Legal Multi-State Compliance Matrix to get started on registration or exemption in a state.
In Pennsylvania, there is a charitable solicitation registration exemption, but it is limited to certain religious organizations, such as churches and religious orders. If you are unsure whether you are excluded from charitable registration in Pennsylvania, the state provides an exclusion and exemption chart.
Since most religious organizations are not exempt in Pennsylvania, the next step is to file the Charitable Organization Registration Statement. I know we want to get through this process as quickly as possible, so this warning bears repeating: make sure to read the instructions before you fill out or file any form.
The instructions for the Pennsylvania registration will tell you that you need to include with the registration your organization’s Form 990, financial statements, IRS exemption letter, organizational documents and bylaws, and filing fee. Check the instructions to determine the amount of the registration fee: depending on your organizations’ gross annual contributions, the fee ranges from $15-250.
3. Corporate Income Tax Exemption
Fortunately, Pennsylvania law gives an automatic exemption from state corporate income tax to any nonprofit organization that qualifies as a 501(c)(3) organization under federal tax law. Pennsylvania does not require that you apply or submit proof of 501(c)(3) status to receive the state income tax exemption. So that is one less application to fill out when becoming compliant in Pennsylvania!