Forming a Non-Profit Corporation

THE FUNDAMENTALS OF FORMING A NON-PROFIT CORPORATION

Forming a non-profit organization can be a good idea for many types of groups. If you are interested in community service, starting a church, or have an interest in education, the non-profit corporation may be a good fit for you. Also, once you gain your non-profit status from the federal government, you can apply for a multitude of grant funding for your project.  Completing the paperwork to gain your non-profit status can be quite a job, but you will find that it is worth it once the job is complete. At MyLegalReview, we are here to assist you in learning the benefits and responibilities of starting a non-profit corporation.

If you are interested in completion services for forming a non-profit corporation, check out mylegaledge.com. You can also find other form products here that will help you keep your non-profit corporation organized and fisically sound. So, whatever your dream or vision may be, we can assist you in making it happen.

Tax Exemption for Your Non-Profit Corporation

In addition to applying for grant money, once you gain your non-profit status from the federal government, you are eligible to receive exemptions from federal and state income taxes. The way to start this process is to apply for federal exemption status using Section 501(c)(3) of the Internal Revenue Code. Keep in mind that 501(c)(3) status only grants you the privilege of not paying federal and state income tax on those activities attributed to your non-profit purpose. Those activities which are outside of your purpose will require a tax.

Another benefit are the tax deductions individuals will enjoy if they donate to your 501(c)(3) organization.

Protection from Personal Liability

Under normal circumstances, once the 501(c)(3) is formed, this will protect your directors, officers, and members from personal liability from debts and obligations owed by the corporation. This limited liability acts as a shield and ensures that individuals who obtain judgments against the non-profit are only able to reach the assets of the corporation. Now, there are exceptions to the limited liability rule. For example, if a director or officer or the corporation personally and directly injures someone, personal liability will be imposed.

Groups that Should Consider Forming a 501(c)(3)

Listed below are just a few examples of groups that could benefit from receiving a 501(c)(3) status:

• Religious Organizations
• Shelters for the Homeless
• Museums
• Schools; and
• Community Health Care Clinics.

Formation of your Non-Profit Organization

In order to form your non-profit organization, you must file Articles of Incorporation with the Secretary of State’s Office within your particular state. There is usually a fee associated with this service.  You will want to obtain a copy of the Articles of Incorporation for your records.

Next, you want to adopt by-laws for your organization. The by-laws are the governing rules of your non-profit organization.

When you file your 501(3) application with the federal government, your by-laws must be included in the application.

Governing Rules for Non-Profit Corporations

Even though your 501(c)(3) organization is not responsible for paying taxes on activities aligning with your corporate purpose, you will still need to follow certain formalities attributed to for profit corporations. This includes:

• Maintaining accurate records
• Holding meetings
• Maintaining a bank account and
• Preparing minutes

Conclusion

Operating your non-profit organization can be a benefit to you, your community, and those you serve. Starting out with the right information and procedures can definitely make the process a little easier. To assist you in getting your 501(c)(3), you may want to take advantage of the completion service offered by mylegaledge.com. To inquire about this service, just send an e-mail to staff@mylegaledge.com or leave your comment here at MyLegalReview.com.

Good luck!