Setting Up A Non-Profit Corporation
How is a "non-profit" corporation similar to other corporations?
A non-profit corporation is just a corporation. But it's more than just a corporation at the same time. So, you have to have by-laws and you have to set up articles of incorporation, but they're a little bit different depending on what your states laws are. So, if the articles of incorporation for a regular profit corporation has a certain form, on most states, there is a separate form for doing a non-profit. Also it asks a few extra questions. And like we've talked about before when dealing with non-profit corporations, sometimes they might make you name the directors, they might make you state what the purpose is, but again, that is just the formality of setting up the company. That has nothing to do with the separate formality and it's not really a formality but the separate need for filing with the IRS the exemption from taxation.
How can I establish federal "tax-exempt" status for my non-profit corporation?
Getting tax-exempt status for a non-profit is a real loaded question and probably something that I could sit and talk for a couple of hours on, as a matter of fact I think law schools have entire classes on it. That being said, most companies when you look at standard charities, they are tax-exempt under section 51c3 of the Internal Revenue Code. There is 51c6 and 51c4 and a bunch of other ones for political, corporate non-profit corporations, for education or religious and you need to take a look at what your corporation is, what it does, and then once you find that out you can take a look at the tax codes. And the IRS website, by the way, its www.irs.gov is a phenonenol resource for you to take a look at that. And you can determine, or at least get an idea of the type of information you're going to need and what kind of tax-exempt application you're going to want to file. After that, my recomendation would definitely be to see an attourney that has some sort of experience in either tax law and non-profit law or someone that has actually represented a non-profit before and understands the filing of that. And, just to be specific, because someone understands and has worked at a 51c3 non-profit which is a general charity, doesn't mean they're necessarily qualified to set up a political non-profit, or even a religious non-profit. I would definetly, I am sure they could learn about it, but I would want to find someone who at least has got a little bit of experience with that.
How can I establish state tax-exempt status for my non-profit corporation?
A good chunk of the time, once you get federal tax-exempt status you alert your state's boards and they will offer you the same tax-exempt status. That's a good portion of the time. Now, every state's laws defer, and it probably depends on the type of non-profit you are and what you're using for the reason for your exemption. That being said, I would say for most of the people who are listening to this, I would bet that once you get non-profit status at the federal level, that you just need to contact the income tax boards or whatever it is, the equalization board or the franchise board, and discuss it with them. Take a look at their website, and there's probably a one page paper or some sort of form that you'd want to file out and that'll assure you tax-exempt status at the state level also.
Do I need a license to raise funds for my non-profit corporation?
Licensing laws vary. They vary statewide; they can vary countywide, citywide. You know, you should be really careful whenever you go out and start soliciting funds for a non-profit. First off, you should definitely make sure you have non-profit status and a tax-exempt status from the IRS if you're telling people that they can deduct as a charitable donation any donations to your charitable company. That being said, you also might need to get a permit to solicit which is something that you would definitely check your local laws for. And I think that the best way of doing that is to, and if I were starting up a brand new non-profit, I would find a non-profit that was similar to mine and I would talk to them. And I would just go up, be friends, and say, "Hey, what is it that you do?" or "What is it that you've done?" And I would talk with the individuals at the county level or the city level and just tell them, "Hey this is what I'm going to be doing, and I want to make sure I'm not violating any laws." And you'd be surprised that kind of an ounce of permission goes to like the pound of forgiveness.
