WHAT IS A NONPROFIT CORPORATION?
A nonprofit corporation (“NPC”, or “non-profit” or “not-for-profit” or non-stock ) is a corporation whose primary objective is to support an issue or matter of private interest or public concern for non-commercial purposes. Nonprofits may be involved in an innumerable range of areas relating to the arts, charities, education, politics, religion (churches), research, sports or some other endeavor.
In the United States, nonprofit organizations are normally formed by incorporating in the state in which they expect to do business. The act of incorporating creates a legal entity enabling the organization to be treated as a corporation under law and to enter into business dealings, form contracts, and own property as any other individual or for-profit corporation may do.
HOW TO FORM A NONPROFIT CORPORATION
As with any other type of entity, Articles of Incorporation have to be prepared and filed with the Secretary of State where the entity is going to operate. The Nonprofit’s “Articles of Incorporation” is the main filing document which begins the nonprofit corporation’s existence under state law.
The articles of incorporation declare the desire of a group of people to become a nonprofit corporation. It spells out certain minimum information about the nonprofit that is required by the laws of the state. They are more complex than other for-profit entities.
Generally, most jurisdictions require Articles of incorporation to contain, at a minimum, information about the following:
- Corporate Name *
- Business address
- Detailed main purpose **
- Name and address of the Registered Agent.
- Name and Address of at least 3 initial Directors.
- If the Nonprofit will have members or not.
- WHY is the corporation being formed?
- WHAT does the corporation intend on accomplishing?
- HOW will the corporation accomplish these purposes?
- WHO will benefit from these purposes?
* It must include a name ending such as “Corporation”, “Incorporated” or “Company” , “Foundation” or its abbreviations. Some states does not impose name ending requirements.
** Every nonprofit corporation should clearly answer the following questions
HOW TO OBTAIN TAX EXEMPT STATUS UNDER 501(c)(3).
To obtain approval from your state doesn’t concede tax exempt status. Only the IRS can grant tax exemption under the norm 501(c).
501(c) is a subsection of the Internal Revenue Code (26 U.S.C. § 501(c)), which lists 28 types of non-profit organizations exempt from certain federal taxes.
In order to apply for a tax exempt status, you must meet the following requirements:
- You must be incorporated as a nonprofit corporation.
- You must adopt bylaws for your corporation.
- Your must elect a Board of Directors and elect Officers.
- You must obtain an employer identification number
- Your organization must be organized and operated for a charitable, literary, scientific, religious or educational purpose or in furtherance of amateur athletics.
- Your organization may not be operated for the private financial benefit of any one person or for the benefit of a small class of persons.
- You must NOT engage in lobbying for political campaigns or similar political activity.