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How To Form A Nonprofit Corporation

Aug 17, 2007
The inception of a nonprofit corporation is similar to the inception of any other corporation. The main difference is that nonprofit corporations are exempt from government taxes. Apart from filing the required papers and information necessary for a corporation, a company that wants to be registered as a nonprofit corporation must file an application for tax exemption with the IRS. Below is a list of the initial steps for this process.

Steps Involved In Instituting A Nonprofit Organization

1 Select the name of the entity by confirming its availability. The name of the corporation should not infringe on the name of any existing business entity. The name should be in accordance with the laws of the intellectual property act. The company registers its name after paying a registration fee. The company pays this fee to the government regularly to retain the rights of the name.

2 File legal documents such as the article of incorporation and pay the fee. The completed form and the attached legal documents with the required information must be submitted to the registrar of companies. The government provides authorization by verifying all the information and facts.

3 Apply to the IRS for tax exemptions. Submit the Federal 501 {c} (3) tax exemption application for provision under a nonprofit corporation status. Only after filing for tax exemption, can an organization claim the benefits of being a Nonprofit Corporation. After verifying the facts, the IRS either grants the entity the status of a Nonprofit Corporation, asks for more or further information or rejects the company's appeal for the Nonprofit Corporation status. The application for Tax Exemption can't be filed until the filing and acceptance of the Article of Incorporation. As required by law, a company must file a separate application for exemption from taxes with the state authorities as well.

4 Create corporate bylaws and other governing rules for the nonprofit corporation.. The company must maintain a systematic record of basic rules guiding all the issues, such as procedures for holding meetings, voting on issues, and electing directors and officers.

5 Appoint the Board of Directors. In a Board of Directors meeting, the board passes resolutions pertaining to the operation of the corporation.

6 Record the minutes of the Board of Director's first meeting.

7 Apply for the necessary licenses and permits from various authorities.

8 Appoint legal representatives.

9 Create a registered office for the corporation.

10 Record the details of the promoters.

Additional Help
There are software packages available to assist companies in the formation of nonprofit corporations. This software not only helps in documentation, but also guides the user through the bylaws, taxation laws, and procedural details.
About the Author
David Gass is President of Business Credit Services, Inc. His company publishes afree weekly e-newsletter on Small Business Consulting at their web site http://www.smallbusinessconsulting.com
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