Nonprofit
501(c)(3) Tax-Exempt Corporations
You have a dream - let us help you achieve it!
The expert staff of 501c3 nonprofit Paralegals at ATTORNEY ALTERNATIVE are highly trained and experienced in preparing all 501c3 documents required to set up your tax-exempt 501(c)(3) Nonprofit Corporation anywhere in the United States! We will:
* Expertly draft your tax-exempt 501(c)(3) Nonprofit Corporation Articles of Incorporation
* Prepare your 501c3 Nonprofit Corporation Corporate Bylaws
* Prepare model 501c3 Nonprofit Corporation Minutes to follow for the First Meeting of the Board of Directors
* Prepare your California Franchise Tax Board (FTB) Forms 3500 (Application for Exemption) or other State Exemption Application and attachments
* Prepare all Federal 501c3 Nonprofit Corporation forms required by the Internal Revenue Service (IRS 1023 Application for Recognition of Tax-Exempt Status, Forms 872 and 8713, and all IRS attachments)
* Assist you in preparing your 501c3 Nonprofit Corporation Mission Statement, Statement of Purpose, and other required documentation.
* Obtain your Federal Tax ID number (EIN)
WE DO IT ALL!
for a single low flat fee of $1,295.00
(plus the applicable Federal and State filing fees)
IF YOU DON'T NEED AN ATTORNEY'S ADVICE...
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The President of Attorney Alternative, Thomas A. Hicks, JD, graduated Law School with honors, and is a noted lecturer on the procedures and regulations involved in setting up a 501c3 Tax-Exempt Nonprofit corporation.
His well-known educational seminar:"Why and Why Not to Start a Nonprofit"
has been presented to Volunteer Centers and numerous other civic, educational, business and community groups in the Southern California area.
The following is some basic information regarding a 501c3 Nonprofit Corporation.
If you have further questions, contact us and we’ll be glad to give you more – more service, more information, more time to concentrate on your business and less time worrying the paperwork!
What is a Nonprofit Corporation?
State laws distinguish between General, For-Profit
(stock) corporations and nonprofit (nonstock) corporations. In a For-Profit
corporation, shareholders are authorized to receive stock in exchange for
capital investments in the corporation. This capital investment often takes
the form of money, equipment, or some other property. Shareholders in a
For-Profit corporation only receive a return on their investment when dividends
are declared and paid. Advantages of Nonprofits
A Nonprofit corporation, however, can not issue shares and cannot pay dividends.
In addition, under the Internal Revenue Code (IRC) Section 501(c)(3), a
tax-exempt corporation cannot pay dividends AND, upon dissolution, must
distribute its remaining assets to another nonprofit group.
Tax
Exemptions
Under Internal Revenue Code Section 501(c)(3) a non-profit corporation
is eligible for certain federal and State tax exemptions. With income
tax rates as high as 34% on corporate income over $75,000, tax exemption
status can be invaluable.
Receiving Public Funds
Many organizations are required by law to donate a certain percentage
of their funds to non-profit organizations or risk endangering their own
tax-exempt status. In addition, many exemptions exist for property transferred
at death to a non-profit organization.
Also, there are public foundations, philanthropic organizations and corporate
grant-makers that provide funding for tax-exempt organizations. But, be
aware that virtually any donor or sponsor thinking of funding your operation
will insist on your organization having already obtained a 501(c)(3) number
before they will consider donating.
Limited Liability for Members
and Directors
As with a General, for-profit corporation, directors, trustees, and officers
of non-profit corporations are usually afforded the same limited liability
status. Thus, creditors of the nonprofit corporation can only reach as
far as the corporation's assets to satisfy corporate debts and not the
personal assets of the people involved in the nonprofit corporation.
Exceptions to the Limited Liability Rule
Personal Guarantees
Where a corporation has not yet established a credit rating, banks and
other creditors will often require a personal guarantee from corporate
directors before extending credit. Thus, the individuals will be liable
for the debt if the corporation defaults on its obligation.
Tax Obligations
State and federal governments have the power to hold corporate officers
and directors personally liable for reporting and payment of taxes. Although
your nonprofit corporation should be tax exempt from certain taxes, your
corporation may still be required to file informational returns and annual
reports to the state and federal governments...and don't forget about
employee withholding taxes.
Violation of Statutory Duties
Corporate officers and directors have a statutory duty to act responsibly
when engaging in corporate activities. Thus, if an individual acts grossly
irresponsibly, he or she may be held personally liable for his or her
actions
Separate and Perpetual Existence
A nonprofit corporation, like a for-profit corporation, is an entity with
a perpetual existence that may outlive all of its founders. In addition,
the corporation can act like an individual in that it can enter contracts,
incur debt, own property and it can sue and be sued.
Employee Benefits
The principle of a nonprofit corporation can be employed by the corporation.
As such, these employees can be eligible for fringe benefits not available
to self-employed people. Examples of these benefits include, sick pay,
group life insurance, accident and health insurance, and corporate pension
plans.
Other Advantages:
• Nonprofit corporations under 501(c)(3) receive lower postal rates on bulk mail
• many organizations offer discounted advertising rates to nonprofit entities
• many internet service providers offer discounted rates to nonprofit corporations
• many national chains (Costco, for example) offer lower membership rates
• nonprofit corporate employees may qualify for job-training and other work-study programs subsidized by the federal government.
Disadvantages of a Nonprofit Corporation
Paperwork
Articles of Incorporation, Bylaws, and Minutes
Articles of Incorporation must be prepared and filed with the Secretary
of State in California. In addition, Bylaws must be prepared, minutes
must be maintained, and certain federal and state tax exemption filings
must be timely filed to attain a tax-exempt status.
We'll
make it easy. The expert 501c3 nonprofit Paralegals at Attorney Alternative will prepare and file
your Nonprofit Articles of Incorporation in California. In addition, and
unlike almost everyone else out there, we will prepare your 501c3 Federal
and State Exemption Applications too!
Federal & State Tax Filings
What forms must be completed for tax exemption?
On the Federal level, IRS form 1023 plus a number of attachments must be completed to qualify for 501(c)(3) Federal Tax Exempt status. Although certain groups like churches are NOT required to file Form 1023, it is recommended that these exempt organizations nonetheless submit the filing to ensure that the IRS views the organization as a tax exempt entity.
Only after a corporation is approved by the IRS as a 501c3 Tax Exempt Organization can it rest assured that it is in fact a tax-exempt entity.
Nonprofit
501(c)(3) Corporation FAQ's
When must form 1023 be filed?
IRS form 1023 must be filed within 15 months of the date your articles of incorporation were filed. If your filing is timely, the tax-exemption will be retroactive and will apply to the date your articles of incorporation were filed.
How Many Directors Must My 501c3 Nonprofit Corporation Have?
The State of California requires only one director for
a valid nonprofit corporation. However, in considering your application
for 501c3 tax-exempt status, the IRS typically likes to see at least 3
directors, the majority of whom are not related by birth or marriage.
For example, if you have 3 directors, but two are husband and wife, the
“49% rule” says that you must have a majority of directors
that are not related. Therefore, if a husband and wife want to be directors,
you need 3 additional directors (total of 5) to adhere to the “disinterested
persons” rule for directors of nonprofits.
For What Purposes May a 501c3 Nonprofit Corporation
be Formed?
Under IRS Code 501(c)(3) a Nonprofit corporation may be formed to operate for a religious, charitable, educational, literary, or scientific purpose. These five purposes are included as purposes accepted by California as well as valid Nonprofit corporate purposes.
What are some of the limitations imposed upon a501c3 Nonprofit Corporation?
A 501c3 nonprofit corporation must observe the following limitations:
• Pursuit of the following “exempt” purposes only: Charitable, educational, religious, literary, scientific or other specific purposes.
• No distribution of financial gains to directors, officers or members.
• Corporate assets may only be distributed to another tax exempt organization upon dissolution of the nonprofit corporation.
• Participation in political campaigns for or against persons running for public office is prohibited.
• Substantial engagement in legislative political activities is forbidden
• The activities of the corporation must be carefully monitored to avoid triggering “unrelated business taxable income” (UBTI) (You need to be very careful about this issue when considering the type and frequency of your fundraising efforts! The advice of an expert is a good idea here!)
Want to get started as a 501(c)(3) Nonprofit Corporation TODAY?
Then contact ATTORNEY ALTERNATIVE TODAY, and let us take the hassle out of getting you set up and headed towards realizing your dream…
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