Non-Profits are corporations organized to benefit public welfare groups, causes, churches, fraternal organizations, and political and issue- or cause-specific organizations. Further, certain businesses can operate as non-profits if the product or service provides a public benefit, including health care services and employment for the disabled.
Treatment and Benefits
Non-profits receive special treatment from government-taxing authorities concerning taxation and contributions. As corporations, non-profits are subject to many of the normal and usual rules of corporate structure and governance. Certain non-profits, commonly known as 501(c)(3)s, have the advantage of tax deductibility for contributions and the sale of certain products and services.
Because non-profits receive special tax treatment and benefits, it is a matter that is highly regulated by the federal and state governments. Special care is needed to ensure proper compliance.
The Steps to Take When Forming a Non-Profit Corporation
Once you have chosen the initial directors and a name for your corporation, you must then prepare and file your non-profit articles of incorporation with the California Secretary of State. This includes basic information about you, the owner, and your corporation, including an explanation as to why it should be categorized as a non-profit. As for tax exemption, certain language must be used in your articles:
- A statement of purpose that meets the IRS’s requirements,
- Statements that your non-profit won’t engage in prohibited political or legislative activities, AND
- A provision that dedicates your assets to another organization upon dissolution.
If you would like to obtain a federal tax exemption, you must complete and file IRS Form 1023 or 1023-EZ. To obtain a tax exemption in California, the organization must apply and qualify for tax-exempt status by completing and filing FTB 3500 or FTB 3500A.
Contact an Experienced Attorney in the Roseville, California Area
Our firm has the expertise in non-profit formation, governance, and tax compliance to facilitate a successful mission for a non-profit to flourish. To schedule a free consultation with NewPoint Law Group, call 1-800-358-0305 or message us online.