There are two steps to take while starting a Non-Profit Corporation. First, the owner(s) or the organization that will begin this corporation will start a non-stock company. There are no shareholders except for the members of this company, and they usually expect no profit. There can be members with different status within this company. For example; members with or without the right to vote. Description and the terms of the membership are stated in the by-laws of this company.
Some non-stock companies give right to become a member to those who pay an annual subscription fee. In other companies, members are a particularly specified group of people. Therefore, original members decide who is eligible to be the member of this company with a by-law.
The second step is the submission of the documents which are necessary to get the non-profit status, within 15 months following the incorporation process. These documents must be submitted to the Internal Revenue Service. To do this, Form 1023 must be filled.
To be eligible for this status, relevant articles in your Certificate of Incorporation must be checked, and the purpose of your organization must be stated explicitly.
If you want to start a non-profit organization to create encouragement in the fields of education, sport, religion, charity, science or literature; you can begin by starting your non-stock organization and applying for 501(c)(3) approval to IRS. Personal profit is forbidden in non-profit organizations.
Organizations that are approved to be eligible for 501(c) by IRS are exempt from Federal Income Tax. To achieve this, the organization must carry incentive purposes and has a non-stock structure.
Non-profit organizations can also be established for political campaigns or trade unions. The important thing here is to state the purpose of this organization clearly.
If you are planning to start a non-profit organization, we can help you with the process. Please feel free to contact us if you have more questions.
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