- What is a nonprofit corporation?
- What is the difference between a corporation and a nonprofit corporation?
- How is a nonprofit corporation structured?
- What are some of the advantages of a nonprofit corporation?
- What are some of the disadvantages of a nonprofit corporation?
- Do I need an attorney to form a nonprofit corporation?
- Are all nonprofit corporations tax exempt?
- How many Directors must a nonprofit corporation have?
- Does a nonprofit corporation need a Registered Agent?
- What is a Nonprofit Corporate Kit?
1. What is a nonprofit corporation?
A nonprofit corporation is a business structure normally used by those who are involved in activities that will benefit society in general and, as the name suggests, are not formed for the purpose of making a profit.
2. How is a nonprofit corporation formed?
As with for-profit corporations, non profit corporations are formed by filing official documents with the appropriate state.
3. How is a nonprofit corporation structured?
Members occupy the position held by stockholders in a for-profit corporation. A Board of Directors, elected by the members, meets regularly to collectively make decisions as to how the corporation is run while the officers, appointed by the Board of directors, handle day to day operations.
4. What are some of the advantages of a nonprofit corporation?
- The nonprofit corporation members, directors and officers are entitled to the same limited liability afforded standard corporations.
- Dues paid or donations made would normally be the most that its members, directors and officers could lose.
- Qualifying nonprofit corporations are tax exempt.
- Tax exempt status makes qualifying nonprofit corporations eligible to receive government and private foundation grants
- Raising money is easier with a tax exempt status, allowing donors to deduct contributions to the corporation from their income taxes
- The life of a nonprofit corporation is perpetual
- The public can feel more comfortable about contributing to a formal corporation
5. What are some of the disadvantages of a nonprofit corporation?
- Official documents must be filed with the appropriate state in order to form a non profit corporation
- State filing fees must be paid
- Formal record keeping and compliance with applicable rules and regulations can be cumbersome
6. Do I need an attorney to form a corporation?
No. Forming a nonprofit corporation is primarily a clerical process and although it is relatively complicated, anyone who understands and follows the required procedures can form one. We provide this formation service for substantially less than the amount charged by most attorneys. We can and do guarantee the accurate formation of a corporation but our service is not intended to serve as a substitute for professional advice. Since individual situations and state statutes vary, you may need to seek more detailed advice from your local professionals who are familiar with the specifics of the nonprofit corporation and its purpose.
7. Are all nonprofit corporations tax exempt?
No. Tax exempt status is not automatic and all nonprofit corporations do not have tax-exempt status. Nonprofit status is a function of state law but tax-exempt is a status is a function of federal law and in some states a nonprofit corporation must also apply for tax-exempt status at the state level as well. In order to qualify for tax exempt status, the corporation must be organized for one of the purposes allowed in the Internal Revenue Code. Obtaining tax-exempt status is generally required in order to be eligible to receive grants from the government and private foundations. A tax-exempt status also allows donors to deduct contributions from their income taxes.
8. How many directors must a nonprofit corporation have?
The number of directors required for a nonprofit corporation varies by state. Some require a minimum of three directors but several require only one.
9.What is a Registered Agent and must a nonprofit corporation have one?
Yes, all corporations are required to have a registered agent. A registered agent is a person registered with the state of incorporation who is authorized to receive legal papers on behalf of the corporation. They are normally listed with the Secretary of State and they must be located in that state and available during normal business hours. While anyone can serve as a corporation’s registered agent, most choose to have a professional registered agent since it is extremely important that all legal documents and correspondence with the state and regulatory agencies be handled promptly and efficiently.
10. What is a Nonprofit Corporate Kit?
A Nonprofit Corporate Kit consists of many things that will help you comply with state rules and regulations regarding documentation and record keeping. A metal seal is used to make an official impression identifying the company on official documents.