FORM A 501(c)(3) NON PROFIT CORPORATION
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|OUR GOAL—YOUR Complete Satisfaction and UnderstandingOur goal is to provide each of our clients with as much information as possible about starting a 501(c)(3) Non Profit Corporation. As you will see as you review the following material, there is a lot of information to digest and consider. Many legal aspects may be complex and confusing. We want you to know we are available to speak with you about any legal aspects of the formation of your 501(c)(3) Non Profit Corporation at your convenience either over the telephone or in person at the Spiegel and Utrera, P.A., office nearest you. |
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WHAT’S 501(c)(3) TAX EXEMPTION?
A 501(c)(3) organization is a non-profit corporation formed to carry out a charitable, religious, literary, educational or scientific purpose that is recognized by the Internal Revenue Service as tax exempt. Such a 501(c)(3) non-profit corporation doesn’t pay federal or state corporate income tax on profits it makes from events carried out in furtherance of its exempt function. In essence, this is because both state and federal taxing authorities believe that the benefits the public receives from these organizations entitle them to this advantageous tax exempt status. These corporations are known as 501(c)(3) non-profit corporations because they are granted tax exempt status from Section 501(c)(3) of the Internal revenue Code.
PUBLIC CHARITY OR PRIVATE FOUNDATION?
Tax exempt 501(c)(3) non-profit corporations are classified as either a public charity or a private foundation. Generally, organizations that are classified as public charities are those that are churches, hospitals, qualified medical research organizations affiliated with hospitals, schools, colleges and universities; have an active program of fundraising and receive contributions from many sources, including the general public, governmental agencies, corporations, private foundations or other public charities; receive income from the conduct of activities in furtherance of the organization’s exempt purposes; or actively function in a supporting relationship to one or more existing public charities. Private foundations, in contrast, typically have a single major source of funding (usually gifts from one family or corporation rather than funding from many sources) and most have as their primary activity the making of grants to other charitable organizations and to individuals, rather than the direct operation of charitable programs.
Public charities are favored because the organization will not be a taxable entity as long as its activities are in furtherance and related to its specific tax exempt purposes, such as charitable, scientific, religious or educational or a combination thereof. Additionally, with 501(c)(3) tax exemption as a public charity, the organization will be allowed to receive tax free contributions and contributors will be permitted to deduct the contribution on their income tax returns. Section 501(c)(3) status would provide your non profit corporation with the benefits of public recognition of tax exempt status, which is particularly helpful for obtaining grants; advance assurance to potential donors of the deductibility of contributions; exemption from certain Federal excise taxes; and even non profit mailing privileges. The application process to obtain this tax-exempt status can be a very complex and tedious one. Therefore, we strongly recommend you seek the assistance of a tax professional in order to avoid any likely problems or undue delays in obtaining this status. Allow our office to take care of the whole process for you. Since our inception, Spiegel & Utrera, P.A., has assisted many clients in obtaining the tax exempt status from the IRS.
TAX EXEMPT APPLICATION PROCESS AND 501(c)(3) CORPORATE RECORDS COMPLIANCE
To obtain a favorable Federal Income Tax exemption determination from the Internal Revenue Service, your corporation will be subjected to a lengthy (about 6 to 9 months regularly, 2 to 3 months if expedited) and often cumbersome Internal Revenue Service investigation and approval process. During this period, the Internal Revenue Service will review documents provided, make additional demands and scrutinize corporate records and detailed information regarding your corporation’s activities. Your Articles of Incorporation, Corporate By-laws and other corporate documents must include the proper information to comply with Internal Revenue Service Regulations. Time is of the essence. If you select this service at the time of formation of your non-profit corporation, we will draft your Articles of Incorporation, Corporate By-laws and other corporate documents for guaranteed compliance with the requirements needed to meet the definition of a tax exempt 501(c)(3) non-profit corporation. If you have an existing non-profit corporation that does not meet the requirements of 501(c)(3), we can make the necessary changes to the Articles of Incorporation and draft the appropriate corporate documents so that your non-profit corporation is in compliance.
We can represent you in preparing and submitting the documentation whereby your non-profit corporation receives formal recognition of tax exemption from the Internal Revenue Service and receives a formal letter of determination from the Internal Revenue Service. We, at Spiegel & Utrera, P.A., are prepared to assist you in this tax exemption process in order to ensure you that all of the necessary documents are completed and submitted in compliance with IRS’ requirements.
The typical application process may take 6 to 9 months. The sooner the better, as it is easier for a new non-profit corporation with no financial history to get tax exemption than a pre-existing entity. Our services include assisting you in completing the documentation necessary for submission to the IRS as well as reasonable assistance in responding to requests for additional information. If other services are needed, additional fees may apply. It has been our experience that in most cases additional fees are not needed.
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