Non-Profit Structure - Steps to Creating One Without All the Headaches

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Posted on: 2nd Jul 2014

A non-profit structure is a type of corporation that is structured to provide services to improve the public sector. Its tax-exempt status allows it to operate without the state and federal taxation requirements of a for-profit organization. In order for it to quality for tax exempt status, the earnings made by the organization are not passed along to shareholders, office associates, or company board members. They are not used as gifts, bonuses, or pay raises. Instead, earnings are submitted back into the organization�s budget for future public assistance. Setting one up is not the big grizzly bear that many people often think that it is. This blog post will explain the steps to creating one without falling ill to migraine headaches or ulcers.

State its Mission
The first step in establishing your non-profit structure is to state its mission. By definition, a mission is an objective that your organization believes will greatly benefit a certain segment of the population. In this section, you will state the type of public service it will provide, how it will provide it, and the societal long-term benefits.

Name Your Company
The next step is to choose an appropriate name for your non-profit structure. The name should very closely reflect the type of service that it plans to provide. It must be unique, and non-offensive. To register for the name, you must comply with the laws of your state.

Complete the Articles of Incorporation
A non-profit structure is generally not required to file Articles of Incorporation. However, if you decide to do so, you can file them with either your secretary of state or state attorney general's office. You are required by your state law to comply with the requirements for forming and operating a non-profit structure.

File for State Tax Exemptions (State and Local)
You are legally required to submit the Federal 501{c}(3) tax exemption application for your non-profit structure. The purpose of filing this application is to claim and receive tax benefits as a non-profit entity. In some states, the Article of Incorporation filing is required before you can apply for state tax exemptions. Check with your state�s requirements.

Request Federal Tax Exempt Status
Under federal law, you may be eligible for federal tax exempt status under section 501(c)(3), or sometimes section 501(c)(4) of the Internal Revenue Code, if your nonprofit structure serves charitable, educational, scientific, religious, cultural causes, and disaster relief. Complete the 1023 form, and submit it to your local Internal Revenue Service office. You can also submit the form online to the IRS.

Prepare the Bylaws
Bylaws are the rules your non-profit structure has established by which its administrators and managers must comply. These bylaws must be drafted and approved by the board prior to forming your structure. You must maintain good recordkeeping pertaining to meetings, voting, and electing directors and officers.

Gather the Board of Directors
Your non-profit structure needs an council of elected or appointed representatives to oversee its activities, and to pass regulation of its procedures. This council is referred by as a �board�. Your structure can have a board of directors, board of trustees, board of governors, board of managers, or an executive board, and is required to hold annual board meetings.

Get Permits and Licenses
Your non-profit structure might require specific city or state permits and licenses so that you can conduct business legally and responsibly. The types of permits needed will depend on the nature of the services that you will be providing, and the rules and regulations for providing such services. Therefore, make certain to check all permit and license requirements.

Develop an Organizational Plan
Set up a strategic organizational plan that you will use to promote and manage your nonprofit structure. The plan could include outreach programs, volunteer recruitment events, walkathons, food and clothing drives, giveaways, children�s recreational agendas and so on.

Work Out an Operations Budget
The final step in creating your non-profit structure is to establish an operations budget. You must give details of its budget and financial plan. A financial consultant can help you develop a budget for rental space, office overhead, utilities, telecommunications, marketing, printing, reproductions, and miscellaneous costs.

Conclusion
You may be overwhelmed by the massive amount of details that this encompasses. In any case, it doesn�t have to feel that the task is beyond you. You can either do the work yourself, or use an online service like legalzoom.com. Create your non-profit structure now, and do away with the migraine headaches or ulcers.

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Non-Profit Structure - Steps to Creating One Without All the Headaches

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