Start a Non-Profit

Frequently Asked Questions About Starting a Nonprofit Organization

If you want to start a nonprofit, be prepared to embark on the adventure of your life. Not only are you creating valuable experiences that touch everyday lives, but you are also contributing positively to the US economy. There is no feeling quite like making an impactful difference for the communities in which we work and play.

Below, see the answers to a few frequently asked questions we receive at LegalZone:

Why Register As A Nonprofit?

It’s not always easy to make a choice between a nonprofit and a for-profit organization. For some, forming a corporation will create a financial gain, but there are other issues you’ll need to manage that don’t come with operating a nonprofit.

On the other hand, the intent of a nonprofit is to be purely charitable. The good news is that the LegalZone team has done the heavy lifting for you by listing the advantages of registering as a nonprofit.

The advantages of registering as a nonprofit include:

·      Advantage 1. Directors are financially insulated from liability

·      Advantage 2. There’s tax exemption eligibility

·      Advantage 3. You can apply for grants to receive project funding

·      Advantage 4. Employees can still receive pay and benefits

·      Advantage 5. It’s easier to fundraise for a nonprofit organization

·      Advantage 6. The IRS recognizes a nonprofit as a formal structure

Regardless of your decision, there are legal and financial implications that come with it. However, a nonprofit organization is the best choice for charitable organizations, such as churches, schools, education programs, and more.

LegalZone can guide you through the process at every critical point.

What’s A 501(C)(3) Status?

A 501(c)(3) status is a tax designation under the federal income tax code. It’s one of the twenty-nine types of nonprofit organizations in the United States. This designation means that your organization has been approved by the Internal Revenue Service (IRS) to operate as a tax-exempt charitable organization.

The 501(C)(3) designation allows taxpayers to write off donations that contribute to bonafide nonprofits.

What Is A Nonprofit Organization?

A nonprofit organization is a charitable entity that exists for the public’s benefit. The primary goal of a nonprofit is to create public value versus focusing solely on company profit. Employees can be volunteers or paid salary people, but no single owner or group will earn gains from a nonprofit organization.

Why Do You Need To Start A Nonprofit?

You need to start a nonprofit to receive the advantages that this type of structure offers. It’s unrealistic to fundraise for your cause without forgoing money or equity in the meantime. While a nonprofit may never make you rich, it does provide the legal designations and tax advantages that donors and supporters have come to expect.

What Tax Benefits Do You Get As A Nonprofit?

You receive several tax benefits when you have a nonprofit. The IRS supports a particular set of standards that don’t allow any member or employee to earn a profit unless paid through wages.

The critical tax benefits you get as a nonprofit include the following:

·      Tax benefit 1. Federal tax exemptions on revenues

·      Tax benefit 2. Local, county, and state tax exemptions on revenues

·      Tax benefit 3. Donor tax deductions to reduce taxable income

Donors and patrons routinely incorporate charitable giving as part of their bigger financial plan. In some cases, taxpayers can earn more money by donating enough money that places them in a lower tax bracket. This result helps nonprofits make even more considerable, untaxed revenue sources.

What Forms Do You Need To File With The IRS And When

You need to file for 501(C)(3) tax-exempt status using Form 1023 – Application for Recognition of Exemption. You submit this form after receiving a conformed copy of your nonprofit’s Articles of Organization. Nonprofits may also be required to supply supporting documentation and evidence along with their application package.

There are a few different documents and certifications that you’ll need to form a nonprofit. These requirements may vary according to your specific geographic location since every state follows different rules. Fortunately, the forms and documents you need to obtain are relatively simple to procure.

Get The Right Start for your Non-Profit

Your vision and the public’s need are too important to leave to chance. Ensure that your nonprofit receives the healthiest start possible by setting it up with LegalZone. We deliver on results, simplicity, and affordability.

Get started today by contacting LegalZone. We look forward to hearing from you and your plans to make a difference!