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How to Start a 501 Organization

 

A non- profit organization

Any organization or corporation referred to as a non- profit entity is exempted from paying income taxes. According to congress, some enterprises, and particularly those that exist for the benefit of the public should be free from the burdens of having to pay taxes. These currently, these entities have been sanctioned under section 501(c) (3) of the IRC (Internal Revenue Code)

For an organization to qualify for tax exempt status, it has to be community chest, a corporation, or fund. The term non- profit organization means that it is expected to provides some level of service that include the creation of projects and planning for the well-being of the community. Some examples of non- profit organizations include those involved in:

  • community planning
  • healthcare
  • education
  • economic development
  • environmental development among others
  • how to start a non-profit organization

There are several steps on how to start a non-profit organization. They include;

Step 1

Organizing a group of interested parties so as to determine the status that the group wishes to pursue

Step 2

Check with the office of the secretary of state for the availability of the proposed name of the organization. This should also involve asking for more information with regard of how to file for the incorporation,

Step 3

The third step involves writing and filing Articles on Incorporation with the secretary of the site so as to become incorporated. These should be written in general terms since they cannot be easily amended once they have been established. Some Internal Revenue Service (IRS) should be included so as to ensure that their activities of the group are legally tax- exempt,

Step 4

The fourth step involves the writing of bylaws that will address a number of issues such as:

  • fiscal management
  • membership
  • board of director
  • amendments

These are relatively easy to amend. Moreover, they do not need to be as definitive as the Articles on Incorporation,

Step 5

This step involves obtaining of the tax exempt status from the Internal Revenue Service. This can be done by calling or contacting them through their online website (http://www.irs.gov/charities/charitable/index.html) on clicking the link, there are some instructions to be followed.

From the website, one should request for a number of documents that include;

IRS Publication 4220,

Form SS-4,

Form 1023,

Form 2848,

Form 8821,

One should consider hiring an attorney, who will help in guiding through the process of filing for 501(c) (3) status; this may be provided for free. With regard to filing the documents with IRS, Form SS-4 should be filed in order to obtain a new EIN number. This is followed by filing Form 1023 within 15 months of founding the organization. This explains the purpose of the organization and why it should be exempted from taxation. The Forms 2848 and 8821 should also be attached to Form 1023 if it is applicable.

Step 6

The IRS plays the role of reviewing the proposed legislative activities of the group by looking at the amount of;

Resources,

Staff time, and the efforts proposed by the organization to expend on the lobbying. The IRS also allows 501(c) (3) organizations limited ability so as to lobby for legislation, and no opportunity whatsoever so as to campaign for the election of the candidate. These organizations are allowed to advocate for any issue that is non- legislative for free.

Step 7

Following tax- exempt status, it is important to call the Department of Revenue of one's state to be able to receive an application for the certification of exempt status. If necessary

If necessary, it is also important to receive an application business registration form so as to obtain a tax- identification number. Moreover, this should be followed by:

  • calling the office of the state attorney general, register as a charitable organization, charitable division;
  • acquire Form 990 from the IRS if the gross recipients in the annual tax of $25,000 or more
  • checking if the state one is from has any resources for non- profits
  • give consideration to join one's non- profit  associations and more so the associations with the theme of community development

 

 

Links

http://www.501c3.org/how-to-start-a-501c3-nonprofit/

GuideStar.org –  http://www.guidestar.org

www.irs.gov/businesses/small/article/0,,id=102767,00.html

Reference

The Nonprofit Handbook: Everything You Need to Know to Start and Run Your Nonprofit Organization (Paperback), Gary M. Grobman, White Hat Communications, 2008.