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Your client Mary Lyon is going to establish a private non-for-profit organization to assist homeless women....

  • Your client Mary Lyon is going to establish a private non-for-profit organization to assist homeless women. She wants to know what the requirements are to create a private NFP entity under State Laws and how the non-taxable status is achieved at both levels, State and Federal Governments.
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Requirement to Create a private NFP entity under state laws:

Rules for incorporating a non profit organization are very similar to the rules for incorporating a for-profit business. Incorporated nonprofits can receive grants and donations, and the process of obtaining tax-exempt status is more straight forward.

Organizations that want to incorporate must file articles of incorporation or similar paper work with the secretary of State or the governing office responsible for regulating busniess structures in the state the nonprofit plans to operate.

The Oragnisation must also create a purpose clause which describes organizational objectives.

Non-Taxable status:

Steps to apply for Tax Exempt status

  1. Hire legal counsel to help make the decisions and guide you through the process.
  2. Determine if you are eligible for tax-exempt status, and if your organization is automatically exempt
  3. decide if it makes sence for your organization to apply for such status now
  4. If you are not already a nonprofit organization , you will need to become so
  5. Decide the tax exemption (e.g.,501(c)(3),501(c)(4)) for which your organization is eligible
  6. Apply for exemption from the IRS
  7. Be Sure you understand the ongoing requirements for reporting and renewal
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