FAQ's: Not For Profit

A Not For Profit Corporation is a corporation that is formed for purposes other than to make a profit from the company’s activities. These purposes include, but are not limited to, educational, scientific, religious and charitable activities. Not For Profit corporations share the limited liability protection as held by corporations and LLCs. The personal assets of the members, officers and directors are protected and typically cannot be used to satisfy the liabilities of the Not For Profit Corporation.

When creating a NFP Corporation, Articles of Incorporation or a Certificate of Incorporation must be prepared and submitted to the respective Department of State for filing. The information required in the formation document varies per state. When forming your company we will request the mandatory information from you in order to complete the filing. In addition to the formation documents some states required the NFP Corporation to obtain consent from one or multiple state agencies in order to form the company. If required Accumera will obtain these consents for you. View our State Specific Information page for details on what information is required for your filing.

Most states require a minimum of three directors needed to form a NFP Corporation. When Accumera forms your company we will act as the initial incorporator.

NFP Corporations do not automatically have tax exempt status once formed with the Department of State. In order for your NFP Corporation to claim tax exempt status, you must file for both state and federal tax exemptions. The most typical form for the Internal Revenue Services is the 1023 application. This application is used for 501(c)(3) companies that have charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals, purposes. NFP Corporations may be organized for other purposes pursuant to the IRS code and file IRS Form 1024. If you have a NFP Corporation that falls under a section of code other than that of 501(c)(3) please let us know the section of law and we will assist accordingly. As for state tax exempt status we suggest that you speak to your tax advisor for assistance in registering for state tax exempt status and the associated filings.

Nonprofit is not the same as tax-exempt. You can form a NFP Corporation but it is not automatically tax exempt. You must file with the IRS and state in order to obtain tax exempt status. A “tax-exempt” company is a company that has been approved for an exemption from tax liability. A “nonprofit” Corporation does not have this exemption until it registers with the IRS and State tax agencies.

Most states require a minimum of three directors needed to form a NFP Corporation. When Accumera forms your company we will act as the initial incorporator.

The most common IRS NFP Corporation classification is the 501(c)(3). The other most common are Civic Leagues, Social Welfare Organizations, and Local Associations of Employees, 501(c)(5) Labor, Agricultural and Horticultural Organizations, 501(c)(6) Business Leagues, Chambers of Commerce, Real Estate Boards, etc., 501(c)(7) Social and Recreational Clubs, 501(c)(8) Fraternal Beneficiary Societies and Associations and 501(c)(9) Voluntary Employee Beneficiary Associations. To learn more about the different NFP classification and the tax-exempt status for your company view IRS Publication 557.

There are no owner(s) of NFP Corporations. As they are filed for purposes other than making profit there are no shareholders or stock. NFP Corporations have a board of directors that oversees the operations of the company. Similar to that of For Profit Corporations the NFP Board of directors is responsible for making the major decision of the company and elect officers to carry on the daily operations of the company. NFP Corporation can also have members who control the company and elect the directors. If it does not have members the directors typically elect their successors.

In many states, there is a requirement of at least three directors for Not For Profit corporations. Some states though, only require one director. The amount of directors needed for Not For Profit corporations varies by state. View our State Specific Information page for details specific to your state.

In most states your NFP Corporation is required to have a Registered Agent who can accept service of process on behalf of the company. If required your company must have a Registered Agent in every state where your company is registered. Further, you must maintain the Registered Agent with the Secretary of State in order to keep your company active. Accumera can provide you with registered agent services as required in your state.

The NFP bylaws is a document that states the internal rules and regulations for how your NFP Corporation will operate. Each state has different requirements for what must be included in the NFP Corporate bylaws. Included with Accumera’s corporate kit are state specific bylaws that you can use for your company. Please note that corporate bylaws do not get submitted or filed with the respective Department of State.

States require that all NFP Corporations hold annual meetings with members/directors and record the minutes of each meeting. The method and date on which these meetings are held is typically recorded in the corporate bylaws. These meetings are held to elect new directors or officers and discuss any other business the company has. By following this formality the corporation will maintain its corporate identity/protection. Contact us if you would like assistance with drafting your annual corporate minutes.