We can help, if you thinking of starting a non profit business or want to establish a public foundation. Forming the corporation properly with all the legal structure, documentation, proper planning to help our client achieve its goal and also do so with the IRS tax exemption approval, and helping our clients achieve their goals and also comply with Iowa, or Illinois and federal law and withe the IRS tax rules.
A non profit company is a term that encompasses many organizations that are known as charities, nonprofits, non-governmental organizations (NGOs), private voluntary organizations (PVOs), civil society organizations (CSOs), etc. Not for Profit Organizations are regulated by local, state and federal laws.
The purpose of a non-profit corporation or association is to conduct business for the benefit of the general public without shareholders and without a profit motive. Nonprofit corporations are created according to state law. Nonprofit corporations must file a statement of corporate purpose with the Secretary of State and pay a fee, create articles of incorporation, hold regular meetings, and satisfy other obligations to achieve and sustain corporate status.
The most simple difference between a non profit company and a for profit is that nonprofit corporations cannot do business or operate for profit. Meaning, they cannot allocate corporate income to shareholders. The funds acquired by nonprofit corporations must stay within the corporate accounts to pay for reasonable salaries, expenses, and the activities of the corporation and to be distributed for its general purpose, which is charitable, or educational, or scientific. Income of a non profit cannot inures to the personal benefit of any individual. Salaries are not considered personal benefits because they are essential for the operation of the corporation. An unwarranted salary, however, may cause a corporation to lose its nonprofit status.
Nonprofit corporations are exempt from income taxes if they conduct business solely for the benefit of the general public. State laws on corporations vary from state to state, but generally states give tax breaks and exemptions to nonprofit corporations that are structured and operated exclusively for either a religious, charitable, scientific, public safety, literary, or educational purpose. Nonprofit organizations may charge money for their services, and donations to tax-exempt nonprofit organizations are tax deductible. The Internal Revenue Service must approve the tax-exempt status of all nonprofit organizations except churches.
Why do Non Profits get special tax treatment?
Charitable nonprofits play important roles in public service delivery as nongovernmental, flexible organizations. The purposes of nonprofits vary, but they generally are categorized within the areas of:
- Arts & Humanities
- Human Services
- International Affairs
Yes, nonprofits fall into one of the following categories:
- Public Benefit nonprofits provide a service or product to the public that is generally not offered by for-profit corporations. It does not have a membership that would limit its accessibility to the non-membership public. Examples include schools, libraries and hospitals.
- Mutual Benefit nonprofits are formed to serve the members of the organization. Attributes of organization and conduct are usually associated with for-profit entities. Examples are cooperatives, day care centers, nursing homes and trade associations.
- Religious nonprofits are organized primarily or exclusively for religious purposes. Churches are an example.
An immense number of organizations qualify for nonprofit status under the various definitions. Nonprofit organizations include churches, soup kitchens, charities, political associations, business leagues, fraternities, sororities, sports leagues, Colleges and Universities, hospitals, museums, television stations, symphonies, and public interest law firms.