Posted on Thursday 26 March 2009
After making the decision to incorporate, there are a few steps that must be taken to start a non- profit organization. Here is a brief list of what must be done.
1- Understand the purpose of a non-profit:
A non-profit is an organization whose primary objective is to support some issue or matter of private interest or public concern for non-commercial purposes. There are different types of non-profits. Some are exempt from income and/or property tax, and are able to receive tax-deductible charitable contributions.
2- Mission Statement:
To start a non-profit organization, you must really clarify what the purpose of the nonprofit is, or determine its mission. The mission is all about providing a specific service or task and meeting a need in the community. This statement describes the overall purpose of the organization. This needs to be descriptive and clear. The mission statement should be refined so that all key stakeholders have a complete understanding of the organization’s goals. It addresses the question “Why does the organization exist?” If it is primarily to meet a public service or need in your community, then starting a nonprofit is a good idea. Consider at least these specific aspects for the mission statement. First, the primary benefits and services to clients, second, the groups of who will benefit from those services and third, the values that will guide how the nonprofit will operate.
3- Form a Board of Directors:
Each state has regulations that determine the size of the board. There are usually three members, but the optimum number of people who sit on the board should be determined by the needs of the organization. Depending on what your organization’s mission is, you should decide what skills and qualities you will require of the individuals on your board.
4- File Articles of Incorporation:
Articles of Incorporation are official statements of creation of an organization filed with the appropriate state agency. They are necessary to protect both board and staff from legal liabilities, making the corporation the holder of debts and liabilities, not the individuals who work for the organization.
5- Draft bylaws:
Bylaws are simply the “rules” of how the organization operates. Bylaws should be drafted with the help of an attorney and approved by the board early in the organization’s development.
6- Develop a budget:
A budget is often a challenging task for a non-profit organization. A budget is the financial plan of operation. New organizations may start the budgeting process by looking at potential income to figure out how much money they have to spend.
7- Keep Records:
Legally, you must save all Board documents including financial statements. You should save all important corporate documents, such as board meeting minutes, bylaws, Articles of Incorporation, financial reports, and other official records.
8- Create an accounting system:
It is better to have an accountant on your board, but if that is not possible, it is best to work with an accountant familiar with non-profit organizations. Non-profit groups are accountable to the public, their funders, and government granting bodies.
9- Apply for a federal employer identification number:
Whether the non-profit has employees or not, non-profits are required to obtain a federal Employer Identification Number (EIN). This number is used to identify the organization when tax documents are filed and is used like an individual’s Social Security number.
10- File for state and local tax exemption:
You may apply for exemption from income, sales, and property taxes.
11- Fulfill charitable solicitation law requirements:
If your organization’s plans include fundraising, be aware that many states and few local jurisdictions regulate organizations that solicit funds within that state. Usually you would need to obtain a permit or license and file an annual report and financial statement.
12- Apply for a nonprofit mailing permit:
The federal government allows non- profits to have reduced postage rates on bulk mailings. This is one of the benefits to incorporating a non-profit.
TAGS: Incorporate Online,
Incorporation,
Non-Profit Organization
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Posted on Tuesday 24 March 2009
Why Incorporate?
Why to incorporate is always the biggest question for a new business owner. The reasons are simple. If one incorporates a new business, personal assets will be separated and not affected by the business. Liability is also limited to the business owner, meaning creditors of your corporation must satisfy their claims by seizing the assets of the corporation rather than your personal assets. Other benefits of incorporation can include tax deductions for health insurance or medical expenses, and a savings on social security tax and Medicare tax.
How do I form a corporation or LLC?
Forming a corporation or LLC is not a difficult process. It can be accomplished quickly and efficiently by a professional incorporating service and even done online. The incorporation service will investigate the availability of your proposed corporate name, reserve it for you and handle all paperwork needed.
What is a Certificate of Incorporation?
A certificate of incorporation is what some states issue to your company as evidence you’re your business is a valid corporation and meets state incorporation requirements. Some states call the certificate of incorporation, articles of incorporation, but that is also the document that you file to incorporate your business.
Do I need an attorney to form a corporation or LLC?
You do not need an attorney for incorporation. Most services are knowledgeable in the legal aspects of incorporation and limited liability company (LLC). Although, should you choose to have an attorney, one can provide you with advice as your business grows, so a legal advisor is always recommended.
Does it matter which state I incorporate?
It is recommended that you incorporate in the state where your office is physically located. If you incorporate in another, you may need to submit an application to qualify as a foreign corporation. This is often more of a hassle then it is worth and is not suggested.
What is an Assumed Name?
An assumed name is also called a fictitious name and is a characteristic of some state corporation laws in which a corporation can operate under more than one name. This is a convenient tool for a small business owner who sells different products but does not wish to have several corporations.
What Is a C Corporation?
The IRS classifies corporations according to how they want to be taxed. There are two types of corporations according to the IRS: “C” corporations, named after Subchapter C of the tax code, or “S” corporations, named after Subchapter S of the tax code. C corporations have their own tax identification number and pay their own taxes.
What Is an S Corporation?
S corporations are the opposite of C corporations. S corporations are sometimes called small business corporations and are taxed like a partnership, as if they were not a corporation. An S corporation passes through its losses to the shareholder’s personal tax return, and is not liable for Federal income taxes itself. The shareholders of an S corporation will pay personal income taxes based on the income of the S corporation. The S corporation shareholders will be able to personally enjoy any losses the corporation may have.
TAGS: Incorporation,
IRS,
Limited Liability Company,
Small Business Owner
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Posted on Monday 16 March 2009
An LLC or Limited Liability Company is an incorporation that provides limited liability to its company owner. It is an entity that was mixed to have certain characteristics of both a corporation and a partnership. It is a more flexible option for incorporation and mostly benefits a company with a single owner.
An LLC is a great option for incorporation because of its benefits. It seems that with a recession looming over our heads, the public is unsure about what to do to make a living and keep themselves afloat. With average layoff percentages at an all time high, a lot of people have made the decision to start their own business and be their own boss. This is a great time to form your own LLC.
Recession and Limited Liability Company:
Due to the recession, many companies are now downsizing. That also opens the door to more contract work. Jobs like these are becoming more common. People will take what they must to get by. To do this people are often working more or working longer hours. This means that people will need more things or services for everyday living. Take a look at what people need or seek in their lives. These are good opportunities to take advantage of these needs and begin a business that is sure to be a success. People always need basics such as food, heat, electricity and other such things that are essentials. Businesses can be formed out of these needs to provide the services that people are looking for. Another upside is that the cost of almost everything you need to run your business is very low. It will cost much less to start up now during times of hardships than it will when times are better.
TAGS: Economy,
Incorporation,
Limited Liability Companies,
LLC,
Recession,
Small Business
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