Nonprofit Accountant Starting A Corporation

It is as likely that you will need an accountant as a lawyer. You can struggle through much of the
legal filings and forms. However, if you do not have at least a basic understanding of bookkeeping
and accounting, then you should get some help. Ideally, you can recruit a volunteer who has
financial management skills, and even becomes your Board Treasurer.

Call the local volunteer organization to see if they can recommend someone. Call several local
corporations to see if they have a volunteer center to help their employees find useful volunteer
positions in the community. Look through the Yellow Pages to find accountant organizations.

What Is A Not for Profit / Non Profit Corporation

Nonprofit corporations are organizations in which members, officers, directors, and associates do not
receive any profits of the corporation, although they may receive reasonable compensation for services
rendered. Any profits of the corporation must be used to further the purpose for which the corporation
was formed. Some of the most common types of nonprofit corporations include social clubs, civic
organizations, day care centers, foundations, outreach organizations, museums, humane societies,
schools, and homeowner associations.

The Articles of Incorporation for a nonprofit corporation must state whether the corporation will be formed
as a stock or nonstock corporation. If a nonprofit corporation is formed on a stock basis, the number of
authorized shares must be included in the Articles. If a nonprofit corporation is organized on a nonstock
basis, the value and description of real and personal property assets, the method by which it will be
financed, and a statement that it is organized as a membership or directorship corporation must be
included in the Articles of Incorporation.

Nonprofit Corporations - What Are They?

NPCs are a type of corporate entity that limits payment or distribution of any part of its assets, income, or profit except in conformity with the purposes of the corporation. Members of the corporation may only receive profits in conformity with the purposes of the corporation. Generally, a NPC is created under state stautes. However, there are many special acts that permit the formation of a wide variety of NPCs. Some purposes for which NPCs are commonly formed are those involving religious, educational, and charitable activities. To create a NPC, Articles of Incorporation must be filed with the Secretary of State, Bureau of Commercial Services, Corporation Division. Some NPCs may be eligible for exemption from federal income taxes. Contact the IRS at 877.829.5500 or access Publication 557 ìTax Exempt Status for your Organizationî on-line along with the accompanying package ìApplication for Recognition of Exemptionî - Form 1023 under Section 501(C) (3) online at www.irs.gov.

Nonprofit Corporation

This is a term that refers to an organization that
uses all profits to further organizational goals instead of distributing
the profits to shareholders, organizers or owners. In Colorado, an organization may choose to
be an unincorporated nonprofit association or a nonprofit corporation.
Establishing tax-exempt status is a second process that is
completed by filing either Package #1024, ìApplication for Recognition of
Exemption Under Section 501(a)î or #1023, ìApplication for Recognition of
Exemption,î with the IRS.

Private Foundation Vs. Public Charity

Most organizations that are exempt from
income tax under IRC Section 501(c)(3) are presumed to be private foundations, unless
they notify the Internal Revenue Service within a specified period of time that
they are not. In effect, the definition divides organizations into two classes, namely
private foundations and public charities. There is an excise tax on the net investment
income of most domestic private foundations. In addition, there are several other
rules that apply.

See Publication 557 for a chart listing many other categories of exempt organizations.
Organizations seeking formal recognition of their exempt status must generally file
one of the applications listed below with the Internal Revenue Service and must pay
the required user fee. Requests for exemption under subsections other than 501(c)
(3) must include Form 8718, User Fee for Exempt Organization Determination Letter
Request. Requests should be sent to the address shown on Form 1023 and
on Form 8718. To decide which application form listed below is needed for your
organization, refer to Publication 557, Tax-Exempt Status for Your Organization.

ï Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of
the Internal Revenue Code

ï Form 1024, Application for Recognition of Exemption Under Section 501(a) for
Determination Under Section 120 of the Internal Revenue Code
Note: All non-profit organizations must apply for an EIN before filing for exempt
status.

All publications and forms mentioned above are available for download from the
IRS website, www.irs.gov, or by calling our toll-free number 1-800-TAX-FORM.
Group Exemption Letter: A group exemption letter is a ruling or determination letter
issued to a central organization recognizing, on a group basis, the exemption of
subordinate organizations on whose behalf the central organization has applied for
recognition of exemption. A central organization is an organization that has one or
more subordinates under its control. A subordinate organization is a chapter, local,
post, or unit of a central organization.

Public Disclosure of Forms 990: Exempt organization Forms 990 are required to be
made available to the public. Procedures for obtaining this information are found
in Publication 557, Tax-Exempt Status for Your Organization, and Form 4506A, Request
for Public Inspection or Copy of Exempt or Political Organization. In addition,
submitted Forms 990-N are made available on the IRS website, www.irs.gov.
Unrelated Business Income: Even though an organization is recognized as taxexempt,
it still may be liable for tax on its unrelated business income. Unrelated
business income is income from a trade or business, regularly carried on, that is not
substantially related to the charitable, educational, or other purpose that is the basis
for the organizationís exemption.