Not For Profit
A nonprofit corporation is an organization formed as a corporation for purposes other than generating a profit, and in which no part of the organizationï¿½s income is distributed to its directors or officers. Nonprofits are formed pursuant to state law, often under the Revised Model Non-Profit Corporation Act. A nonprofit can be a church or church association, school, charity, medical provider, legal aid society, volunteer service organization, professional association, research institute, museum, or in some cases a sport association. Being formed with the state as a nonprofit corporation does not automatically provide an organization with tax exempt status. Nonprofits must apply for tax-exempt status at the federal and sometimes at the state level.
What business purposes are valid for a nonprofit?
To qualify for federal tax-exempt status, the nonprofit must be organized and operate for some religious, educational, charitable, scientific, literary, testing for public safety, fostering of national or international amateur sports, or prevention of cruelty to animals or children purpose permitted under this section of the code. Nonprofits may also be formed for other purposes pursuant to different sections of the Internal Revenue Code. To qualify for federal tax-exempt status as a nonprofit under a different section of the code, your corporation must comply with the requirements of that federal tax code section.
The business purpose of the nonprofit must be listed in the articles of incorporation, and to apply for tax-exempt status, it is very important that the purpose of the organization be well described in the articles.
How many directors are nonprofits required to have?
Most states require nonprofits to have a minimum of three directors; however, some only require one director, and others allow for less than three.
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