Many people are passionate about nonprofit organizations because they support various causes and often give back to the community. Not only do nonprofits get support from those that are interested in the cause they support, but nonprofit organizations also may qualify for tax exemption. You may want to start a nonprofit organization but do not know where to start. Learn more about the important items that need to be done to start a nonprofit successfully.
What is a nonprofit organization?
Nonprofit organizations are set up to benefit the community, which is often accomplished when they support a social cause or give back to the community. The profits that are made from the operations of a nonprofit are not to be distributed among owners. The profits made should go to the cause the organization was created to support. Many nonprofits are supported on a volunteer basis; however, nonprofits may have paid employees.
What is needed to form nonprofits?
Forming a nonprofit can be complicated. There are strict guidelines you must follow to gain the full benefits of being a nonprofit organization. Learn a few of the items needed to start your nonprofit organization.
- Name the organization
According to Wis. Statute 181.0401, your organization needs to contain the word “corporation,” “incorporated,” “company,” or “limited” or the corresponding abbreviation (corp., inc., co., or ltd.). The name must be unique, meaning no other business can have the same name as yours.
- Board of directors
Under Wisconsin law, a nonprofit organization must have a minimum of three members on the board of directors. These board of directors are stakeholders in your organization that support the organizations purpose and try to help maintain the organizations success.
- Registered agent
There also needs to be a registered agent that is appointed by your organization. A registered agent receives legal notices on behalf of the organization. This registered agent needs to be located in the state you are conducting business in.
- Articles of incorporation
For a nonprofit, the articles of incorporation is a legal document that is filed with the secretary of state. This helps register your organization’s name, limits personal liability, and is needed for the organization to apply for tax exemption with the IRS.
- Governing documents
One important aspect of forming your nonprofit organization will be the creation of its bylaws. The bylaws are the rules and procedures you will run the organization by. It establishes the rules that each person in the organization should abide by.
- Apply for tax exemption
To be exempt from federal taxes, declaring your business as a nonprofit is not enough. You need to file a form with the IRS. Depending on what type of nonprofit your organization is classified as, you will need to fill out a corresponding form.
How are nonprofits tax exempt?
To be tax exempt, it is important to file for tax exemption with the IRS. Many of the nonprofits formed are formed as 501(c)(3) nonprofits, meaning that they were formed around religious reasons, charity, science, literature, or education. There are other types that your nonprofit may fall under, but these are the most common. When filing for tax exemption, make sure you are filling out the correct corresponding form. These forms may take a while and need to be filled out accurately for your organization to be considered for tax exemption. You may also wish to file for state tax exemption. This should be done by filling out the correct forms through your state.
How business lawyers can help you create and organize your nonprofit
By hiring corporate & business lawyers to guide you and review your documents when creating your nonprofit, you can be sure you are following federal and states laws and regulations. The bylaws is one of the most important item created, which lawyers can help you draft. These rules affect the way everyday business is done. If you are looking for an experienced business lawyer that can help you, contact the attorneys at McDonald & Kloth, LLC. We can help you create your nonprofit organization.