What is a Non-Profit Corporation?
A non-profit corporation is a special type of corporation that is typically created for charitable purposes. This type of business puts out that they are creating themselves for a purpose other than generating a profit. In this article, we will go over how to create a non-profit corporation in Arizona, the difference between tax-exempt and non-profit, and how to get tax-exempt status from the IRS.
Creating a Non-Profit Corporation in Arizona
In each state, the process of creating a non-profit corporation will differ. In this article, we focus on the process for the State of Arizona. The first step is to file Articles of Incorporation with the Arizona Corporation Commission. The forms on the Arizona Corporation Commission’s website are not sufficient for creating a non-profit corporation, so you will need to have special Articles of Incorporation prepared elsewhere. If you live in any county besides Maricopa or Pima you will have to publish a copy of your approved articles in a newspaper.
The third step is to have special Non-Profit Bylaws drafted for your corporation. The last step is that you will need to have an initial meeting of board members, which will need to be documented in official minutes.
Tax Exempt vs. Non-Profit
It is a common misunderstanding to think that tax-exempt and non-profit are the same thing. They are two very different terms when it comes to tax status. Non-profit refers to a corporation created on the state level. You create this type of corporation for a purpose other than generating a profit and promulgate it with Perth community marketing campaigns, unlike a typical corporation. This type of business may or may not experience tax advantages on the state level. They receive no tax advantages on the federal level. On the other hand, tax-exempt means that your corporation is exempt from taxation. You must be granted 501(c)(3) status by the IRS to be considered tax exempt.
How to Get 501(c)(3) Status
Getting 501(c)(3) status from the IRS is a very intense process. You will need to fill out IRS Form 1023 and submit it for review by the IRS. This typically includes many additional pages of required supporting documentation. The form its self is 28 pages. You should expect to spend several hours completing this package, at least. You will need to submit the completed form, with the supporting documentation, and the $850 filing fee. It takes several months after submission to hear anything back from the IRS. So, if you need tax-exempt status, it is something that you need to plan well in advance.
Your Non-Profit Corporation
Deciding to create a non-profit corporation is a very important step. It is important that you weight the pros and cons and fully understand the process it involves. It is also vital that you meet with a tax professional who can help you understand the in and outs of running a non-profit corporation and how to qualify for 501(c)(3) tax-exempt status.
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