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| Questions About Our Nonprofit and Charitable Organizations Practice |
1. How do I start a nonprofit corporation? There are several steps involved in the process of starting a nonprofit. We begin with an initial conference, by phone or in person, to discuss your vision and goals. Upon obtaining the required information, we then draft the necessary documents required for a new entity. These documents include articles of incorporation, bylaws, minutes, and various state forms. We file the articles of incorporation with the Secretary of State and obtain an employer identification number from the IRS. Finally, we assemble the completed package, including all company documents and the corporate seal, enclosed in a corporate records book. 2. How do I get the IRS to say that my nonprofit is tax-exempt? Once you have become incorporated, you then are ready to apply for tax-exempt status with the IRS. The application for exemption is very detailed and takes several weeks to complete. We do the initial draft and send it to you for review and approval. Once we have made all necessary changes, per your instructions, we then file the application with the IRS. 3. How long will it take me to file the application? We typically estimate that we will have drafts of the application for you to review within approximately two months of your initial meeting (2-4 weeks for incorporation, and 4-6 weeks for preparation of the application). For a premium, we may be able to place your formation and exemption ahead of others we are currently preparing. Please discuss your preferred timetable with us at your initial meeting. 4. How long does it take for the IRS to respond to my application? It typically takes 4-6 months from the time of filing the application for the IRS to respond. 5. Do you guarantee that I will receive a positive determination letter from the IRS, and are your fees refunded if I don't? We advise you in best positioning your application for a positive determination, and we attempt to warn you if your plans are on the edge. Since the IRS makes the determination, and since their positions change periodically and are not exhaustively provided in guidance, we are unable to guarantee any particular result. Nonetheless, our success rate is stellar. Refunds are not given, because your fees are paid in exchange for the time and expertise we provide in preparing the application. 6. What are the fees involved with starting a nonprofit? We typically charge flat fees for each of the incorporation and preparation of the tax exemption application. The incorporation flat fee includes the filing fees and out-of-pocket costs. Additional research or drafting not typically included in the incorporation package will be billed at our hourly rates. The exemption application flat fee includes the cost of preparing the application and preparing the response to the first additional information request from the IRS. After that preparation, any further drafting or interaction with the IRS will be billed at our hourly rates. Please contact our office for specific information. In addition, the IRS charges its own filing fee for the Form 1023 application. This fee must be paid at the time the application is submitted to the IRS. Please contact us with further questions on our charges. 7. Is there a difference between a nonprofit and being a tax-exempt nonprofit? What are the benefits of applying for tax-exempt status with the IRS? Technically, a nonprofit corporation is simply a corporation without shareholders; therefore, no profits are distributed to its shareholders. Tax exemption is conferred pursuant to the Internal Revenue Code or to state revenue laws. Tax-exempt organizations to which charitable contributions may be made achieve their exemption under Section 501(c)(3) of the Internal Revenue Code, and are further designated as public charities or private foundations. Such status carries many benefits, but also imposes certain limitations on the organization's structure and operations. |