November 17, 2017  
 
Gaebler.com is a daily online magazine covering small business news. We help entrepreneurs transform ideas and innovations into greatness.

Articles for Entrepreneurs

 

Setting Up a NonProfit

 

Getting Tax-Exempt Status

Tired of paying taxes? Getting tax-exempt status is easy. Get a section 501(c)(3) exemption and stop paying sales tax.

One of the biggest advantages of forming a nonprofit organization is that it makes you eligible for tax-exempt status.
(article continues below)

If you've filed an application for tax-exempt status and meet IRS eligibility requirements to claim this status, you will tap into a big benefit...once you are granted tax-exempt status.

What's the benefit?

In a nutshell, you will not have to pay any state sales taxes! That can be a big savings for your organization.

To qualify for tax-exempt status, nonprofit incorporation is necessary. The process for incorporation varies widely in each state, but generally requires that bylaws be written and a board of directors elected.

Contact the Secretary of State's office for information on nonprofit incorporation in your state. A small nonprofit incorporation filing fee is usually required.

Once you have filed your articles of incorporation and fulfilled all other state requirements, you can file for tax-exempt status.

Mind you, after you get federal tax exemption, you are still required to pay state taxes. To receive state exemption, you must file with the appropriate state agency. The state, however, will not give an exemption until the federal exemption has been granted.

Nonprofit incorporation can be an attractive option for many businesses that might otherwise choose a for-profit formation.

For example, many day care centers choose to operate as nonprofits, in part to be able to obtain tax-exempt status.

As a refresher, remember that in a nonprofit organization any money that remains after expenses are paid is returned to the support the operations of the nonprofit. There are never any profit dividends per se.

In addition to getting tax-exempt status, there are some other benefits from being a nonprofit.

- Contributions to the center are tax deductible for any donor, whether made by an individual or a foundation.

- Grants are easier to obtain from both private and public sources.

Before deciding to operate as a nonprofit organization, contact a lawyer. Sound legal advice will help you make the right decision.

Related Articles

Want to learn more about this topic? If so, you will enjoy these articles:

Hiring Personnel for a Nonprofit
Launching a Nonprofit
Recruiting a Board for a Nonprofit Organization


Conversation Board

We greatly appreciate any advice you can provide on this topic. Please contribute your insights on this topic so others can benefit.


Questions, Comments, Tips, and Advice  Code Image - Please contact webmaster if you have problems seeing this image code
Problem Viewing Image
Load New Code

 

 

Additional Resources for Entrepreneurs

Search Engine Marketing

Social Marketing Optimization

Business Forms

Business in the Jungle - Business in Fiction - Negotiating

Radio Ad Costs

Newspaper Advertising Rates

City-Specific Resources for Entrepreneurs

Small Business Insurance

Global Entrepreneurship

China & Entrepreneurs