Nonprofit FAQs

What is "tax exempt status", and how can your nonprofit acquire it?

As most Nonprofits are typically founded with the main goal of benefiting the general public. Nonprofits can become "tax exempt" entities. This means that they are free from paying a vast majority of the taxes that are levied on other types of organizations. However, Nonprofits are not granted tax-exempt status automatically upon formation. After the organization is successfully formed with its state, it must file form 1023 or 1023EZ with the IRS to receive tax exempt status. There may also be some state level filing required to become tax exempt at the state level depending on where your organization is located.

Does Truth Written Nonprofit Solutions, LLC can assist with helping my Nonprofit receive "tax exempt" 501(c)(3) status?

Yes, we can help your nonprofit obtain"tax exempt" 501(c)(3) status. To learn more about this service, please click here.

How many board members does my nonprofit organization need?

Intially, the founders and/or persons who oversee the operation of your Nonprofit serve as its board members. In most states, one person may serve as the sole director for the incorporation purposes. Hoever, when submitting a 501(c)(3) applciation or other types of tax exempt application, the IRS almost always requires at least three distinct individuals to serve on the board of directors. Keep in mind, you may change your board from time to time and that your board may be "reasonably" compensated. In general, the IRS prefers directors who are vounteers. Don't worry if you initially have one director. You'll have the chance to add more directors later.

What formal paperwork must be filed when forming a Nonprofit?

A special set of documents called the Nonprofit Articles of Incorporation must be filed with the relevant state agencies in order to become formally recognized. The appropriate agency will change depending on where you are forming your organization. There may also be some fess or franchise taxes that must be paid during this process. A filing service such as Truth Written Enterprises can take care of the required filings for a Nonprofit. This allows you to focus on developing and growing your new organization.

How should I name my nonprofit?

Your organizations name must be unique and not deceptively similar to any other trademarked name or business. It is also required that your name not intentioanlly misrepresent the products or services you offer. For Nonprofits, most states require signifier of your corporate status, such as "Company", Corporation", "Incorporated", or a relevant abbreviation to be added to your business name. Choosing a name for your Nonprofit is an important decision; it will be how you represent yourself the general public and to potential associates so take time research and select a name that will accurately represent you and your business.

Do we need to prepare a mission statement?

There is no legal requirement that you prepare a mission statement but you may find it helpful to have one for your internal operations.

How long will the IRS take to respond to my tax exempt status application?

The IRS response to a 501(c)(3) application typically takes 3-6 months. While expedited service is available on a limited basis, it is not guaranteed.

Can I still be a nonprofit if I don't apply for tax exempt status?

Yes, you are a nonprofit corporation once you are filed with the state. However, your corporation will still be liable for federal (and maybe state) income taxes. Donations made to your nonprofit will be be tax deductible without tax exempt status. Further, it may also be difficult to obtain grants if you are not a 501(c)(3) organization.

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