A non profit incorporation is an organization whose aim is not to make a profit but when it does it is used to further the goals of the corporation.
Non-profit incorporations are not in business to make individuals, owners, or share holders money. Their purpose is to advance their not for profit goals.
Such organizations include charities, public art corporations, and even trade unions. These organizations are usually exempt from paying income and property tax in most States in America.
It is a requirement in most States to register not for profit incorporations in order to qualify for exemption of property and income tax.
When an organization gets incorporated, the IRS recognizes its validity to be exempted from tax. Different States will have varying rules when it comes to tax exemption and so it is important to find out the non-profit incorporation laws for a specific State.
It is important to register the organization as a non-profit incorporation as it protects the board members, owners and individuals of the organization from being held personally liable in cases of a law suit.
Steps to Incorporate
There are certain steps to be taken in order to become not for profit incorporation. They include:
Registering a legally available name for your corporation with the State.
Appointing a board of Directors for the non-profit incorporation.
Coming up with by-laws that state the structure, vision and mission of the organization.
Applying for all permits and licenses required for your corporation to operate within the State.
Filing articles of incorporation of the organization and paying a standard filing fee.
Applying for Federal and State tax exemptions.
These steps are a requirement for all non-profit incorporations to ensure that only legitimate incorporations get tax exemption from the IRS.