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Are there any annual filing requirements for non-profit corporations with other federal or state agencies?

What is a Federal Employer Identification Number, and are nonprofit corporations required to have one?

How do we get a tax ID number?
In the articles of incorporation, does there have to be specific 501(c)(3) language?
Can employees be board members?
Can the officers of the non profit corporation be the same as the board of directors?
What are the titles of officers?
How many board members do we need to have on our board?
What Purposes may a Nonprofit Corporation Be Formed?
Who are the Incorporators?
Can directors receive compensation?
Can a nonprofit have classes of Membership?
Can the nonprofit have employees and pay compensation?
Can a Nonprofit Corporation engage in For-Profit Pursuits?
Can a Nonprofit Corporation make a profit?
Can a nonprofit charge for its services?



Q What is a corporation?

A A corporation is a legal entity having a legal status or existence separate
From both the individuals who form it and its owners. A corporation
can ordinarily acquire and deal with property and engage in certain activities
in the same manner as an individual.


Q How many people are required to organize and operate a nonprofit
Corporation?

A You may have one or more incorporators. The incorporator is the
Individual who signs the articles of incorporation. You must have at least
One director who may be the same as the incorporator.
The corporation also needs officers, usually a president, one or more
Vice-presidents, a secretary and a treasurer, although these specific titles are no longer required. Your state law may require 3 directors or more of legal age (18 or older). Depending on your organization it is advisable to have at least 5 directors. Non-profit directors normally serve without compensation except for any expenses incurred in performing director duties.

 

Q Do any documents of a non-profit corporation other than the
articles of incorporation need to be filed with the Department of
the Secretary of State?

A Yes, whenever the corporation’s members or directors decide to
amend its articles of incorporation, the corporation must file articles of
amendment with the Department of the Secretary of State. Or, if the
corporation’s registered office, registered agent, or principal office is
changed, the corporation must file a statement of change of registered office
or registered agent, or principal office with the Secretary of State’s office.

Whenever a corporation’s members or directors decide to dissolve the
corporation, the articles of dissolution must be filed with the Secretary of
State’s office. A dissolved corporation continues its existence, but it is prohibited
by law from carrying on any activities except those appropriate to
winding up its affairs and liquidating its assets.

 

Q Now that my non-profit corporation is on file with the Secretary
of State, am I ready to start business?

A There are several other steps you will need to take before you actually
start operating as a corporation.

The following list may help:

 

Q Are there any annual filing requirements for non-profit corporations
with other federal or state agencies?

A Yes. The Internal Revenue Service and your state Department of Revenue may require annual filings to insure the corporation’s tax-exempt
status (assuming of course, the corporation is tax-exempt). Moreover, state
licensing agencies may require annual filings and/or renewals. Be sure to
check the appropriate agency’s filing or reporting requirements.
There may also be state or federal audit requirements when governmental assistance is received.


Q What is a Federal Employer Identification Number, and are nonprofit
corporations required to have one?

A A Federal Employer Identification Number is a number which your
corporation must obtain from the IRS for the purpose of identifying itself in
correspondence involving tax matters. Every non-profit corporation must
have one, even if it has no employees.

 

Q How do we get a tax ID number?

A Use IRS Form SS-4 to obtain an EIN (Employer Identification Number), an identifying number for all Federal tax purposes, whether you plan to have employees or not. You can apply for an EIN separately if you need one immediately, for banking, for instance, or attach a completed Form SS-4 to your application for tax exempt status. NOTE: This number does not, in any way, indicate whether or not your organization is exempt from tax!


Q In the articles of incorporation, does there have to be specific 501(c)(3) language?

A. Yes, Federal tax law requires specific wording that limits your organization's purposes, powers, and what will happen to the assets if the group dissolves. These "magic words" must be in the primary governing document of your 501(c)(3) organization. For corporations, this means the Articles of Incorporation. For unincorporated entities, this means the Constitution, Articles of Association, or other document that created your group. Wording in the Bylaws will not meet this requirement.

 

Q Can employees be board members?

A Yes, although most state law allows employees to serve as board members, in practice, most nonprofit organizations rarely have employees on the board, with the possible exception of the executive director. Having an employee on the board is not recommended. It increases the potential for conflicts of interest. Perhaps most important, it may interfere with the board’s ability to oversee and evaluate the chief executive’s performance. Also, because the executive director reports to the board, having employees who report to the executive director also serve on the board can confuse the lines of decision-making within the organization. There are other ways for board members to work with and receive information from employees. Employees can serve on board committees, attend joint board and staff retreats, and contribute to the evaluation of the executive director. Many funders (including certain government departments, United Ways, and many foundations) will not fund organizations that have employees serving as board members.

 

Q Can the officers of the non profit corporation be the same as the board ofdirectors?

A Yes.

 

Q What are the titles of officers?

A Basic titles include: President, Secretary and Treasurer.

 

Q How many board members do we need to have on our board?

A There should be at least 3 unrelated board members. Unrelated means by blood or marriage. There must be an odd number of board members to be able to make a quorum.

 

Q What Purposes may a Nonprofit Corporation Be Formed?

A To qualify for your federal nonprofit tax exemption, you will want to organize and operate your nonprofit corporation for religious, charitable, educational, literary or scientific purposes permitted under Section 501 (c)(3) of the Internal Revenue Code. These five federal tax-exempt purposes are included as allowable nonprofit purposes under the corporation laws of each of the states. To make it clear that your corporation is being formed for a valid 501 (c) (3) tax-exempt purpose, you will wish to include language to this effect in your Articles of Incorporation.

 


Q Who are the Incorporators?

A An incorporator is someone who signs and delivers the Articles of Incorporation to the proper state office (usually the secretary of state or corporations’ commission) for filing. In most states, one person (the State Sheets indicate if your state requires more than one incorporator) can do this. In practice, the incorporator is often selected from among the persons who serve as the initial directors of the corporation. Once the corporation is formed, the incorporator's legal role is complete.

 

Q Can directors receive compensation?

A Nonprofit directors normally serve without compensation. While state nonprofit statutes generally allow directors to be paid provided the payment is reasonable and related to the actual performance of services, most non profits limit themselves to reimbursing directors for any necessary expenses incurred in performing director duties (such as travel expenses-typically a gas or mileage allowance-to attend board meetings).

 

Q Can a nonprofit have classes of Membership?

A Nonprofit corporations can establish different classes of membership, such as voting and non-voting membership classes. If so, the rights, privileges, restrictions and obligations associated with each class of membership must normally be stated in the Articles of Incorporation.

 

Q Can the nonprofit have employees and pay compensation?

A Yes, Salaries can be paid to officers or regular employees, however they should be reasonable, and given in return for services actually performed. A reasonable salary is one roughly equal to that received by employees rendering the same services elsewhere (in other nonprofits or commercial businesses).

 

Q Can a Nonprofit Corporation engage in For-Profit Pursuits?

AYes, regular commercial business activities can also be used to finance nonprofit operations. However, to avoid jeopardizing the nonprofit’s federal 501(c) (3) tax exception, these profit-making activities must be incidental sidelines, not substantial operations, of the nonprofit organization.

 

Q Can a Nonprofit Corporation make a profit?

A Yes, provided that the reserves are used to further the exempt purposes as stated in the application.


Q Can a nonprofit charge for its services?

AYes