Starting NonProfit Corporations or Organizations
The road to NonProfit Tax Exemption is paved with the best intentions of many fine and well-meaning organizations that simply did not have the experience or expertise to resolve the mandatory and voluntary pieces of the NonProfit Tax Exempt puzzle. The beginning point to start NonProfit Organizations is literally "getting organized".
Being granted NonProfit Tax Exemption by the Internal Revenue Service is not in and of itself an overly complicated process. Problems most often arise because the goal itself is simply not a stationary target. Gaining recognition as a NonProfit 501(c) Organization by the Internal Revenue Service does not guarantee that your benefactors will receive tax advantages for granting you monies, services, goods or property. Contrary to common perception, many 501(c) organizations are taxed on the activities they are involved in. The bottom line on 501(c) Tax Exemption is that not all I.R.S. designations are created equal.
When it comes to designations, the I.R.S. includes both Foundations and Charities under the 501(c)3 umbrella. The difference between these primary I.R.S. designations is significant, and the NonProfit Tax Exemption restrictions run from limited rules to complicated tax requirements on both the donor and the organization sides. Within these primary designations of Charity and Foundation, there are substantial variations between the allowable and taxable activities and donation guidelines.
The primary aspiration of every organization seeking NonProfit Tax Exemption should be to receive the appropriate I.R.S. designation considering the structure and mission of the organization. Throwing out common mistakes and fallacies is the best way for you to get your own NonProfit Tax Exemption pointed in the right direction. We can begin by highlighting one of the most common misconceptions: Tax Exemption is not the beginning of the process; in fact it’s the very end.
The Beginning Steps to NonProfit Tax Exemption