Nonprofit Accountant Starting A Corporation

It is as likely that you will need an accountant as a lawyer. You can struggle through much of the
legal filings and forms. However, if you do not have at least a basic understanding of bookkeeping
and accounting, then you should get some help. Ideally, you can recruit a volunteer who has
financial management skills, and even becomes your Board Treasurer.

Call the local volunteer organization to see if they can recommend someone. Call several local
corporations to see if they have a volunteer center to help their employees find useful volunteer
positions in the community. Look through the Yellow Pages to find accountant organizations.

Nonprofit Corporations - What Are They?

NPCs are a type of corporate entity that limits payment or distribution of any part of its assets, income, or profit except in conformity with the purposes of the corporation. Members of the corporation may only receive profits in conformity with the purposes of the corporation. Generally, a NPC is created under state stautes. However, there are many special acts that permit the formation of a wide variety of NPCs. Some purposes for which NPCs are commonly formed are those involving religious, educational, and charitable activities. To create a NPC, Articles of Incorporation must be filed with the Secretary of State, Bureau of Commercial Services, Corporation Division. Some NPCs may be eligible for exemption from federal income taxes. Contact the IRS at 877.829.5500 or access Publication 557 ìTax Exempt Status for your Organizationî on-line along with the accompanying package ìApplication for Recognition of Exemptionî - Form 1023 under Section 501(C) (3) online at www.irs.gov.

Nonprofit Corporation

This is a term that refers to an organization that
uses all profits to further organizational goals instead of distributing
the profits to shareholders, organizers or owners. In Colorado, an organization may choose to
be an unincorporated nonprofit association or a nonprofit corporation.
Establishing tax-exempt status is a second process that is
completed by filing either Package #1024, ìApplication for Recognition of
Exemption Under Section 501(a)î or #1023, ìApplication for Recognition of
Exemption,î with the IRS.

Private Foundation Vs. Public Charity

Most organizations that are exempt from
income tax under IRC Section 501(c)(3) are presumed to be private foundations, unless
they notify the Internal Revenue Service within a specified period of time that
they are not. In effect, the definition divides organizations into two classes, namely
private foundations and public charities. There is an excise tax on the net investment
income of most domestic private foundations. In addition, there are several other
rules that apply.

See Publication 557 for a chart listing many other categories of exempt organizations.
Organizations seeking formal recognition of their exempt status must generally file
one of the applications listed below with the Internal Revenue Service and must pay
the required user fee. Requests for exemption under subsections other than 501(c)
(3) must include Form 8718, User Fee for Exempt Organization Determination Letter
Request. Requests should be sent to the address shown on Form 1023 and
on Form 8718. To decide which application form listed below is needed for your
organization, refer to Publication 557, Tax-Exempt Status for Your Organization.

ï Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of
the Internal Revenue Code

ï Form 1024, Application for Recognition of Exemption Under Section 501(a) for
Determination Under Section 120 of the Internal Revenue Code
Note: All non-profit organizations must apply for an EIN before filing for exempt
status.

All publications and forms mentioned above are available for download from the
IRS website, www.irs.gov, or by calling our toll-free number 1-800-TAX-FORM.
Group Exemption Letter: A group exemption letter is a ruling or determination letter
issued to a central organization recognizing, on a group basis, the exemption of
subordinate organizations on whose behalf the central organization has applied for
recognition of exemption. A central organization is an organization that has one or
more subordinates under its control. A subordinate organization is a chapter, local,
post, or unit of a central organization.

Public Disclosure of Forms 990: Exempt organization Forms 990 are required to be
made available to the public. Procedures for obtaining this information are found
in Publication 557, Tax-Exempt Status for Your Organization, and Form 4506A, Request
for Public Inspection or Copy of Exempt or Political Organization. In addition,
submitted Forms 990-N are made available on the IRS website, www.irs.gov.
Unrelated Business Income: Even though an organization is recognized as taxexempt,
it still may be liable for tax on its unrelated business income. Unrelated
business income is income from a trade or business, regularly carried on, that is not
substantially related to the charitable, educational, or other purpose that is the basis
for the organizationís exemption.

Incorporate A Nonprofit Organization in New Jersey

To become incorporated in New Jersey, your organization
needs to file a certificate of incorporation
(and pay the fee) with the New Jersey Division of
Revenue, Corporate Filing Unit (see resource list on
page 11). Religious organizations may want to contact
the Corporate Filing Unit for information on Title
16 incorporation (certificate filed with the county and
then with the State).

One method for incorporating in New Jersey is to
file the Public Records Filing for
New Business Entity form, which is in the New Jersey
Complete Business Registration Package available
from the Division of Revenue (see resource list
on page 11). If you use the form and plan on applying
for IRC Section 501(c)(3) status with the IRS,the following 
guidelines should help you satisfy IRS requirements:

1. In the item labeled ?Type of Business Entity? insert
?NP?;

2. In the item labeled ?Business Purpose? include
the 501(c)(3) purpose wording required by the IRS
(see Chapter 3 of IRS Publication 557);

3. In the item labeled ?Stock? make no entry;

4. In the item labeled ?Management? list at least
three trustees;

5. Directly below the item labeled ?Additional Entity-
Specific Information? insert ?see attached
501(c)(3) requirements.? On the attachment include
the IRS-required restrictions such as those
found in the Fifth Article of Draft A of the Sample
Articles of Organization in IRS Publication 557
(see also detailed information in Chapter 3 of IRS
Publication 557);

6. Below the item labeled Domestic Non-Profit Corporations
(Title 15A) under The method of distribution
check the box for As set forth herein:
and include the 501(c)(3) dissolution wording required
by the IRS (see Chapter 3 of IRS Publication
557, particularly the Sample Articles of Organization,
Draft A, Sixth Article).
NOTE: For information on Section 501(c)(3), (c)(4),
etc. requirements, contact the Internal Revenue
Service.

If your organization wants to incorporate in New Jersey
by using the Sample Articles of Incorporation in
IRS Publication 557, you must satisfy New Jersey
requirements by adding certain provisions from the
New Jersey Public Records Filing for New Business
Entity Form. More specifically, include the registered
agent, three trustees, incorporators, membership
and other information, and signatures required by
all the items from ?Contact Information? through
Additional Information? on the Public Records Filing
for New Business Entity Form.