FAQs
1. When can we start giving tax-deductible receipts?
2. What about directors? How many do we need? How do we select them?
3. Do the directors and officers have to live in my state? Be U.S. citizens?
4. How long does the process take?
5. Will your fees and state and federal filing fees be tax-deductible?
6. What does your service NOT cover?
7. What do your Questionnaires consist of?
8. What about the bookkeeping and tax returns after I get nonprofit status? Will I be able to handle this?
9. What if I have already filed my Articles of Incorporation? Do you have a reduced fee?
10. What about being under someone else’s nonprofit?
11. I have some problems with the IRS–past tax returns, an audit, owing them money, etc. Also, I have problems with my credit. I’m currently in bankruptcy. Will this affect getting tax-exempt status?
12. Do you have lawyers and CPAss on staff?
13. They’re not called “Articles of Incorporation” in my state. What about this?
14. We don’t have an office yet for our mission/ministry or a location yet for our church/congregation/school. Can we still get tax-exempt status?
15. Do you file the Articles in my state?
16. What is the difference between general nonprofit status and church nonprofit status with the IRS?
17. What about the IRS User Fee?
18. What about your on-line Questionaire?
19. Once we fill out your Questionnaires, how long does it take you to process it and take the next step for us?
20. What about the 501(c)(3) application, Form 1023, etc.?
21. What about communicating with the IRS? Will we be communicating directly with the IRS?
23. Is it true that you will put us on your web site? Is there a charge for this?
24. When the process is over, are we still a part of easynonprofit.com? Do you continue to provide a service to us?
25. You refer to Plan B. What is Plan B?
26. What is your refund policy?
27. Is there a time limit on sending back your Questionnaires?
28. What is your privacy policy?
29. Why do you mention that your documents look good?
30. What if we are outside the U.S.?
31What state Should I form in?
32. Is my Corporate Name Available?
33. How long is the incorporation process?
34. What is a Registered Agent?
36. What are Articles of Incorporation?
37. What is a Corporate Officer?
38. What is a Corporate Director?
39. Where can I get a Corporate Seal?
40. What is a Federal Employer Identification Number?
41. Does the entity have to issue stock?
43. If I incorporate, will doing so prevent others from using my company name?
44. Can I protect a trade name nationwide?
45. Can the same person be the shareholder, director and all officers of a corporation?
46. Do I need to publish a notice of incorporation?
47. What is a state filing fee?
48. What is meant by “Our Fee for Preparing & Filing Articles of Incorporation”?
49. What is meant by “Our Fee for Preparation of Your 501c3 Application”?
1. When can we start giving tax-deductible receipts?
If you are a new organization just now filing your Articles of Incorporation, your tax-exempt status will be retroactive to the date of the filing of the Articles. For these organizations, you can begin giving tax-deductible receipts for donations you receive as soon as your Articles are filed as long as the donor understands that if for any reason you do not obtain tax-exempt status, the tax-deductible receipts are invalid, and the donations can be disallowed by the IRS. If you have already filed your Articles of Incorporation, tax-exempt status may not be retroactive to the date of the filing of your Articles but retroactive only to the date of the filing of the Form 1023 501(c)(3) application. This is often true when more than 27 months have passed since the filing of your Articles.
2. What about directors? How many do we need? How do we select them?
Directors have 100% control of the corporation. It is very important that you have trustworthy directors. The IRS requires a minimum of three. You can have as many as ten. We recommend an odd number to avoid a deadlock in voting. If you want more than ten directors, you can amend your Bylaws once you have obtained tax-exempt status.
The directors vote for the officers (president, vice-president, secretary and treasurer) and can normally change them at any time (absent a contract to the contrary). Here’s a brief hypothetical to keep in mind: A man operated a nonprofit organization for 16 years. He, his wife, and a third director comprised the board of directors. When his wife divorced him, she joined up with the third director, and they removed him from his organization. After 16 years of sweat and toil in his own nonprofit, he was out in the street. Choose your directors wisely.
3. Do the directors and officers have to live in my state? Be U.S. citizens?
No, they can live anywhere in the U.S. or reside abroad. They can be U.S. citizens or foreign nationals. Normally, your treasurer must be a U.S. citizen or a legal U.S. resident, and the accounting records for the organization must be kept in the U.S. If the organization has no U.S. presence, it may still obtain tax-exempt status (e.g., to get grants), but donations to it would not normally be tax-deductible.
4. How long does the process take?
Once we get a questionnaire back from you, it takes about a week to prepare your documents. We guarantee to send you your documents within 5-business days or we pay you $100. States take varying amounts of time to file the Articles of Incorporation. After your application is sent to the IRS, you will receive a letter saying you will hear from the IRS within 120 days (4 months). Sometimes, the IRS finishes its work in 60 day, sometimes in 90 days and sometimes, if the IRS needs additional information about your organization, it may take longer than 4 months. If the IRS is backlogged in its work (as it is currently), it may be longer than four months. See our information from the IRS about how long it takes.
5. Will your fees and state and federal filing fees be tax-deductible?
Yes, they will be tax-deductible if you follow our procedure. We provide you a legal document to accomplish this. Just make a mental note that you intend to be repaid by the organization for the fees you pay.
6. What does your service NOT cover?
Other than your corporate documents (Articles, Bylaws, etc.), we do not handle anything on the state level. State, county and city laws and regulations vary state by state, county by county and city by city. Normally, you should be able to handle them on your own. Likewise for state tax-exempt status (automatic or almost automatic for most states).
7. What do your Questionnaires consist of?
Our Corporation Questionnaire and 501c3 Questionnaires can be found on our website. In this way, we get all the information from you to prepare all your documents. Of course, we give you guidance in answering the questions in the questionnaires themselves, and are also available by phone should you need additional guidance. With the 501c3 Questionnaire, we also give you sample answers taken from cases that sped through the IRS process in less than six weeks.
8. What about the bookkeeping and tax returns after I get nonprofit status? Will I be able to handle this?
It is complex to secure nonprofit status, but once you have the status, it is surprisingly easy to do the bookkeeping in most cases. Tax returns were not required to be filed for nonprofit organizations until gross revenues are more than $25,000 per year (Page 8-9 of IRS Publication 557, Rev. March, 2005), but now they are, but this is not difficult. There are no federal tax returns required for churches. Most states require no tax returns from the organization (California is an exception). You will need to fill out the Form 990 informational tax return. If you are a private foundation, tax returns are much more complex. With any organization, you need to keep good track of income and expenses.
9. What if I have already filed my Articles of Incorporation? Do you have a reduced fee?
Yes, see our fee schedule.
10. What about being under someone else’s nonprofit?
Be careful. There may be a problem lurking. Tax-exempt status from the IRS is not something that can be passed around like a winter coat. The IRS says that if you are going to be a subordinate organization included in a group exemption letter, you must be in relation to the central organization, “subject to its general supervision or control” (Page 7 of IRS Publication 557, Rev. March, 2005). Is that something you want? Will you truly be subject to the general supervision or control of that organization? If not, you could be looking at problems with the IRS.
11. I have some problems with the IRS–past tax returns, an audit, owing them money, etc. Also, I have problems with my credit. I’m currently in bankruptcy. Will this affect getting tax-exempt status?
Good news! Not at all. These problems will not in any way affect our ability to help you incorporate and obtain tax-exempt status.
12. Do you have lawyers and CPA’s on staff?
Incorporation and creating corporate documents are a job for a lawyer, not a CPA or a layman. A CPA normally cannot create corporate documents. Tax-exempt status is a job for a lawyer or CPA. We would have to charge you two to three times as much if we did our work for you as lawyers do. If you desire legal or tax advice, you should contact a lawyer or CPA.
We do not give you any specific legal advice. If you have legal questions, you should consult a lawyer. We give you the benefit of our twenty-five years of experience, but we will not give you specific legal advice. We take you through the process of incorporation and tax-exempt status in a standard way.
We use the corporate legal documents, the Articles of Incorporation, the Bylaws, and other documents that we have developed since 1981 and that have been proven acceptable to the IRS. If later, you want to tailor your Bylaws to some specific need or desire (for example, to add an Advisory Board), you can amend them after the process is finished and you have your 501(c)(3) Determination Letter. We give you a sample form for a corporate resolution to amend your Bylaws, but we will not specifically advise you. We caution you to be very careful in making any substantive changes to our Bylaws. Unless you’re a lawyer, you may not know the ramifications of doing so. For example, your state law may have certain requirements you are unaware of.
13. They’re not called “Articles of Incorporation” in my state. What about this?
Different states call the basic organizational document by different names: Articles of Incorporation, Certificate of Incorporation, Articles of Organization, Articles of Agreement, Articles of Association or Charter. For simplicity, we call them Articles, or Articles of Incorporation. This is sometimes called the charter or constitution of the organization.
14. We don’t have an office yet for our nonprofit organization or a location yet for our church/congregation/school. Can we still get tax-exempt status?
Yes. You can have your nonprofit office in your home, and your church or congregation can meet in someone’s home. Neither of these situations will keep you from getting tax-exempt status.
To be classified as a school, you must have facilities where the educational activities are regularly carried on. If your school does not have facilities, it can still get tax-exempt status as an educational organization.
15. Do you file the Articles in my state?
In the past, we did that, but we found a much better and faster way. We prepare your Articles and cover letter to meet all your state requirements and e-mail them to you as Adobe PDF files. You open the files, print them out, and follow our simple and concise instructions. We tell you how many originals and how many copies you need to send and how to make out your check to your Secretary of State. This is a much faster approach to get your nonprofit up and going.
16. What is the difference between general nonprofit status and church nonprofit status with the IRS?
You can obtain tax-exempt status for a nonprofit organization on the basis of a future plan. This is not true of church status. You must have a current operating church to obtain church status. Churches do not file any tax returns. A very small church, and/or one made up mostly of family members, may obtain 501(c)(3) status as a general nonprofit until it is large enough to qualify as a church.
17. What about the IRS User Fee?
The IRS charges a $300 or $750 User Fee to process your application. If your projected annual gross income for your first three years of operation (or up to four past years of operation if Plan B) is under $10,000 per year, then the $300 user fee applies to you. If it’s over $10,000 per year, then the $750 user fee applies.
18. What about your On-line Questionaire?
If you have any questions, please email us at info@easynonprofit.com.
19. Once we fill out your Questionnaires, how long does it take you to process it and take the next step for us?
From the time we receive your completed Questionnaires, we guarantee to e-mail you your documents within 5-business days. The 5-business days excludes weekends, U.S. national holidays. Since there are two sets of questionnaires (one for state and one for federal), this means that you can have all your documents in a little over a week after you get started (assuming you get the Questionnaires right back to us). Now that is fast!
20. What about the 501(c)(3) application, Form 1023, etc.?
We prepare and send you the 501(c)(3) tax exempt application (Form 1023) for date and signature. We also prepare Schedule A for churches and Schedule B for schools and any other schedules that may apply to you. Using our instructions, you prepare any attachments and attach them to the Form 1023 and include a copy of your Articles and Bylaws and your check for the IRS User Fee.
21. What about communicating with the IRS? Will we be communicating directly with the IRS?
Most often, when you send in your application to the IRS, that is the end of the process for you. You receive a letter acknowledging that your application has been received by the IRS and that you will hear from the IRS in 120 days. Then you wait until you receive your determination letter recognizing your tax-exempt status. However, depending on how clearly and completely you described your activities on the 501c3 Questionnaire, it is not uncommon for the IRS to have additional questions for you. Responses to these questions enable the IRS to get a better understanding of your operations in order to determine that your organization is tax-exempt. If you get additional questions, you will prepare the answers and send them directly to the IRS (we give you a sample cover letter to use). If you don’t understand any question from the IRS or feel you need some direction in answering the question, please contact us, and we’ll help you understand it and guide you in the answer.
22. Are there any limitations on the kinds of organizations you will incorporate and obtain nonprofit status for?
Normally, no. In complex cases, or in cases where you desire incorporation with formal (voting) members, we will decline to perform our incorporation service. We advise you to seek the services of a lawyer in such cases. A church/congregation with informal members (which is what we recommend) is never a problem. (Informal members may be called members, but they do not have voting control over the church/congregation.) However, even in the event that we will not handle the incorporation for you, we can still handle the 501c3 process for you.
23. Is it true that you will put us on your web site? Is there a charge for this?
We are considering putting basic information on our web site for most all of our clients. Please let us know if this service would be of interest to you or your organization.
24. When the process is over, are we still a part of easynonprofit.com? Do you continue to provide a service to us?
Once we finish the process for you, we step out of the picture. You are completely independent. You are not under our “umbrella” or tied to us in any way. We gently push you away from the dock with our final letter full of helpful parting advice and very useful sample forms (Unanimous Written Consent of Directors (for Corporate Resolutions), Resignation of Director or Officer, Unanimous Written Consent of Directors to Set Time and Date for Annual Meeting of Board of Directors, Unanimous Written Consent of Directors to Change Location of Annual Meeting of Board of Directors, Unanimous Written Consent of Directors to Establish End of Annual Accounting Period, Waiver of Notice and Consent to Holding of Annual Meeting of Board of Directors, Minutes of Annual Meeting of Board of Directors, Waiver of Notice and Consent for Special Meeting of Board of Directors and Minutes of Special Meeting of Board of Directors ).
25. You refer to Package 2. What is Package 2?
See our fee schedule.
26. What is your refund policy?
We take 3 steps for you. Step 1, you fill out the Online Questionnaire and we review it for state and IRS accuracy. Step 2, we e-mail you your corporate documents. Step 3, we e-mail you your 501c3.
If we have taken Step 1, 75% of total fee is refundable, Step 2, 50%, Step 3, 0%. A refund request for steps not taken must be made within 30 days of the previous step.
27. Is there a time limit on sending back your Questionnaires?
No.
28. What is your privacy policy?
All the information you give us is strictly confidential and will not be shared or sold to anyone for any reason.
29. Why do you mention that your documents look good?
We believe everything we do in life should be the best we can do and that your legal documents should not only be excellent from a legal standpoint (most important), but also be esthetic and pleasing to the eye. Generally, legal documents are pretty boring. At least, ours look good! (Exception: Articles of Incorporation and government forms have to follow a specific format and cannot be made to look good.)
30. What if we are outside the U.S.?
No problem. We incorporate and obtain tax-exempt status for people all over the world. That’s one advantage of doing everything by e-mail. Your directors do not need to be U.S. citizens nor reside in the U.S. (see question 3. above for more details.)
31. What state should I form in?
Generally speaking, you should form in the state in which you conduct your business in. However, if you conduct your business in more than one state, you might consider the various tax advantages of each state you do business in to determine which state is right for you. If you do not form in your home state of business, you may still be required to qualify as a foreign entity in your home state which would mean double the formation fees and double the paperwork. Still worse, you will be required to pay state taxes in your home state because that’s where you are doing business. Give us a call we would be more than happy to answer any questions you have about incorporation.
Email us at info@easynonprofit.com.
32. If I am self-employed, how will incorporating my business benefit me?
It benefits you in several ways, but keep in mind that some of the following does not apply to nonprofits.
(1) As a self employed person you have to pay self employment taxes at the federal level of 15% in addition to your personal income taxes. With an S-Corporation, you can cut your self employment taxes down because you will only have to pay taxes on money that is paid to you out of the corporate bank account. For instance, assume you are self-employed as a sole proprietor and you make $100,000.00 this year. You would have to pay to the IRS $15,000 or 15% of this $100,000 as self employment taxes, in addition, to any other monies you owe the IRS for personal income taxes. If you form a S-Corporation, you can pay yourself a salary as an employee, of say, $60,000/ year, and the $60,000 would be taxed at 15% and the remaining $40,000.00 would not be taxed because it was not received by you as an employee but would stay in the corporate bank account. You would only be required to pay the IRS $9,000 rather than the $15,000 and you would realize a tax saving of $6,000.
(2) In addition to this saving, as a sole proprietor, you can only deduct a portion of insurance for medical and dental premiums. By incorporating, you can deduct 100% of these premiums so long as all employees of the entity receive these benefits equally and without discrimination. If you are a one person entity, that solves that problem.
(3) Incorporation will protect you from lawsuits. If you get sued, your personally assets will be protected from attachment and the debts of the entity will be owed by the entity so long as you maintain you annual meetings and operate the entity in legitimate fashion observing corporate formalities as required by state law.
(4) By incorporating, you can use an entity to build and repair your credit. For those who have problems with their credit, incorporating and obtaining a corporate credit can be a wonderful way of creating new credit and demonstrating credit worthiness so that you may buy your first house.
easynonprofit.com suggests that you consult with your attorney or tax professional to make sure incorporating is the best alternative for you.
33. Is my Corporate Name Available?
We will perform a non-binding name check for name availability within the state of incorporation. The name check is preformed by us at no additional charge where available. However, please remember that the final determination is made by the state officials; thus, never rely on a corporate name check until AFTER you have received a copy of your filed Articles of Incorporation, stamped with the state’s approval.
Most jurisdictions allow you to telephone in and ask whether the corporate name is available, or whether it is in use by another company. Many jurisdictions are updating their systems and now allow you to check for your corporate name via the internet. Some jurisdictions will provide a name check over the telephone for a charge of between $15 to $20. Still some, however, will not provide name checks over the telephone and require you to physically enter the state office and complete a form with the requisite information before the state will perform a name check.
34.How long is the incorporation process?
Processing times for incorporating a company vary amongst the different states and change constantly depending on the workload at the state office. Please ask one of our representatives for our most current approximation of the processing time for Articles of Incorporation within your state of incorporation.
35. What is a Registered Agent?
Almost ALL jurisdictions require that the entity designate a registered agent for service of process. However, in most cases, anyone who has a street address (NO PO BOXES) within the state of incorporation may act as a registered agent for the entity.
We can select a registered agent service for you if you are in need of such services. Persons who require our registered agent services are usually those who are incorporating in one state (Nevada, for example) and operating a business in another state (California, for example).
36. What are Articles of Incorporation?
An entity’s “Articles of Incorporation” is the main filing document which begins the entity’s existence under state law. Once filed, the entity comes into existence.
The level of complexity for an entity’s Articles of Incorporation can range from very simple to extremely complex. Generally, most jurisdictions require Articles of incorporation to contain, at a minimum, information about the Corporate Name, the Registered Agent, and the entity’s business address. Requirements vary by state.
37. What are Bylaws?
Bylaws serve as the internal operating document for the entity. Generally, Bylaws detail the responsibilities, rights, and duties of directors, shareholders and officers. Currently states generally do not require that Bylaws be filed.
38. What is a Corporate Officer?
Our forms allow you to name up to 6 officers for your entity. While most jurisdictions allow the same person to act in all capacities, that person has different responsibilities depending on the capacity in which he or she is acting.
Although most jurisdictions allow one person to serve in all three capacities, the person’s responsibility and authority changes through the different officerships the person assumes. For example, the President is typically responsible for entering into contracts on behalf of the entity, the Treasurer is responsible for maintaining and accounting for corporate funds, and the Secretary is responsible for observing corporate formalities and maintaining corporate records.
In addition to these required officer positions, an entity may also have vice presidents or other officers.
Typically, the authority and responsibilities of each officer is described in the corporate bylaws and may be further defined by an employment contract or job description.
The President. The President has the overall executive responsibility for the management of the entity and is directly responsible for carrying out the orders of the board of directors. He or she is usually elected by the board of directors.
The Treasurer. The Treasurer is the chief financial officer of the entity and is responsible for controlling and recording its finances and maintaining corporate bank accounts. Actual fiscal policy of the entity may rest with the Board of Directors and be largely controlled by the president on a day-to-day basis.
The Secretary. The Secretary is typically responsible for maintaining the corporate records.
39. What is a Corporate Director?
The Board of Directors is essentially the management body for the entity.
Responsibilities of the Board of Directors include establishing all business policies and approving major contracts and undertakings. In addition, the Board may also elect the President. Ordinary business practices of the entity are carried out by the Officers and employees under the directives and supervision of these Directors.
The Directors must act collectively for their votes and decisions to be valid. That’s why Directors may only act at a Board of Directors meeting. This, however, requires certain formalities. One such formality is that the Directors must all be notified of a forthcoming meeting in a prescribed manner, although this can be waived or provided for in the entity’s Articles of Incorporation or Bylaws.
For a Directors’ meeting to be valid, there must also be a Quorum of Directors present. A Quorum is usually a majority of the Directors then serving on the Board; however, the Bylaws may specify another minimum number or percentage.
The Board of Directors must meet on a regular basis (monthly or quarterly), but in no case less than annually. These are the regular Board meetings. The Board may also call Special Meetings for matters that may arise between regular meetings. In addition, boards may call a special shareholders’ meeting by adopting a resolution stating where and when the meeting is to be held and what business is to be transacted.
The first meeting of the Board of Directors is important because the Bylaws, the Corporate Seal, Stock Certificates and Record Books are adopted.
Board members, like officers, have a fiduciary duty to act in the best interests of the entity and cannot put their own interests ahead of the entity’s. The Board must also act prudently and not negligently manage the affairs of the entity. Finally, the Board must make certain that it properly exercises its authority in managing the entity and does not abrogate its responsibilities to others.
This means that the board must be very careful to document that each Board action was reasonable, lawful and in the best interests of the entity. This is particularly true with matters involving compensation, dividends and dealings involving Officers, Directors and Stockholders. The record or Corporate Minutes of the meeting must include the arguments or statements to support the Board action and why must detail why the action was proper.
40. Where can I get a Corporate Seal?
While many jurisdictions have abolished the requirement of maintaining a corporate seal, many entities still prefer to maintain a corporate seal as a formality. Corporate seals range in price from $8 (rubber stamp) to about $75 (steel embosser). Please contact your local stationer to obtain a corporate seal. You’ll need to know the name of your entity and the date of incorporation before you can order it.
41. What is a Federal Employer Identification Number?
If you plan on opening a bank account under your corporate name, most banks will require that your entity have a Federal Employers Identification Number. Furthermore you may need this number to file your tax return.
42. Does the entity have to issue stock?
Shares of stock represent ownership of the entity. Where no shares are issued, no individual owns the entity. Thus, shares must be issued to those individuals who will own the entity. While most states have created many exceptions and exemptions from registering a stock issuance with the State or with the SEC for most small businesses, it may be wise to contact the appropriate entity to determine whether you must file a notice of stock issuance on a state or Federal Level.
Tax-Exempt organizations do not issue stock. Because we are an administrative service, our company CANNOT be involved with your entity’s stock issuance. For help regarding your entity’s stock issuance, please contact a licensed attorney or the appropriate state entity.
43. What is Par Value?
A business entity must sell shares of stock in order to capitalize the entity, that is, provide the entity with its own capital, separate from the money of its owners. This separation provides part of the support for shielding the shareholders from personal liability for the debts and obligations of the entity.
Shares of stock sold by the entity represent proportionate ownership interests held by shareholders in the entity. “Par value” is a dollar value assigned to shares of stock which is the minimum amount for which each share may be sold. There is no minimum or maximum value that must be assigned. Shares may also have “no par value,” which means that the Board of Directors will assign a value to the stock below which the shares cannot be issued.
There is no minimum number of shares that must be authorized in the articles of incorporation. One or more shares may be authorized. However, the entity may not sell more shares than it is authorized to issue and it must receive consideration in exchange for its shares.
44. Must I file a D.B.A.?
Individuals and unincorporated entities that regularly conduct business using an assumed name (often referred to as a “d.b.a.”) must file an assumed name certificate with the county clerk in each county in which business premises are maintained. If corporations, limited liability companies or limited partnerships (entities created by filing with the secretary of state) do business with a name that is different than the name set forth in the organizational documents, they must file assumed name certificates in the county or counties where the registered office and the principal office are located, and must also file with the secretary of state.
45. If I incorporate, will doing so prevent others from using my company name?
Incorporating will not keep another business from using your name. Generally, every business must protect its own business name and the good will that it has acquired from the sale of its goods or services in a specific geographic area. Filing articles of incorporation only prevents the secretary of state from filing a document to create another corporation, limited liability company or limited partnership that has the same, a deceptively similar, or similar name as the entity already in existence.
46. Can I protect a trade name nationwide?
There is no national registration of trade names. Generally, businesses, including corporations, protect their trade names by registering their trade name as a service mark or trademark if the trade name also functions as a service mark or trademark. Because of the legal complexities involved, we recommend that businesses obtain private counsel to get advice on how to protect a trade name in interstate commerce.
47. Can the same person be the shareholder, director and all officers of a corporation?
While jurisdictions will vary in their requirements, most states require that there be at least one director and two officers, in a general, for-profit entity . The required officers are President and Secretary. Most states allow one natural person to hold both offices and be the sole director of the entity. Usually, that one person may also be the sole shareholder. A corporation may not be a director of another corporation.
48. Do I need to publish a notice of incorporation?
While a few jurisdictions require publication of the corporate name to be published in a newspaper local to the county of the registered agent (Georgia, Arizona, Illinois, and Pennsylvania), most jurisdictions do not require publication unless an existing unincorporated business intends to incorporate without a change in its name; that business must then publish its intent to incorporate in the local newspaper for four consecutive weeks (in most jurisdictions).
49. What is the difference between a corporation and an LLC?
Corporations are formed pursuant to state law and have shareholders, are managed by a board of directors, and the daily affairs are administered by officers. Similarly, a limited liability company (LLC) has members and may be managed by one or more managers. Most often, both entities must pay franchise taxes, but may have different federal tax liabilities.
Generally, most people form corporations or limited liability companies in order to shield the shareholders or members and officers or managers from personal liability for the debts and obligations of the entity. There may also be various tax advantages to forming these entities which may not be available for sole proprietorships and general partnerships.
We cannot provide information as to whether a person should incorporate or form a limited liability company or a partnership. If you are contemplating forming any of these entities you should consult with private counsel regarding your individual fact situation.
This is a corporation which is formed with the purpose of benefiting the public in some religious, scientific, educational or charitable way. Because of this charitable purpose, most jurisdictions do not require these corporations to pay income taxes on monies it earns. In addition, nonprofit corporations may achieve tax exempt status for charitable contributions by obtaining what is known as 501(c)(3) status. Please consult your attorney or accountant for more specifics and advice on whether this entity is the one for you to form.
50. What is the difference between an S-Corporation and a C-Corporation and Limited Liability Company regarding tax ramifications?
If you do not make an election with the Internal Revenue Service (FORM 2553) or with the appropriate State Agency, you will be considered to be a C-Corporation. A C-Corporation will be subject to double taxation. It will be taxed one time at the corporate level and one time when distributions or dividends are given to shareholders. For example, assume a corporation earns $100,000 for the first year. The corporation must pay taxes at its own tax rate. Assume the corporation distributes the $100,000 to the sole shareholder of the company. This shareholder will have to pay taxes on this dividend as well; therefore there is double taxation.
If you prepare and file Form 2553, you will be an S-Corporation. A S-Corporation is subject to single taxation and the profits earned by the S-Corporation are taxable to the shareholders according to the individual income tax brackets and their ownership interest in the company. In other words, a 100% shareholder will report the full gain on his/ her individual income tax returns. If you are 50% shareholder and the corporation earns $100,000 for the first year, that 50% will report only $50,000 as income earned for this year.
A limited liability company is taxed similarly to an S-Corporation in that there is only single taxation. The difference is that, generally, an LLC files a partnership tax return whereas an S-Corporation must file a corporate tax return. To determine which entity to form consult with an attorney or accountant. Easynonprofit.com is simply a document preparation service.
51. What is a state filing fee?
Each state charges it’s own state filing fee for the formation of any entity. The fees vary from state to state and from entity to entity. The fees are also subject to change.
48. What is meant by “Our Fee for Preparing & Filing Articles of Incorporation”?
This is the fee that we, easynonprofit.com, charge for the preparation & filing of your Articles of Incorporation.
49. What is meant by “Our Fee for Preparation of Your 501c3 Application”?
This is the fee that we, easynonprofit.com, charge for the preparation of the Form 1023.
50. What is meant by “Our Fee for Preparing & Filing Articles of Formation”?
This is the fee that we, easynonprofit.com, charge for the preparation & filing of your Articles of Formation.