If you have an organization that benefits the public, charitable entities, education, literary, religious, and/or scientific organizations, we can help you to get your 501c3 to start functioning. It is your organization that will be exempted from federal taxation under the section 501(c)(3) of the Internal Revenue Code. There are several organizations such as; Corporations, trusts, unincorporated associations, and other types of organizations exempted from federal income tax under Section 501(c)(3) of Title 26 of the United States Code constitute 501(c)(3) organizations.
Reasons for Choosing to Apply for 501c3:
Non-profit groups are created to assist the poor and underprivileged section of the society, to renovate and maintain public buildings and monuments, to promote civil rights, etc. Organizations of varied types can be qualified for a charitable designation, such as nursing homes, parent/teacher organizations, charitable hospitals, some schools, the Salvation Army, the Red Cross, and some churches. There are a number of reasons as of why organizations will choose to apply for the 501c3 application status.
To builds credibility with potential donors
To unlock funding reserved for non-profit organizations.
To get provisions for state, federal and other tax exemptions.
To have contributions to certain types of tax deductible non-profits.
To file for your non-profit status quickly with the help of our experienced non-profit professionals.
To be recognized as a charitable organization by IRS.
Procedures to Start for 501c3:
To begin a non-profit organization you are required to deal with lot of steps such as research, planning, fund raising, etc. In addition to these you have to overcome legal, accounting and technical hurdles. Thus Steps to start for 501c3 are as follows:
Step1: Create a non-profit corporation
It is a state-level procedure of filling articles that establishes a non-profit corporation. Most of the non-profit organizations form corporations for a variety of reasons such as to ensure that their officers, directors, and other key personnel are protected from liability. The initial procedure is to obtain a federal tax identification number (FEIN) from the IRS and bylaws. The rules are created that must be followed by the board of directors.
Step2: Obtain the status of 501c3 with IRS
If you are to obtain 501(c)(3) status for your non-profit organization, the federal government requires them to submit 501c3 application form to seek exemption from taxation. The actual 501c3 application form extends up to 28 pages. The IRS examines the documents as part of the 501c3 application form. An application process of 501(c)(3) is just like an audit of proposed activities rather than an audit of a tax return. It targets to examine the governing structure, goal and planned activities of the organization. 501(c)(3) organizations should ensure that their programs can realize the mentioned purposes of their formation and they must ensure that their programs are designed to solve these purposes. Moreover, the IRS looks firmly for clashes of interest and the probability that insiders might be benefitted from the process, both of which may lead to refutations.
Step 3: Issues of State Compliance
Gaining the status of 501(c)(3) will be the first step to obtain federal tax exemption for your non-profit organization, but you have also to address to two crucial issues before you proceed.
Registered Charitable Solicitation– The mandatory registrations are required in 40 states which are often under the administration of the Attorney General. Most of the states require registration prior to soliciting donations.
Exemption from State Corporate Taxes- The status of 501c3 is valid for exemption of state corporate tax in most of the states. Charity status must be applied in some states such as California and Texas through their own processes. The requirement for separately submitted applications varies from state to state, but with simpler registration process.
Reasons to Apply for 503c3 Application Form:
The primary reasons of individuals 501c3 application form is to help the organization in obtaining fund through one of the following course of actions for the pertinent causes:
To receive public and private donations
To receive public and private grants
Solely obtaining your 501(c)(3) application form for tax exemption status is not enough, your entity must be classified as a 501(c)(3) public charity to provide your donors with the highest tax benefits. To achieve this additional identification it is essential for trustworthiness and to boost up funding.
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