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  Tax Exemption Home: 501c3 Applications: Non-Profit FAQ's
 

Non Profit FAQ's

 
1. How do for profit and non-profit organizations differ?
2. Are non-profit corporations exempt from tax responsibilities?
3. Is one person able to be the sole director and officer of a nonprofit?
4. Is a non-profit corporation able to make a profit?
5. Who monitors the activities of a non-profit corporation?
6. What, if any, are the differences between a director and a trustee?


1. How do profit and non-profit organizations differ?

Non-profit organizations are unable to give away dividends or shares to its directors, officers or organization members. A profit organization is able to give away shares of stock.  In this situation, shareholders are able to benefit from their investments.

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2. Are non-profit corporations exempt from tax responsibilities?

Not all non-profit organizations are 501c3 tax exempt. There are special requirements that must be satisfied in order for a non-profit to take advantage of a 501c3 tax exemption status. In order to take advantage of this opportunity, an organization must apply for the status and be approved by the IRS and state tax board.

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3. Is one person able to be the sole director and officer of a nonprofit?

Most states require three directors to form a nonprofit. The following states will require less than three directors if there are less than three members:

Most states have a requirement that states that three directors are needed to form a non-profit. The following will require less than three directors if there are less than three members:

  Louisiana  
  Massachusetts  
  Minnesota  
  Virginia  
     

Some states allow only one director to form a non-profit organization.  These states include:

  California Colorado Delaware
  Michigan Mississippi New Hampshire
  Pennsylvania South Carolina Virginia
  Kansas Oregon West Virginia
  Iowa Oklahoma Washington

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4. Is a non-profit corporation able to make a profit?

Yes. A non-profit corporation is able to bring in more money than it spends. The profits can be used to cover operational costs. These profits can't be given to directors, employees, and officers in the form of dividends.

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5. Who monitors the activities of a non-profit corporation?

The Attorney General has authority to monitor and investigate the activities of a non-profit corporation. This includes the ability to investigate non-profit corporation charities and investigate the records of all corporations, including those that are non-profits.

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6. What, if any, are the differences between a director and a trustee?

There are no differences between the two. Both a Board of Directors and Board of Trustees hold the same meaning. Many non-profits choose to have a Board of Advisors and outline its powers in the bylaws. Unless the bylaws outline legal authority, the Board of Advisors doesn't possess legal authority.

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Our Recent 501(c) Tax Exempt Approvals:

State: Washington Corporate. No. 603244645

State: California Corporate No. C3510839
 
 

 


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Since 1999
For over 14 years, has been the trusted leader in in obtaining tax exemptions for our clients


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"Patel and Almeida helped us to establish a 501c3 organization in an efficient way. With their help, we went through this process quickly.."
  -Christopher Onzo
Paderewski Music Society
www.ijpaderewski.org
 
 
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Save a Kitty Inc.
www.saveakittyca.org
 
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