1. TAX-EXEMPT & NON-PROFIT
ORGANIZATIONS

2. Benefits of Non-Profits
Limited liability protection of trustees and
members
Exemption from federal income tax
Eligibility to receive tax-deductible contributions
Donors federal income tax
deduction
Lower postal rates on certain bulk mailings

3. Disadvantages of Non-Profits
Limitations on the sources of income
Inability to divide profits among members beyond reasonable
salaries
Paperwork, paperwork, paperwork
Restrictions on the use of assets to
purposes
Justifying tax exemption; public scrutiny; availability of financial documents to
public

4. Apply for recognition of exemption via form 1023.
include…
The Process- Federal

5. • EIN
• Organizing Documents
• Bylaws
• Description of activity
• Conformed copy
• Financial statements showing
receipts and expenditure
• Balance sheet for this year
and three previous years

6. The IRS may ask for more information,
so have prepared…

7. • Copies of advertising
placed
• Copies of publications
distributed written
material used for
expressing views on
legislation
• Copies of
leases/contracts/agreem
ents

8. Registration Time

9. The IRS will issue letter or recognition or request for
additional information within 90 days for the following three
categories:
Those that are submitted on obsolete forms/do not include items
specified in procedural checklist.
Those that can be approved immediately based on information
submitted
Those that need minor additional information.

10. All other applications referred to Determination Specialist
to approve, withdraw, or deny application.
Currently, the federal government is processing applications within 2 months to 12 months.

11. Submit form 532 and a signed copy of articles of
incorporation to Secretary of State,
include:
The Process- State

12. • Corporate name
• Place of principal
office in Ohio
• Purpose for forming
corporation
• Names and
addresses of at least
three (3)initial
directors
Do not include anything with SSN or federal TIN

13. Secretary of State has
discretion to accept or deny
application!

14. If corporation plans to sell items to general public, it will
need to register for the appropriate vendor’s license
Regular: $25.00; Transient: $25.00;
Delivery: $25.00; Service: $25.00
The Process- Local

15. Although a non-profit may make a
tremendous amount of income, it must remain
compliant. Non-profits must:
Restrictions on Non-Profits

16. Absolutely refrain from participation in political
campaigns
Restrict lobbying activity
Ensure that it’s earning do not inure to private shareholders and
individuals
Not operate for the benefit of private interests
Not operate for the primary purpose of conducting a trade or business
that is not related to tax exempt purposes
May not have purposes of activities that are illegal

17. To further remain compliant, a non-profit must:
• File a990-EZ, 990PF, or submit an electronic 900 annually
• Failure to file for three (3) consecutive years revokes exempt status
• Must report significant changes to program services or organizational documents
• The following forms may be filed electronically through the approved IRS 990 efiler
provider:
Maintenance- Federal
Form 990; Return of Organization Exempt from Income Tax; Form
990-EZ; Short Return of Organization Except from Income Tax, Form
990-PF; Return of Private Foundation; Form 990-N (e-Postcard);
Form 8868; Application for Extension of Time To File an Exempt
Organization Return; Form 1120-POL; U.S. Income Tax Return of
Political Organizations Form 7004; Application for Automatic
Extension of Time To File Certain Business Income Tax; Information,
and Other Returns (extension form for Form 1120-POL).

18. To further remain compliant, a non-profit must:
Maintenance- State
Must file a Statement of Continued Existence every five years
and keep all information regarding the statutory agent current.
Articles may be amended by voting members at a meeting
and a certificate containing a copy of the amended resolution,
and a statement of the basis of the adoption must be
prepared, signed by an authorized officer, and filed with the
Secretary of State.

19. • If $10,000 or less in gross receipts, then $2,000.00
• If $10,000 or more in gross receipts, then $2,500.00.
• Pre-Existing Organization, then $3,250.00.
The Costs

20. • Signed Fee Agreement and Consult Fee.
• Signed Power of Attorney Form.
• Mission Statement 3-5 sentences.
• Contact information for your current accountant.
The Next Steps

21. • http://grantspace.org/Tools/Knowl
• http://www.irs.gov/charities/
• http://www.form-a-corp.com/non-p
• http://smallbusiness.findlaw.com
/business-structures/non-
profit/non-profit-tax-exempt-pro-
con.html
Bibliography