If you run a business that operates to benefit community members or another designated group of individuals, you may be eligible to form a nonprofit. Forming a nonprofit allows you to obtain tax exemption status and may come with additional benefits for your organization. Read on to learn more about how to form a nonprofit in California, and how A People's Choice can help.
California law uses the term “nonprofit corporation” as a company that doesn't distribute profits to its directors or officers the way a corporation does. It may earn income by engaging in business activities, and it may have paid employees. With this in mind, however, it is not a conventional business in which the owners get a share of the profits. Religious organizations, social clubs, and charities are all eligible for nonprofit corporation status in California. You don't need a lawyer to set up a nonprofit corporation, but you should have your documents prepared by a qualified professional. The best choice is to hire a registered legal document assistant to prepare your forms.
Decided to start a California nonprofit for religious, charitable, scientific, literary, or educational purposes? You must take specific steps to make sure you satisfy the requirements for a California nonprofit formation. Once you create a California nonprofit corporation, you can apply for tax-exempt status (501 (c) 3) with the IRS.
Obtaining 501(c)(3) tax exempt status in California involves a long process. You must fill out several applications with state and federal agencies, in addition to paying hefty application fees. Fortunately, once your nonprofit obtains its tax exempt status, it no longer has to pay income taxes. Your nonprofit will be required to keep and submit [...]