What is a nonprofit corporation?
A. A nonprofit corporation (whether incorporated or as an unincorporated association) is an organization in which no part of the income is allowed to be distributed to its members, directors, or officers. The corporation is not prohibited from making a profit; the prohibition is that profits can not be distributed to the members, officers, or directors of the organization. Nonprofit corporations are formed pursuant to state law. Nonprofit corporations must apply for tax exempt status, both at the federal and state level. A nonprofit corporation formed under IRS code Section 501(c)(3) may be formed and organized to operate for some religious, educational, literary, charitable, or scientific purpose. It must be noted that a nonprofit corporation may also be formed for other purposes pursuant to various other sections of the IRS code.
A nonprofit corporation is a corporation formed to carry out a charitable, educational, religious, literary, or scientific purpose. A nonprofit corporation doesn’t pay federal or state income taxes on profits it makes from activities in which it engages to carry out its objectives. This is because the IRS and state tax agencies believe that the benefits the public derives from these organizations’ activities entitle them to a special tax-exempt status. The most common federal tax exemption for nonprofits comes from Section 501(c)(3) of the Internal Revenue Code, which is why nonprofits are sometimes called 501(c)(3) corporations. For more information, see Nonprofit Basics.
A nonprofit corporation is a corporation formed to carry out a charitable, educational, religious, literary, or scientific purpose. A nonprofit corporation doesn’t pay federal or state income taxes on profits it makes from activities in which it engages to carry out its objectives. This is because the IRS and state tax agencies believe that the benefits the public derives from these organizations’ activities entitle them to a special tax-exempt status. The most common federal tax exemption for nonprofits comes from Section 501(c)(3) of the Internal Revenue Code, which is why nonprofits are sometimes called 501(c)(3) corporations.
A nonprofit corporation is created by filing a Certificate of Formation with the Secretary of State. See Form 202 (Word, PDF). A “nonprofit corporation” is a corporation no part of the income of which is distributable to members, directors, or officers. A nonprofit corporation may be created for any lawful purpose, which purpose must be stated in its Certificate of Formation.
A nonprofit corporation is created by filing articles of incorporation with the secretary of state in accordance with state law. A nonprofit corporation may be created for any lawful purposes, which purposes must be fully stated in the articles of incorporation. Not all nonprofit corporations are entitled to exemption from state or federal taxes.
