Forming a Non-profit in California
Forming a Non-profit in California
When creating an organization or business, it is incredibly important to choose the legal entity that best suits your dealings. For example, law firms are limited liability partnerships (LLP) and many businesses are corporations. Organizations that are intended to operate as charities, religious organizations, or educational institutions (and other options) form non-profits. Not every organization can be a non-profit and given the tax implications, you should consult an experienced corporate lawyer prior to embarking on the formation of the legal entity.
How Do You Form a Non-Profit?
A non-profit organization is considered a non-profit corporation in California. In order to form the corporation, the non-profit needs to have at least one board director and have a name. The name cannot be similar to those already incorporated, as listed by the Secretary of State. A name is a crucial aspect of any corporation, which is why you should also check the name against any existing trademarks.
Once you have a name and a director you will want to file the articles of incorporation. There are specific forms for non-profits to fill out and file, and they are provided by the Secretary of State. In these articles of incorporation, you will have to describe the purpose of the non-profit. Having a clear statement of purpose is necessary not just for the incorporation process, but also for doing work in the future. Furthermore, you will also have to create bylaws for the corporation. These bylaws delineate many of the vital rules and functions that must be in place for the proper running of a non-profit. Ensure the bylaws detail provisions such as board responsibilities, authorizations, financial reports, and many other important sections.
Following the work for incorporating and writing the bylaws, the non-profit will hold its first board meeting. This meeting is when bylaws are passed, bank accounts are set up, other members appointed, and a fiscal period is created. Further actions can include filing a CT-1 form, SI-100, and Form 1023 for federal tax exemption under the IRS as well as Form 3500A for tax exemption in the state of California.
