You may be familiar with how non-profit organizations work in Florida, but there are some detailed, complex legal concepts involved if you actually intend to create one. The paperwork and requirements are complicated, so you should trust a Clearwater, FL business formation lawyer to guide you through the process. Still, a summary of non-profit corporations should help you understand some of the basics.
Definition of a Non-Profit Corporation
Sometimes called a not-for-profit, a non-profit corporation can be set up for different purposes, but there are two key objectives:
- To receive tax exemptions and special status under federal, state, and local tax laws; and,
- Limiting liability for the stakeholders involved with the business, so that they can protect their personal assets from the obligations and debts of the company.
Tax-exempt status is allowed for qualifying corporations because they provide some service or economic advantage, as opposed to organizing with a goal to make profits for stakeholders. To be eligible, the company must benefit:
- The public, such as a charity for the poor or underserved communities;
- A particular group, including a church or Veteran’s organization; or,
- The individual members, which would be the case for a country club or credit union.
Forming a Florida Non-for-Profit Corporation
There are certain procedural requirements for creating a non-profit corporation through the Florida Department of State’s Division of Corporations. The first is determining whether the name is already in use, as you cannot file documents in the name of a company that’s similar to an existing one. You must also prepare the proper forms and provide such information as:
- The principal place of business;
- A statement of the non-profit’s business purpose;
- The name and address of the Registered Agent, which is required for service of process;
- The names of initial officers and/or directors; and,
- Other details as required by the forms.
In addition, you must pay a fee for filing initial documents, as well as annually to maintain status in good standing by state law.
Tax Issues Involved with Non-Profit Corporations
Tax-exempt status is a significant financial advantage for a company, which is why the Internal Revenue Service has strict requirements for non-profit corporations. The most common type of company is one organized under Section 501(c)(3) of the Internal Revenue Code. The rules are very detailed, so it’s wise to consult with a Clearwater, FL business formation attorney. As an overview:
- The corporation must be organized for a qualifying charitable reason;
- The company must be in existence for three years before seeking tax-exempt status; and,
- There are limitations on how the organization can be involved in political activity.
A Clearwater Business Formation Lawyer Can Assist with Florida Non-Profit Corporations
If you’re considering a not-for-profit and have questions about organization, please contact Clearwater Business Law at (727) 785-5100 to set up a consultation. We can explain the business formation process under Florida law and the IRS requirements for various types of non-profit corporations. Our team serves Clearwater, FL and throughout Pinellas County, and we’re happy to help with your business needs.