Archive for the ‘Start-Up/Organization Costs’ Category

How do I start a nonprofit organization–step 1

February 17, 2012

There are many steps involved in forming a nonprofit organization.  When you started your movement, idea, or ministry, you were excited about the goals you were accomplishing.  Your ministry starts developing and you realize that in order for your organization to grow and reach other individuals, you need to get a more formal entity in place.  You are now ready to take it to the next level.

The first step in forming a 501(c)(3)nonprofit charity organization is to form a nonprofit corporation or LLC.  This corporation will be formed at the state level.  You will need to enlist the assistance of an attorney and he/she will guide you in deciding what type of nonprofit corporation will best suite your organization.  In the State of California you will want to go to the Secretary of State office and search to ensure your business name has not already been used.  The website is http://kepler.sos.ca.gov/.

This website is a great resource in helping you start your entity and to stay in compliance with the state.

There are three categories of California nonprofit  corporations.  You will need to decide if your nonprofit corporation will be organized as a Mutual Benefit, Public Benefit or a Religious corporation.

  1. A Religious corporation is one organized to operate a church or structured primarily for religious purposes.
  2. A Public Benefit corporation is organized primarily for charitable purposes and plans to obtain state tax exempt status under California Revenue and Tax Code section 23701(d).  This category covers most of your 501(c)(3) organizations, civic leagues or social welfare organizations.
  3. A Mutual Benefit corporation is corporation organized other than religious charitable, civic league or social welfare purposes.  These organizations may not be planning tax exempt status at all.

Following you will find a link to download the instructions and sample forms needed to file your Articles of Incorporation. 

www.sos.ca.gov/business/corp/pdf/articles/corp_artsnp.pdf

After filing your articles, you will receive back a stamped copy from the state indicating the approval of your Articles of Incorporation and your new state identification number.

You are now ready to move onto the next step.

As always if we can be of service, please contact steve@ntcpas.com

IRS Issues Rules for Deducting Startup Expenses

August 17, 2011

The Internal Revenue Service on Tuesday issued final regulations on how taxpayers can deduct up to $5,000 in startup expenses in the years they begin active trades or businesses. The new rules also provide guidance on how taxpayers can elect to capitalize, rather than deduct, such expenses.

The rules provide guidance on the application of section 902 of the American Jobs Creation Act of 2004, which amended IRC §§ 195(b), 248(a) and 709(b) to allow taxpayers to deduct up to $5,000 of startup expenses or organizational expenditures by making an election.  The remainder of the start-up or organizational expenses are generally amortized over 15 years.  The deductible amount is reduced by the amount by which startup or organizational expenditures exceed $50,000.

The final regulations provide the time and manner of making the election, and can be found here.