A 501(c)(3) non profit corporation is a popular way to incorporate a not for profit business for entities whose business purpose is for religious, charitable, educational, literary, scientific purposes, or a combination thereof.

So long as your 501c3 non profit corporation is organized for one of those reasons set forth above and you meet other IRS requirements your entity will be eligible for federal and state tax exemptions. Once your 501c3 receives tax exempt status from the IRS you will be able to accept donations from individuals and other companies who will be able to write-off those donations.

PURPOSES FOR WHICH YOU CAN FORM A NON-PROFIT 501C3 CORPORATION

The purposes for which you can form a 501c3 are:

• Religious: general types of religious organizations, including churches (e.g. a non profit corporation that is set up to provide free bibles to poor people);
  
  
• Charitable: providing services that benefit the public interest (e.g. a non profit corporation that raises so sick kids can go to camp);
  
  
• Scientific: research that is carried on in the public interest (e.g. a non profit corporation that is set up to do cancer research);
  
  
• Literary: writing, publishing, and distribution of books and other written materials directed toward promoting public interest rather than commercial publishing (e.g. a non profit corporation that is set up to help people in prison publish poetry);
  
  
• Educational: this one is pretty broad and can be any kind of teaching / instruction that allows for both self-development and which benefits the community as a whole (e.g. a non profit corporation that is set up to help illiterate people learn to read).

SIMILARITIES BETWEEN 501C3s AND FOR-PROFIT CORPORATIONS

Assuming the non profit corporation follows all the corporate formalities, the directors, trustees, members, and officers are afforded the same limited liability status as their counterparts in for profit corporations.

Non profit 501C3 corporations are like for profit corporations in that they have perpetual existence (until such time as they are dissolved) and can outlive those who founded the corporation.

SPECIFIC ADVANTAGES TO BEING A 501C3

In addition to the tax exemption benefit, here are some others that 501C3 non profit corporations enjoy:

• lower postal rates on bulk mail;
• discounted advertising rates may be available from some organizations and media outlets;
• some internet providers offer discounted services;
• some non profit corporate employees may qualify for job-training and other programs subsidized by the federal government.

HOW DOES A NON PROFIT CORPORATION OBTAIN 501C3 STATUS?

1. The first thing you need to do is incorporate your non profit under one of the accepted purposes set forth above and include the language the IRS requires for those desiring 501C3 status (Click&Inc drafts the articles and includes the required IRS language).
   
   
2. Then you must obtain a federal tax id number for your 501C3 non profit corporation (Click&Inc drafts the EIN application for you).
   
   
3. You must also draft bylaws for your 501C3 non profit corporation (Click&Inc provides a number of sample bylaws to assist you).
   
   
4. Finally, you must complete IRS form 1023 which is the official application form to be recognized as a tax exempt organization by the IRS.

THINGS YOUR 501C MUST DO AT THE STATE LEVEL

States, counties, and cities may offer exemptions from income, sales, and property taxes. Contact your state department of revenue and it county and city equivalents to see what you need to do (When you form your 501C3 non profit with Click&Inc we provide you links to many of these resources).

If your corporation wants to engage in fundraising, many states regulate such activities. You may need to obtain a permit from your state attorney general or department of commerce. (When you form your 501C3 non profit with Click&Inc we provide you links to many of these resources)