Table of Contents
Introduction 1
1 Is Nonprofit Incorporation Right for You? 3
Is Your Group a Nonprofit That Can Use This Book? 5
Benefits of the Nonprofit Corporation 9
The Disadvantages of Going Nonprofit 13
How Nonprofits Raise, Spend, and Make Money 16
Your Path to Nonprofit Status 18
Incorporating in Another State-Don't Fall for It 19
2 Legal Rights and Duties of Incorporators, Directors, Officers, Employees, and Members 21
Incorporators and Their Role as Promoters 24
Directors 25
Officers 39
Employees 41
Membership Nonprofits 42
3 Requirements for Section 501(c)(3) Tax Exemption 47
Section 501(c)(3) Organizational Test 48
Valid Purposes Under Section 501(c)(3) 49
Other Requirements for 501(c)(3) Groups 56
Information for Specific Questions About Your Group's Activities 61
4 Public Charities and Private Foundations 63
The Importance of Public Charity Status 64
How to Qualify for Public Charity Status 64
Private Foundations 78
5 Other Tax Benefits and Requirements 81
Federal and State Tax Deductions for Contributions 82
Federal Estate and Gift Tax Exemptions 83
Federal Unrelated Business Income Tax 84
California Unrelated Business Income Tax 86
California Nonprofit Tax Exemption 86
California Attorney General Reporting Requirements 87
California Welfare Exemption 87
Other California Tax Exemptions 95
State Solicitation Laws and Requirements 95
6 Choose a Name and File Your Articles of Incorporation 99
Choose a Corporate Name 101
Practical Suggestions for Selecting a Name 103
Check Name Availability 106
Reserve Your Corporate Name 107
Perform Your Own Name Search 108
Prepare Articles of Incorporation 111
File Your Articles 118
Appoint Initial Corporate Directors 123
7 Bylaws 125
Choose a Membership or Nonmembership Structure 127
Bylaws for a Public Benefit Corporation 128
Membership Bylaw Provisions for a Public Benefit Corporation 138
Bylaws for a Religious Corporation 144
Membership Bylaw Provisions for a Religious Corporation 155
8 Apply for Your Federal 501(c)(3) Tax Exemption 163
Getting Started 164
Form 1023-EZ: Step-By-Step Instructions 168
The Standard Form 1023: Step-by-Step Instructions 172
Final Steps 199
The Federal Determination Letter 200
9 Final Steps in Organizing Your Nonprofit 203
Obtain Your State Tax Exemption 204
Set Up a Corporate Records Book 204
Prepare Offer to Transfer Assets From an Existing Business or Organization to Your Nonprofit 205
Prepare Minutes of Your First Board of Directors' Meeting 211
Complying With the Bulk Sales Law 220
Prepare a Bill of Sale for Assets 221
Prepare Assignments of Leases and Deeds 223
File Final Papers for the Prior Organization 224
Notify Others of Your Incorporation 224
Apply for a Mailing Permit 224
Apply for Your Property Tax Exemption 225
File a Domestic Corporation Statement 226
File an Initial Report With the Attorney General 227
Issue Membership Certificates 228
File Your Articles With the County Recorder 228
Register With the Fair Political Practices Commission 228
10 After Your Corporation Is Organized 231
Piercing the Corporate Veil-If You Want to Be Treated Like a Corporation, It's Best to Act Like One 232
Federal Corporate Tax Returns 233
California Corporate Tax Returns and Reports 235
Federal and State Corporate Employment Taxes 237
Sales Tax Forms and Exemption From Sales Tax 240
Licenses and Permits 242
Workers' Compensation 242
Private Insurance Coverage 243
Dissolving a Nonprofit Corporation 243
11 Lawyers, Legal Research, and Accountants 247
Lawyers 248
Legal Research 249
Accountants and Tax Advice 250
Appendixes
A Using the Downloadable Forms and Other Online Material 253
Editing RTFs 254
List of Forms on the Nolo Website 254
B Forms 255
Index 295
