You might consider forming a nonprofit corporation if you are starting an organization that will promote the arts or music or involve education, health, conservation, or community services, such as a childcare center; a homeless shelter; a health care clinic or hospital; a museum; a place of worship; a school; a performing arts center; or a conservation group.
There are several reasons to form a nonprofit corporation. First, nonprofit status might be a requirement for obtaining grants or other funds from government agencies and private foundations. Second, your organization will be tax-exempt, meaning it will not have to pay taxes on money earned from activities related to its nonprofit purpose or donations made to the organization. Third, the directors, officers, and members of the nonprofit are protected from personal liability for the organization’s debts and other obligations, as well as possible claims or lawsuits brought against the organization. Fourth, a nonprofit organization may be eligible for tax exempt status from the IRS, which would allow donors to deduct donations to the organization on their taxes.
The steps for forming a nonprofit corporation are similar to forming a regular or for-profit corporation:
- Select a business name that is available and meets New York State requirements;
- Obtain any necessary licenses and permits;
- File Articles of Incorporation with the Secretary of State;
- Complete federal and state applications for tax exemptions;
- Create corporate bylaws;
- Elect the initial directors and hold a first meeting.
Legal Editor: Steven M. Lester, November 2014 (updated February, 2016)
Changes may occur in this area of law. The information provided is brought to you as a public service with the help and assistance of volunteer legal editors, and is intended to help you better understand the law in general. It is not intended to be legal advice regarding your particular problem or to substitute for the advice of a lawyer.
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