Are You Really A Non-Profit?

Over the past few months I have had several conversations about and questions regarding whether a company is truly a non-profit organization in the State of Florida. Unfortunately, the answer in all cases was NO. This prompted me to provide some clarification on how to truly become a nonprofit, 501(c)3 organization.

To become a 501(c)3 organization, you must complete ALL of the following steps. Failure to do so will result in your organization not being recognized as a nonprofit and not being able to reap the full tax benefits as such.

PHASE I

As with any corporation in Florida you must register your nonprofit with the Division of Corporation with the State of Florida by filing not-for-profit articles of incorporation. You can file them and pay the filing fee online at www.sunbiz.org. Once you have completed this process, you will receive a certification from the state recognizing you as a nonprofit corporation. This document will enable you to apply for your sales tax exemption and open a bank accounting the nonprofit’s name.

Sidebar: Please understand that at this point you are only recognized by the State of Florida ONLY as a nonprofit organization. You must complete the next phase to obtain federal 501(c)3 status.

PHASE II

The next step is to complete and submit your application for recognition of exemption to the Internal Revenue Service so that they may recognize you as a nonprofit as well for tax purposes and give you your 501(c)3 designation. This designation DOES NOT come from the state in which the corporation is registered. Additionally, any donors to your organization MAY NOT deduct any charitable contribution to your organization until the 501(c)3 designation has been obtained

IRS Form 1023 is the application you need to complete and submit to the IRS. An organization exempt from federal income tax if it is organized and operated from one or more of the following purposes.

• Religious.
• Charitable.
• Scientific.
• Testing for public safety.
• Literary.
• Educational.
• Fostering national or international amateur sports competition (but only if none of its activities involve providing athletic facilities or equipment)
• The prevention of cruelty to children or animals.

The exemption application is extensive and requires information relating the activities the nonprofit will conduct that warrant the 501(c)3 status as well as financial statements over a five-year period (either actual or projected). The application process can also be lengthy and many times the application is not approved the first go around which will require corrections and resubmissions. I highly recommend the enlisting the assistance of an accountant and an attorney familiar with the application and who will coordinate their efforts to give you a better chance of being approved with your first submission. My company New Genesis Financial, LLC is familiar with this process and is here to help! If you are in need of any nonprofit services please contact us at 407-992-4454.

IRS CIRCULAR 230 FOOTER: New IRS rules which govern the way we conduct our tax practice, dictate that we give you the following notice: Any tax advice or opinion contained in this message was not intended or written to be used, and cannot be used, by anyone to avoid any tax penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions. In addition, this advice is not intended or written to be used, and cannot be used by you for the purpose of promoting, marketing, or recommending any tax-related matters addressed within to another party. You are not prohibited from sharing this advice with third parties. However, the third parties should seek their own advice from an independent tax advisor based on their particular facts and circumstances.