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501 c3 IN WORD

501(c)(3) tax-exempt organization



To create a California 501(c)(3) tax-exempt organization, first you need to form a California corporation by filing nonprofit articles of incorporation with the California Secretary of State, and then you apply for tax-exempt status from the IRS and the State of California. Here are the details.

1. Choose who will be on the founding board of directors for your nonprofit corporation.

In California, a nonprofit corporation must have at least one director.

2. Choose a name for your California nonprofit corporation.

The name of your nonprofit corporation cannot be the same as the name of another nonprofit corporation on file with the California Secretary of State. To see if your proposed name is available, you can search California's name database at .

3. Prepare and file your nonprofit articles of incorporation.

You will need to create and file nonprofit articles of incorporation with the California Secretary of State. The articles of incorporation need to include basic information such as your nonprofit's name, your nonprofit's statement of purpose, certain provisions required for state and federal tax-exempt purposes, and the name and address of your agent for service of process (the person to whom legal notices should be sent).

The California Secretary of State has a nonprofit articles of incorporation form on its website at . To ensure that you'll receive 501(c)(3) tax-exempt status when you apply with the IRS, you'll need to include specific language, such as a clause dedicating the nonprofit's assets to another 501(c)(3) nonprofit organization should your nonprofit end. Your state form may include these provisions already, but it is wise to consult a legal self-help guide such as How to Form a Nonprofit Corporation in California , by Anthony Mancuso (Nolo), to make sure the articles of incorporation you submit comply with the tax exemption laws of the IRS and California's Franchise Tax Board.

4. Prepare bylaws for your California nonprofit corporation.

You'll need to prepare bylaws that comply with California law and contain the rules and procedures your corporation will follow for holding meetings, electing officers and directors, and taking care of other corporate formalities required in California. For more information, see Nolo's article Nonprofit Formation Documents: Articles of Incorporation, Bylaws, and Organizational Minutes or, for fill-in-the-blank bylaws, see Nolo's book How to Form a Nonprofit Corporation in California , by Anthony Mancuso (Nolo). Your bylaws do not need to be filed with the California Secretary of State -- they are your internal operating manual.

5. Hold a meeting of your board of directors.

Your first board meeting is usually referred to as the organizational meeting of the board. The board should take such actions as:

· approving the bylaws

· appointing officers

· setting an accounting period and tax year, and

· approving initial transactions of the corporation, such as the opening of a corporate bank account.

After the meeting is completed, minutes of the meeting should be created.

6. Set up a corporate records binder.

You should set up a corporate records binder for your nonprofit to hold important document such as articles of incorporation, bylaws, and minutes of meetings. For more information, as well as minutes forms, consent forms, and other resolutions, see Nonprofit Meetings, Minutes & Records , by Anthony Mancuso (Nolo).

Now that you have created your nonprofit corporation, you can obtain your federal and California state tax exemptions. Here are the three steps you must take to obtain your tax-exempt status:

1. File your Form 1023 federal tax exemption application.

To obtain federal tax-exempt status, you need to complete and file IRS Form 1023 with the IRS. This long and detailed form asks for lots of information about your organization, including its history, finances, organizational structure, governance policies, operations, activities, and more. For more information, see Nolo's article How to Obtain 501(c)(3) Tax-Exempt Status for Your Nonprofit or, for line-by-line instructions on how to complete the form, see How to Form a Nonprofit Corporation , by Anthony Mancuso (Nolo).

2. Obtain your California state tax exemption.

Once you have your federal tax exemption, you need to obtain your California state tax exemption. This may include exemptions from income, property, sales, and other state taxes. The website for California's tax agency, the Franchise Tax Board , will have the form you need to file to obtain your state tax exemption, FTB 3500A, Submission of Exemption Request.

3. Other state reporting and registration requirements.

Depending on your activities and the size of your organization, you may need to register with California's attorney general before doing any fundraising activities. Check with the California attorney general's website at for their registration requirements or, for detailed information about California's fundraising registration requirements,

see Nonprofit Fundraising Registration: The 50-State Guide , by Stephen Fishman (Nolo).

Legal Updates for Nonprofits

For information or to pay to have an accounting firm complete, please contact:


Corporate Services of America

Maria Calvano or Lucy Elias
800 E. Charleston Blvd
Las Vegas, NV 89104-1512
(702)214-9400 , (800) 701-5364
Fax: (702) 214-9499

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