Clients often contact us for help with forming a non-profit, typically to support a specific cause that is dear to them. Because of the charitable nature of the organization, the process of establishing a non-profit is a bit different than establishing a typical corporation or LLC. There are two main steps that must be taken—forming the corporation, and filing for tax-exempt status.
First, it is important to understand that while your non-profit corporation will be set up with the state of Georgia, tax exempt status will be determined by the IRS. Because of this, forming a non-profit is a two-fold process.
Forming the Corporation
Georgia law has a non-profit corporation code, found in chapter 3 of Title 14 of the O.C.G.A., which lays out the steps that must be taken to form the non-profit and receive a certificate of incorporation from the Georgia Secretary of State. If you plan to seek tax exempt status with the IRS, you must complete several additional steps when forming the corporation.
For example, while the generic articles of incorporation that you will file with the Secretary of State are sufficient to form the non-profit corporation with the state of Georgia, they lack certain elements that the IRS will require to grant the organization tax exempt status. To receive tax exempt status, certain provisions must be included in the articles of incorporation, as well as the by-laws. For this reason, you must form the corporation with an eye toward also fulfilling the requirements for tax exempt status with the IRS.
When forming your corporation, you will also want to create customized bylaws to govern the organization. The bylaws lay out how the corporation is governed, including whether there are members, how the board of directors is chosen and operates, and other internal controls and standards.
Filing for Tax Exempt Status with the IRS
Once you form your corporation with the state, the next step is applying for tax exempt status with the IRS, in accordance with section 501(c)(3) of the tax code or another relevant section.. Section 501(c)(3) allows charitable corporations that are organized and operated exclusive for religious, educational, or scientific purposes to be tax exempt. Tax exempt status can also be extended to corporations with the sole purposes of testing public safety, supporting national or international amateur sports, or preventing cruelty to children or animals.
The application for tax exempt status is no small task. It entails completing a lengthy form, as well and providing supporting documents and information. This is a task that an experienced tax advisor or CPA can assist you with to ensure that everything is completed accurately. Your CPA can also help you set up and manage the accounting functions of the corporation to prevent any issues in the future.
If you're interested in starting a non-profit in Georgia, call The Beck Law Firm at (678) 344-5342. Along with your CPA or tax advisor, we will help you get your charitable corporation up and running.