The answer to this question is not a simple one. Over the years we have learned to be very careful about how we answer it.
When you do achieve tax-exempt status with the IRS, that status is retroactive to the date of your filing your articles in your state and picks up any donations that are made after the date of incorporation. That would seem to make it an easy answer.
But what about the person who tries to do the application himself or herself, or what if the person uses someone who is not experienced to do the application? What if the person fails to get tax-exempt status with the IRS? The IRS rejects lots of applications.
What happens then? Those donations would NOT be tax-deductible. That could be very unfortunate, possibly disastrous for the donor. And very problematic for you because you issued the tax-deductible receipt.
If you use our service to obtain your 501c3 status, you can give tax-deductible receipts as soon as you are incorporated. Why? Because we have a 100% success record with the IRS over 39+ years. We would not take you on as a client if we felt there was a chance of your not receiving tax-exempt status.
Directors have 100% control of the corporation. It is very important that you have trustworthy directors. The IRS requires a minimum of three. You can have as many as twenty. We recommend an odd number to avoid a deadlock in voting. The directors vote for the officers (president, vice-president, secretary and treasurer) and can normally change them at any time (absent a contract to the contrary). Selection of directors is so important that in many cases, we spend time with our clients helping them choose. There are many factors involved. This is a good example of how valuable 39+ years of experience can be for you. It is not unusual after discussion to choose different directors than those originally in mind.
I’ve seen just about everything in my 39+ years of doing 501c3s. Here’s a brief story to keep in mind: A man operated a nonprofit organization for 16 years. He, his wife, and a third director comprised the board of directors. When his wife divorced him, she joined up with the third director, and they removed him from his organization. After 16 years of sweat and toil in his own nonprofit, he was sleeping in his car. Choose your directors wisely. And when you become a client, you may want to have a discussion about this.
No, they can live anywhere in the U.S. or reside abroad. They can be U.S. citizens or foreign nationals. However, if a majority of your board of directors are not U.S. citizens or U.S. permanent residents, then there are additional complexities. Please call for additional information.
Once we get the Corporation Questionnaire back from you, we guarantee to send your documents to you within 5-business days or we pay you $200. States take varying amounts of time to file the Articles of Incorporation. Once we get the 501c3 Questionnaire from you, and the Financials, and a copy of your filed Articles of Incorporation, and your signed Adoption of Bylaws, we guarantee that all the information you provide us will be on the IRS website within 5-business days, or we pay you $200.
After you go online and sign the application we have prepared for you and pay the $600 IRS User Fee, it is usually 2 to 3 months before you have your IRS Determination Letter (501c3 tax-exempt status). Sometimes, if the IRS gets behind in its caseload, or if your case is very complex, or if the IRS needs additional information from you in order to make its determination, it will take longer.
At the time of signup, there is not yet a tax-exempt entity to which you can make a tax-deductible gift and from which you can receive a tax-deductible receipt. So how can your fees be tax-deductible? Here’s the good news: We have a special legal document and procedure ($200) that assures you the fees you pay us WILL be be tax-deductible to you (or whomever pays our fees).
Other than your corporate documents (Articles, Bylaws, etc.), we do not handle anything on the state level. State, county and city laws and regulations vary state by state, county by county and city by city. Normally, you should be able to handle them on your own. Likewise for state tax-exempt status (automatic or almost automatic for most states) Click here to see what your state requires for state tax-exempt status.
We e-mail you our Corporation Questionnaire and 501c3 Questionnaire(s). They are Word documents and consist of questions designed to elicit the required information from you. You type your answers right on the Questionnaires and e-mail them back to us. In this way, we get all the information from you to prepare all your documents. Of course, we give you guidance in answering the questions right on the questionnaires themselves (tips, pointers, helps, samples, suggestions, etc.), and we are also available by phone should you need additional guidance.
It is complex to secure nonprofit status, but once you have the status, it is surprisingly easy to do the bookkeeping in most cases. Financial tax returns are easier than for profit organizations. Until you bring in more than $50,000 annually, you can file a little 5-minutes online return, no financials. As you grow and get larger, you will want a CPA to prepare your 990 returns. There are no federal tax returns required for churches that have “church” status from the IRS. Most states require no tax returns from the organization (California is an exception; there may be others). If you are a private foundation, the 990-PF is more complex. With any organization, you need to keep good track of income and expenses.
The cost is the same. Preparing Articles of Incorporation is a very simple matter, but we don’t suggest you try to do it on your own. Seventy-five percent of people who come to us with their Articles already filed satisfied their state’s requirements but did NOT satisfy the IRS requirements, so their Articles have to be amended. This is not easy, and if requested to do that, there is an extra fee which is not insubstantial.
Even if you have filed your Articles of Incorporation, we still need to prepare for you four other very important legal documents that are necessary for a secure legal foundation for your nonprofit.
Be careful. There may be a problem lurking here. Tax-exempt status from the IRS is not something that can be passed around like a winter jacket.
If you are under someone else’s nonprofit, they are completely responsible for you in every way, especially including liability. So they will have to control you for their own protection. Is this something you want? Do they want the added responsibility and liability?
The IRS says that if you are going to be a subordinate organization included in a group exemption letter, you must be, in relation to the central organization, “subject to its general supervision or control.” Is that something you want? Will you truly be subject to the general supervision or control of that organization? Sometimes they just want a percentage of your income and then turn their head the other way. Be careful. You could be looking at problems with the IRS.
Good news! Not at all. We can resolve all of these problems for you such that these problems will not in any way affect our ability to get your 501c3 status for your nonprofit.
A good lawyer friend sent us an e-mail stating, “We are quoting $8,000-$10,000 for fees for a simple nonprofit plus the costs [this was back in 2010—fees are probably higher now]. The most recent organization I worked on was an educational nonprofit which ended up paying close to $15,000….”
Clients have come to us with quotes as high as $15,000 from lawyers they have contacted. (This was before the IRS greatly increased the paperwork for 501(c)(3) applications in 2006.) One client said she had paid her lawyer $19,000 and she still didn’t have her 501c3 status.
Although our founder, David G Marmon, is a Harvard trained lawyer, we do not give you any specific legal advice. We take you through the process of incorporation and tax-exempt status in a standard way. However, it’s all we do, and it’s all we have done for over 39+ years. We have done more than 3,000+ 501c3s and we have a 100% success rate with the IRS.
See what our clients have to say about us.
Different states call the basic organizational document by different names: Articles of Incorporation, Certificate of Formation, Certificate of Incorporation, Articles of Organization, Articles of Agreement, Articles of Association, or Charter. This is sometimes called the constitution or charter of the organization. For simplicity, we call them Articles, or Articles of Incorporation.
Yes. You can have your nonprofit office in your home, and your church or congregation can meet in someone’s home. Neither of these situations will keep you from getting tax-exempt status. To be classified as a school, you must have facilities where the educational activities are regularly carried on. If your school does not have facilities, it can still get tax-exempt status as an educational organization.
Actually, it’s only your state that can file your Articles. We prepare your Articles and cover letter to meet all your state requirements and e-mail them to you as PDF files. You print them out and follow our simple and precise instructions. We tell you how many originals and how many copies you need to mail and how to make out your check to your Secretary of State (may be a different administrative office in your state). Very easy. “Paint-by-the-number.”
You can obtain tax-exempt status for a nonprofit organization on the basis of a future plan. This is not true of church status. You must have a current operating church to obtain church status. Churches do not file any tax returns with the IRS. A very small church, and/or one made up mostly of family members, may obtain 501(c)(3) status as a general religious nonprofit.
The IRS charges a $600 User Fee to process your application.
If your projected annual gross income for your first three years of operation is under $50,000 per year, then you qualify for Form 1023-EZ. For this, the filing fee is $275.
We e-mail you each Questionnaire as a Word document. After saving the document, you type the answers right on the document and send us a reply e-mail, attaching the document to it.
From the time we receive your completed Corporation Questionnaire, we guarantee to e-mail your corporate documents to you within 5-business days or we pay you $200. From the time we receive your completed 501c3 Questionnaire and Financials, and a copy of your filed Articles of Incorporation and signed Adoption of Bylaws, we guarantee (and pay you $200 if we fail) to have your application (with all the information you have provided us) onto the IRS website ready for your signature and payment within 5-business days. The 5-business days excludes weekends, U.S. national holidays and times our web site says we are closed. Now that is fast!
This is where the really good news comes in. You don’t have to struggle on the IRS website to figure out what you are supposed to do. We go onto the IRS website with all the information you have provided us and enter all of it for you. All you have to do is just to go on the IRS website and sign the application we have prepared for you and to pay the $600 IRS User Fee. Talk about easy! That is easy!
For the 1023-EZ, it is somewhat different. You go online yourself and copy and paste onto the IRS website what we have provided for you.
Most often, when you send in your application to the IRS, that is the end of the process for you. You may receive a letter acknowledging that your application has been received by the IRS. Then you wait until you receive your determination letter recognizing your tax-exempt status. However, depending on how complex your nonprofit is, it is possible for the IRS to have additional questions for you. This usually doesn’t happen with our clients because we know what the IRS is looking for and how to structure your application so it is easy for the IRS to process and approve. Responses to these questions enable the IRS to get a better understanding of your operations in order to determine that your organization is tax-exempt. Sometimes there are questions that were not asked on the Form 1023.
If they asked all the questions on the form that would cover every situation for the myriad types of nonprofits that the IRS handles, it would be a 100-page form. Therefore, it is not a negative if you get further questions from the IRS. If you get additional questions, you will prepare the answers and send them directly to the IRS (we give you a sample cover letter to use). If you don’t understand any question from the IRS or feel you need some direction in answering the question, we are here to help you understand it and guide you in the answer.
Normally, no. In complex cases, or in cases where you desire to have formal (voting) members, we will decline to perform our service for you. We advise you to seek the services of a lawyer in such cases. A church/congregation with informal members (which is what we recommend) is never a problem. (Informal members may be called members, but they do not have voting control over the church/congregation.) Because of our 100% success rate with the IRS, we may also decline a case where we are not sure we can obtain 501c3 status for your nonprofit.
We put basic information on our web site for clients who so desire. Those who see your listing can find out basic information about your nonprofit and how to contact you. There is NO CHARGE for this service. Here is a link to the starting page.
Once we finish the process for you, we step out of the picture. You are completely independent. You are not under our “umbrella” or tied to us in any way. We email “Your Road Ahead” to you which is full of helpful advice for your use in the days and years ahead.
We can prepare for you various corporate documents (Unanimous Written Consent of Directors for Corporate Resolutions, Resignation of Director or Officer, Unanimous Written Consent of Directors to Set Time and Date for Annual Meeting of Board of Directors, Unanimous Written Consent of Directors to Change Location of Annual Meeting of Board of Directors, Unanimous Written Consent of Directors to Establish End of Annual Accounting Period, Waiver of Notice and Consent to Holding of Annual Meeting of Board of Directors, Minutes of Annual Meeting of Board of Directors, Waiver of Notice and Consent for Special Meeting of Board of Directors and Minutes of Special Meeting of Board of Directors). We can also register your nonprofit in other states where you may wish to operate. We will also amend your Articles of Incorporation and/or Bylaws if you so require.
We often get questions from former clients, and where possible we answer them or point them in the right direction. You are in our family of 3,000+ clients that stretch all around the world. Stay on our mailing list to stay up to date on latest IRS developments and what is going on in our family.
Plan B means already incorporated. Plan A means not incorporated.
Please note that our refund policy is not set up for people who change their minds after they get started. “Be sure you’re right, then go ahead.” –Davey Crockett
The Corporation Questionnaire will not normally take more than about 45 minutes. (Add another 30 minutes to read our introductory material.) The 501c3 Questionnaire and Financials will normally take no more than a couple of hours or so (the IRS does require a lot of information). But you can work on those while you are waiting for your Articles of Incorporation to come back from you state. Count on another hour or so if your organization is a church or school. Add more time if your nonprofit is very complex.
You have two months to send us back your completed questionnaires and Financials. If you wish, you may extend this period for each by paying $100 per month (extension fee). The same applies to paying any installment payments. If you have not completed both sets of questionnaires (Corporation and 501c3 and Financials) by the end of six months (and made any payments due), we remove you from our database, and you have lost your investment.
We do not share or sell any information to third parties. We are not only a business but rather a 39+ year endeavor to help you Change the World through your nonprofit. We are an open and transparent community, and as such we freely share non-legal-non-confidential information within our 501c3 community, such as in newsletters.
We believe everything we do in life should be the best we can do and that your legal documents should not only be excellent from a legal point standpoint (most important), but also be aesthetic and pleasing to the eye. Generally, legal documents are pretty boring. At least, ours look good! (Exception: Articles of Incorporation and government forms have to follow a specific format and cannot be made to look good.) Take a look at our documents.
No problem. We incorporate and obtain tax-exempt status for people all over the world. That’s one advantage of doing everything by e-mail. Your directors do not need to be U.S. citizens nor reside in the U.S. However, if a majority of your board of directors are not U.S. citizens or U.S. permanent residents, then there are additional complexities. There are additional factors if you operate your organization outside the USA. Please call us for additional information.
A Group Exemption Letter is given by the IRS to a central organization that has subordinates (or chapters) so that the subordinates or chapters do not have to file for their own 501c3 tax-exempt status. We do both the application for group exemption for the central organization as well as prepare the corporate and incorporation documents for the subordinate organizations. The Group Exemption letter can be useful for churches that wish to have “daughter” churches under a head or principal church (denominational model) as well as for organizations with many chapters, such as the Rotary Club or the Boy Scouts. Also good for sports organizations with many clubs throughout the country. Please call us for more information, including information about our fees.
People often think they should file their Articles of Incorporation in Delaware or Nevada because they have heard that these states are better to incorporate in. This is not true. If you have a profit corporation, then Delaware or Nevada can have substantial tax advantages. But there can be no tax advantages for a nonprofit, because there are no taxes! The disadvantage of filing in Delaware or Nevada is that you will have to relate to that state as well as to the state you are operating in. So you end up having to relate to two states. If you have filed in Delaware or Nevada but are operating in State X, you will have to register your Delaware or Nevada corporation in State X as a foreign (i.e., foreign to State X) corporation. You will have to file any annual or bi-annual statements in both states.
The basic rule is that you must either file Articles in the state you are operating in or, if you file in another state, you must register that nonprofit corporation in the state you are operating in. What if you are operating in more than one state? You will file in one of those states and then register that nonprofit in the other states.
In some cases, you may have the choice to file in either State X or State Y or State Z because you aren’t really operating in any state (foreign mission work, for example). In this case, we can tell you which states are most favorable to incorporate in. Not all states are equal!
If an attorney prepared your Bylaws, you can use them. Otherwise, use our Bylaws. We prepare Bylaws for all our clients’ nonprofits. We also prepare two other documents to accompany them: Unanimous Written Consent of Directors (or Trustees) Adopting Bylaws and the Certificate of Secretary re Adoption of Bylaws. If an attorney prepared your Bylaws, presumably he or she prepared these other documents for you as well. This doesn’t always happen, but you should have these two other documents. Then, if you prefer to use your Bylaws, the two documents—Unanimous Written Consent of Directors (or Trustees) Adopting Bylaws and the Certificate of Secretary re Adoption of Bylaws—can be used for the Bylaws that he or she prepared for you.
You must have your Articles filed first, before we file with the IRS. In many states, Expedited Filing can be one day (see this link for your state: https://501c3go.com/cost-and-fees/state-filing-fees/). Also, you would incur Rush fees if we have less than 5-business days to prepare your documents (https://501c3go.com/rush-services/).
Higher income and/or assets means more complexity and more scrutiny from the IRS. This can result in more supplemental questions from the IRS and these questions tend to be more complex. It is also our experience that those of you whose nonprofit will have higher income and/or assets also have more questions for us going through the process. In both cases, we spend more time on your case.
We normally do NOT charge more for higher income/assets but there are cases where we do
Anyone who is serious about his or her nonprofit should never need an extension fee. You can finish your questionnaires in a couple of hours (give yourself an afternoon if you are slow or struggle with English). We give you two months to finish your questionnaires. Countless people over many years have thanked us and said, “If it were not for the extension fees to prod us along, we never would have gotten it done.” Even though our process is as easy as possible, people tend to procrastinate—just a natural human tendency. We want to see your nonprofit get off the ground. We want to see you have success with your nonprofit. We give you a little incentive not to procrastinate.
But there is another reason for extension fees. We are on a moving conveyor belt. There are 50 states that are constantly modifying their service and constantly changing their policies, their fees, and especially their forms requesting information. These changes have to be reflected in our questionnaires. This makes our questionnaires living documents, changing with the states as they change. The IRS is also in a state of flux as they process a growing volume of applications and are continually updating their requirements.
We must always be taking these changes into account. This means that our questionnaires must be constantly updated and improved. An out-of-date questionnaire will give us wrong answers. Also, we are constantly improving our process and making improvements. If clients were to use out-of-date questionnaires without these improvements, your answers would not be the best ones for your state and the IRS. Undoubtedly mistakes would occur because with the myriad of details involved, all it takes is for one thing to be out of place, and there is a mistake. Dealing with the states and the IRS, we don’t want mistakes. That’s why we can’t stretch out the time for our clients to return our questionnaires to us.
A final reason is that people who take longer tend to let other things get in their way, and so the process gets more cumbersome. They lose the rhythm of the process, forget where they are in the process, have more questions for us, etc. All this ends up being more time-consuming, not only for them, but at our end, too.