- 1 Foundation
United States Law
Frequent Asked Questions
- 1.1 Formation
- 1.2 What is a Non-Profit Corporation?
- 1.3 Is a non-profit corporation exempt from taxes?
- 1.4 How does a non-profit organization, including a non-profit corporation, obtain an exemption from Federal Income Taxes?
- 1.5 How do I form a “501(c)(3)” Corporation?
- 1.6 Do you have to be a US citizen to incorporate and/or own a corporation in Delaware?
- 1.7 Can a person under 18 years old be a director, officer or shareholder of a Corporation?
- 1.8 Can the same person be a shareholder, director and officer of a Corporation?
- 1.9 Can a non-profit corporation pay a salary to its officers and/or employees?
- 1.10 Are the books and records of a non-profit corporation available for inspection?
- 1.11 Does a non-profit corporation file the IRS Form 990 with the Secretary of State?
- 1.12 Application for Tax Exemption Frequently Asked Questions
- 1.13 How long does it usually take to get recognition of tax exemption?
- 1.14 How do we get started?
- 1.15 What happens after you get all the necessary information?
- 1.16 How often does the IRS deny tax exemption?
United States Law
Frequent Asked Questions
What is a Non-Profit Corporation?
A non-profit corporation is created by filing articles of incorporation with the secretary of state in accordance with the Non-Profit Corporation Act. “Non-profit corporation” means a corporation with no part of the income of which is distributable to members, directors, or officers. A non-profit corporation may be created for any lawful purposes, which purposes must be fully stated in the articles of incorporation. Not all non-profit corporations are entitled to exemption from state or federal taxes.
Is a non-profit corporation exempt from taxes?
Exemption from federal and state taxation is not automatic and eligible corporations must apply with the Internal Revenue Service (“IRS”) and the State Comptroller to obtain an exemption. Not all non-profit corporations are entitled to exemption from state and federal taxes. The secretary of state, however, does not make the determination of exemption.
How does a non-profit organization, including a non-profit corporation, obtain an exemption from Federal Income Taxes?
Exemption from federal taxes is determined by the IRS. You should consult the IRS prior to filing the articles of incorporation to determine what provisions should be included in the articles for the corporation to be exempt from federal taxes. IRS Publication 557 titled “How to Apply for Recognition of Exemption for an Organization,” describes the rules and procedures for non-profit organizations requesting an exemption.
How do I form a “501(c)(3)” Corporation?
When articles of incorporation are filed with the secretary of state pursuant to the Delaware non-profit Corporation Act a non-profit corporation is created. Designations such as 501(c)(3) relate only to federal tax provisions.
Do you have to be a US citizen to incorporate and/or own a corporation in Delaware?
No. The Delaware Business Corporation Act and the Delaware non-profit Corporation Act do not place any restrictions on who can incorporate or own shares in a corporation except that the incorporator must be at least 18 years old. A corporation may provide residency or citizenship limitations in its articles of incorporation or bylaws.
Yes. Neither the Delaware Business Corporation Act nor the Delaware non-profit Corporation Act places any restrictions on who can own shares in or manage a corporation. Such restrictions may be set forth in the corporation’s Bylaws. The capacity of a minor to own property and/or sign a contract would be considered in whether a corporation should have a minor as an officer or director.
In the case of a non-profit corporation, the Delaware non-profit Corporation Act requires that there be at least three directors in a non-profit corporation. The required officers of a non-profit corporation are a President and a Secretary; however, the same person cannot hold the offices of President and Secretary. Only an individual may serve as a director of a corporation.
Can a non-profit corporation pay a salary to its officers and/or employees?
Yes. Any corporation may pay reasonable compensation for services rendered to the corporation.
Are the books and records of a non-profit corporation available for inspection?
The Delaware Non-profit Corporation Act, requires that non-profit corporations maintain complete books and records of account, minutes of the proceedings of its members, boards of directors, and committees having the authority of the board of directors. These books and records should be available for examination and copying by members of the corporation.
In addition, the Act provides that non-profit corporations should maintain accurate financial records including records relating to all income and expenditures. Based on these records, the board of directors shall prepare or approve an annual report of the financial activity of the corporation. All records, books, and annual reports of the financial activity of the corporation shall be available for inspection or copying by the public. There are numerous exceptions to this provision.
It does not apply to corporations that solicits funds only from its members or a corporation that does not intend to solicit and does not actually receive contributions from sources other than its members in excess of $10,000 during a fiscal year. Nor does the provision apply to proprietary schools; religious institutions; trade associations or professional associations whose principal income is from dues and member sales and services; insurers; charitable organizations concerned with conservation and protection of wildlife, fisheries, and allied natural resources; and alumni associations.
Does a non-profit corporation file the IRS Form 990 with the Secretary of State?
The form 990 or 990-PF is not filed with the Secretary of State. There may be special circumstances when a non-profit corporation files the 990 with the Charitable Trust Section of the Attorney General. Please check with the Attorney General regarding the necessity for your corporation to file the report.
Application for Tax Exemption
Frequently Asked Questions
How long does it usually take to get recognition of tax exemption?
The entire process generally takes about 2 – 4 months from start to finish. A lot of it depends on how fast the client gets information to us, and on how long a particular state takes to file the articles of incorporation. Most of the applications we file with the IRS are reviewed in about 2 – 3 months. It’s important to keep in mind, however, that the official date of the tax exemption from the IRS will date back to the original date of incorporation if the tax-exemption application is filed within 27 months of the end of the month of the date of incorporation.
How do we get started?
First, you should contact our firm; we will discuss your organization with you and determine all matters relating to the application for tax exemption.
Then you will need to sign a retainer letter that you understand the firm’s fees and the work we will complete for you and provide the retainer fee. In addition, to get started we will need the following basic information about your organization:
- Name and address for the organization
- Basic mission statement and list of primary activities you plan to engage in
- List of names and addresses of the initial board of directors (we recommend at least 3-5 board members to start)
Estimated budgets for the first three years of the organizations existence, including basic sources of income (i.e., individuals, corporate grants, private foundation grants, membership dues) and major categories of expense (i.e., program expenses, salaries, rent/utilities, legal, accounting).
We recommend setting up a simple spreadsheet, which we shall be very pleased to assist you with, considering the following basics: Income, Individual Donations, Corporate grants, Total Income, Expenses, Program expenses, Salaries & benefits, Rent/utilities, Legal, Accounting, Total Expenses et surplus (deficit)
What happens after you get all the necessary information?
We’ll draft articles of incorporation and bylaws and complete the required IRS forms. We’ll send everything to you for your review and signature, and then the documents will be filed.
How often does the IRS deny tax exemption?
For applications we’ve filed…rarely, if ever. We simply don’t take on cases that we don’t think will qualify for tax-exempt status.
What separates us from our competitors is that our services don’t end with the registration of your company. We offer a wide range of additional services others can’t or just won’t offer, such as lifetime free support.
Whilst most providers either specialise on personalized consultation at relatively high rates or run bulk registration factories without any support, we want to offer the positive aspects of both types.
Therefore TBA combines professional advice, worldwide registration services, reasonable fees, customized order processing, lifetime support and fast processing. Where others see company formation services as a bulk registration with no support and no individual assistance, we do care about your business needs.
Should you have any question or matter
You would like to discuss or clarify with us
Should you like to receive further Information
About our services and fees, …
Our multi-lingual team of business advisors is happy to assist you with all upcoming questions and issues in relation to your company.
You may call or email us, and we will be happy to assist you in a fast and efficient manner.
You can also come and visit us at our Limassol offices to discuss issues face to face if you prefer. Just arrange an appointment and we will be happy to meet with you.