Why Form 2220 Nonprofit
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Why Form 2220 Nonprofit

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Instructions and Help about Why Form 2220 Nonprofit

Hi my name is Toby Mathis and one of the partners at Anderson business advisors and today we're going to talk about how you can set up your own nonprofit now when I say nonprofit we're really talking about charitable organizations there's about 30 of them underneath the United States Code that are that you're able to get exemption for it but I'm going to zero in like a laser beam on one of them and that's when we all know and love it's called the 501 C 3 and a 501 C 3 is set up for charitable religious or educational purposes there's a few other things like amateur sports and things like that but the big ones are charitable education and religious if you're doing something that's benefiting Society chances are it's gonna fit underneath this category you're providing assistance to veterans boom if you're advancing a religion boom if you're a school or you're educating or whatever those things are boom you're underneath that 501c3 and the reason this is important is because somebody gives you money they can write it off as a charitable donation it's the only one where you can do that so the 501c3 is where we tend to focus you can set up your own there's literally over 1.7 million of these in the United States and they're probably one of the most underutilized entities that exists now to set one up there's only three steps it's actually very very simple when you break it down into pieces and the easiest way to look at this is we always have three categories that entities follow into no matter whether you're for-profit or not-for-profit and that is we have to deal with the states we have to deal with third parties like judges or any third party a bank whatever and then we have to deal with the feds and you norm as the IRS what we care about is that all three are happy with what we set up to recognize it as a 501c3 so the first thing we do is we say what form should it take do not listen to any of the bad information out there there's only one form you're going to want to use to make this as easy as possible and that's because 501c3 starts off with the word and that word is corporations so that's what we're gonna be we're gonna be a nonprofit corporation in whatever state we decide to be in now if you can't pick a state it's real easy we look and say how many directors do you have to have in that state if it's just you we may pick a state that's got one if it's you're doing everything in one state we're probably picking that one these things it's not going to be rocket science we're probably gonna be right in your backyard unless there's a good reason not to be so we pick the state now the third parties they want to know that this organization has a body so you're gonna need bylaws which are the rules by which the company is govern now here's the biggest difference between a for-profit and a not-for-profit in a for-profit it is for the profit of an individual or shareholders the easiest way to look at it is for owners it is set up to give its profits to owners in a not-for-profit there are no owners you're set up to benefit society so there's no shareholders in a not-for-profit that means that we have to have some governing body and I'm going to tell you the easiest way and then you're talking to a group that's approved over 3,000 of these the simplest way so you don't get guff is to have a board of directors and you're gonna have people say you could be a board of trustees you could be regions you could be all this uh-huh but if you want to get approved with the least amount of trouble and you want your own 501c3 this is how you do it now the last step is to deal with the feds now we use something called check-the-box regs in this country which means we tell the IRS what we're gonna file here's what this entity is so we have a corporation and we're gonna tell the feds that it is a non-profit 501c3 we're literally putting that on there this is a 501c3 what section it's a 500 area it's a non-profit it's a 500 see three so now they know and they're going to issue you a tax identification number we have one other little piece of this and that is that we have to apply for the exemption and that's done on an application called at 10:23 this is the one that takes the most time this is one where we're applying for exemption now here's the really cool part this exemption relates back to the date that you set up so date of data formation excuse my handwriting see if you can read that whatever date you set the corporation up it relates back and that's it you go through those steps you will have an operating nonprofit set up for your purpose now the hardest part is figuring out what your purpose is and what you're gonna do with it but there's so many cool things that I've seen clients do whether you're trying to end homelessness whether you're trying to help veterans when you try to help single moms whether you're trying to educate society whether you're trying to prhousing to low to moderate income households which isn't what you think there's folks down in the Bay Area that our family is making over a hundred thousand dollars to qualify you're providing housing for them even rental properties are assisting them in any way that qualifies so there's so many things that we think are not nonprofits.

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