Introduction
Deciding to form a nonprofit corporation will be a big step for you and the members of your group. It will involve more paperwork and government forms, on both the state and federal level, than anyone will like; and you'll have to conduct your business within the legal framework of various state and federal laws. Fortunately, there are big payoffs to all this work and attention, including the ability to attract donors and grant funds, obtain real and personal property tax exemptions and special nonprofit mailing rates, avoid corporate income taxes, and shield officers and directors from legal liability. Before starting down the path of nonprofit incorporation, however, you'll want to learn a little more about who can form a nonprofit and the consequences of doing so. In this chapter, we'll explain:
- the kinds of groups that can -- and can't -- form a nonprofit using this book
- the benefits you'll enjoy as a nonprofit -- and some of the disadvantages to choosing this
route
- how nonprofits can raise start-up funds and earn money, should they wish to do so
- the process you'll go through (following the instructions in this book) to incorporate
and obtain your tax-exempt status, and
- for those considering incorporating in another state, considerations to bear in mind before doing so.
 Throughout the book we refer you to your State Sheet to find a particular legal rule in your state. You can find the State Sheets in Appendix B.
| References to IRS Articles and Materials |
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There are references in the book to IRS articles and materials included on the CD-ROM. Some of this material includes articles and information made available by the IRS on its website as part of its Exempt Organizations Continuing Professional Education Technical Instruction Program, which regularly publishes articles for tax-exempt organizations. The IRS has the following statement on its website regarding this material: "These materials were designed specifically for training purposes only. Under no circumstances should the contents
be used or cited as authority for setting or sustaining a technical position."
In other words, use this material to learn about IRS tax issues, but don't expect to be able to rely on it if you end up in a dispute with the IRS. Nolo includes this material on the CD-ROM as a convenience to the reader and as an alternative to directing you to an IRS website
link to this material. This material is taken from the exempt organization tax law training
articles available from the IRS website at www.irs.gov/charities/article/0,,id=161088,00.html.
If you are interested in one of the issues, you should check the IRS website for any updated
articles or information on your topic.
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