How To Form A Nonprofit Corporation In California

by Mancuso, Anthony

• ISBN13: 9781413303728
• ISBN10: 1413303722
• Edition: 11th
• Format: Paperback
• Copyright: 2005-07-15
• Publisher: Nolo

Summary

If you're thinking of forming a nonprofit corporation in California, you'll find this handbook invaluable.- MacUser - A useful resource to help you get underway. - Entrepreneur magazine

Author Biography

Attorney Anthony Mancuso is a corporations expert

Table of Contents

Introduction
Is Nonprofit Incorporation Right for You?
Is Your Group a Nonprofit That Can Use This Book?	2	(3)
Public Benefit Corporations	3	(1)
Religious Corporations	4	(1)
Mutual Benefit Corporations	5	(1)
Benefits of the Nonprofit Corporation	5	(5)
Tax Exemptions	6	(1)
Receiving Public and Private Donations	7	(1)
Protection From Personal Liability	7	(1)
Separate and Perpetual Legal Existence	8	(1)
Employee Benefits	9	(1)
Formality and Structure	9	(1)
Miscellaneous Benefits	9	(1)
The Disadvantages of Going Nonprofit	10	(3)
Official Paperwork	10	(1)
Incorporation Costs and Fees	11	(1)
Time and Energy Needed to Run the Nonprofit	11	(1)
Restrictions on Paying Directors and Officers	12	(1)
Restrictions Upon Dissolution	13	(1)
Restrictions on Your Political Activities	13	(1)
Oversight by the Attorney General	13	(1)
How Nonprofits Raise, Spend, and Make Money	13	(2)
Initial Fundraising	14	(1)
Making Money From Related Activities	14	(1)
Making Money From Unrelated Activities (Unrelated Income)	15	(1)
Making Money from ``Passive'' Sources	15	(1)
Your Path to Nonprofit Status	15	(1)
State Law Requirements for Nonprofits	15	(1)
Tax Exempt Status Under Federal and State Tax Law	16	(1)
Incorporating in Another State---Don't Fall for it	16
Qualifying as a Foreign Corporation in California Will Cost You More	16	(1)
Two Sets of Tax Exemptions	17	(1)
Two Sets of State Laws	17	(1)
Out-of-State Activities Below the Radar	17	(1)
When Out-of-State Incorporation Makes Sense	17
Legal Rights and Duties of Incorporators, Directors, Officers, Employees, and Members
Incorporators and Their Role as Promoters	4	(1)
A Promoter Must Act With the Corporation's Best Interests in Mind	4	(1)
Directors Must Ratify a Promoter's Actions	4	(1)
Promoters Can Avoid Personal Liability	5	(1)
Convincing Third Parties to Do Business With a Promoter	5	(1)
Directors	5	(15)
Selecting Directors	5	(2)
Paying Your Directors	7	(1)
Public Benefit Corporations and the ``51% Rule''	8	(1)
Term of Office	9	(1)
Quorum Rules	10	(1)
Voting Rules	11	(1)
Executive Committees	11	(1)
Directors Must Act Carefully	12	(2)
Directors Must Be Loyal	14	(1)
How to Avoid Self-Dealing	14	(3)
Loans and Guarantees	17	(1)
Special Protections for Volunteer Directors and Officers	17	(3)
Officers	20	(2)
Duties and Responsibilities	20	(1)
Officers May Bind the Corporation	20	(1)
Compensation of Officers	20	(2)
Loans, Guarantees, and Immunity Laws	22	(1)
Employees	22	(1)
Employee Immunity	22	(1)
Employee Compensation	22	(1)
Employee Benefits	23	(1)
Membership Nonprofits	23
Nonmembership Corporations	23	(1)
Who Is a Member Under Law?	24	(1)
Classes of Membership	25	(1)
Membership Quorum and Voting Rules	26	(1)
Membership Action to Dissolve the Nonprofit	26	(1)
Expelling Members	27	(1)
Complying With Securities Laws	27
Requirements for Section 501(c)(3) Tax Exemption
Section 501(C)(3) Organizational Test	2	(1)
Valid Purposes Under Section 501(C)(3)	3	(7)
Charitable Purposes	3	(2)
Religious Purposes	5	(2)
Scientific Purposes	7	(1)
Literary Purposes	8	(1)
Educational Purposes	8	(2)
Other Requirements for 501(C)(3) Groups	10	(7)
Unrelated Business Activities	10	(1)
Limitation on Profits and Benefits	11	(2)
Limitation on Political Activities	13	(4)
Information for Specific Questions About Your Group's Activities	17
Public Charities and Private Foundations
The Importance of Public Charity Status	4/2	(1)
How to Qualify for Public Charity Status	4/3	(1)
Automatic Public Charity Status	4/4	(1)
Public Support Test	4/6	(1)
Attraction of Public Support Test	4/12	(1)
Exempt Activities Support Test	4/14	(1)
Private Foundations	4/18	(1)
Background	4/18	(1)
Operating Restrictions	4/19	(1)
Limitation on Deductibility of Contributions	4/19	(1)
Special Types of Private Foundations	4/20	(1)
Other Benefits and Requirements
Federal and State Tax Deductions for Contributions	5/2	(1)
What Can Be Deducted	5/2	(1)
What Cannot Be Deducted	5/2	(1)
Donations That Can Be Partially Deducted	5/3	(1)
Reporting Requirements	5/3	(1)
Federal Estate and Gift Tax Exemptions	5/4	(1)
Federal Unrelated Business Income Tax	5/5	(1)
Activities That Are Taxed	5/5	(1)
Activities That Are Not Taxed	5/5	(1)
California Unrelated Business Income Tax	5/6	(1)
California Nonprofit Tax Exemption	5/7	(1)
California Attorney General Reporting Requirements	5/8	(1)
California Welfare Exemption	5/8	(1)
Section 214 Exemption Requirements	5/9	(1)
Special Statutory Categories	5/11	(1)
Educational Purposes That Entitle Nonprofits to Use the Welfare Exemption	5/12	(1)
Scientific Purposes That Entitle Nonprofits to Use the Welfare Exemption	5/14	(1)
Religious Purposes That Entitle Nonprofits to Use the Welfare Exemption	5/14	(1)
Leasing and the Welfare Exemption	5/15	(1)
Other California Tax Exemptions	5/16	(1)
State Solicitation Laws and Requirements	5/17	(1)
Choose a Name and File Your Articles of Incorporation
Choose a Corporate Name	6/3	(1)
Your Name Must Be Unique	6/4	(1)
You Can't Use Certain Terms	6/5	(1)
No Need to Use ``Inc.''	6/5	(1)
Using Two Names and Changing Your Name	6/5	(1)
Practical Suggestions for Selecting a Name	6/6	(1)
Use Common Nonprofit Terms in Your Name	6/6	(1)
Names to Avoid	6/6	(1)
Pick a Descriptive Name	6/7	(1)
Limit Your Name Geographically or Regionally	6/8	(1)
Choose a New Name Instead of Trying to Distinguish Yourself	6/8	(1)
Use a Corporate Designator in Your Name	6/8	(1)
Take Your Time	6/9	(1)
Check Name Availability	6/9	(1)
Check Your Proposed Name by Mail	6/9	(1)
Check Existing Corporate Names Online	6/10	(1)
What to Do When There's a Name Conflict	6/10	(1)
Reserve Your Corporate Name	6/11	(1)
Perform Your Own Name Search	6/12	(1)
Who Should Perform This Search?	6/12	(1)
Who Gets to Use a Name?	6/13	(1)
Finding Users of Your Name	6/13	(1)
Further Searching	6/14	(1)
The Consequences of Using Another's Name	6/14	(1)
Protect Your Name	6/15	(1)
Prepare Articles of Incorporation	6/16	(1)
Preparing Articles for a Public Benefit Corporation	6/17	(1)
Special Instructions for Public Benefit Corporations	6/20	(1)
Preparing Articles for a Religious Corporation	6/23	(1)
Special Instructions for Religious Corporations	6/26	(1)
Preparing Articles for an Unincorporated Association	6/26	(1)
File Your Articles	6/29	(1)
Don't Rush to File	6/29	(1)
Make Copies	6/30	(1)
Prepare Your Cover Letter	6/31	(1)
File Your Documents With the Secretary of State	6/34	(1)
Bylaws
Choose a Membership or Nonmembership Structure	7/2	(1)
Bylaws for a Public Benefit Nonprofit Corporation	7/3	(1)
General Instructions	7/3	(1)
Sample Bylaws	7/4	(1)
Instructions for Completing Your Bylaws	7/9	(1)
Bylaw Provisions for Schools and Federally Funded Groups	7/13	(1)
Membership Bylaw Provisions for a Public Benefit Corporation	7/14	(1)
General Instructions	7/15	(1)
Sample Membership Provisions	7/15	(1)
Special Instructions	7/20	(1)
Bylaws for a Religious Corporation	7/21	(1)
Special Rules for Religious Corporations	7/21	(1)
General Instructions	7/23	(1)
Sample Bylaws	7/24	(1)
Special Instructions	7/29	(1)
Membership Bylaw Provisions for a Religious Corporation	7/32	(1)
General Instructions	7/32	(1)
Sample Membership Provisions	7/33	(1)
Special Instructions	7/38	(1)
Prepare Your State Tax Exemption
The State Tax Exemption Application: Form FTB 3500	8/2	(1)
Ways to Complete the Exemption Application	8/2	(1)
Attachments and Exhibits	8/3	(1)
Instructions for Completing Form 3500	8/5	(1)
Background and Organizational Information (Blanks 1(a)--6(h))	8/5	(1)
Supporting Legal and Financial Documents (Item 7)	8/9	(1)
Purpose, Activities, Funding, and Other Information (Items 7(d)-7(i))	8/13	(1)
Specific Questions for 23701(d) Nonprofits (Item 11)	8/17	(1)
Sign and Mail Your Exemption Application	8/18	(1)
Apply for Your Federal 501(c)(3) Tax Exemption
Getting Started	9/3	(1)
Forms and Publications	9/3	(1)
Ways to Complete the Exemption Application	9/4	(1)
Preliminary Reading	9/5	(1)
Form 1023 Schedules, Attachments, and Exhibits	9/5	(1)
Public Inspection Rights	9/6	(1)
The Consequences of Filing Late	9/7	(1)
Do You Need to File form 1023?	9/8	(1)
Prepare Your Tax Exemption Application	9/8	(1)
Part I: Identification of Applicant	9/9	(1)
Part II: Organizational Structure	9/11	(1)
Part III: Required Provisions in Your Organizing Document	9/12	(1)
Part IV: Narrative Description of Your Activities	9/13	(1)
Part V: Compensation and Financial Arrangements With Your Officers, Directors, Trustees, Employees, and Independent Contractors	9/16	(1)
Part VI: Your Members and Other Individuals and Organizations That Receive Benefits From You	9/25	(1)
Part VII: Your History	9/26	(1)
Part VIII: Your Specific Activities	9/27	(1)
Part IX: Financial Data	9/36	(1)
Part X: Public Charity Status	9/39	(1)
Part XI: User Fee Information	9/49	(1)
Filling Out the Schedules	9/50	(1)
Schedule A -- Churches	9/50	(1)
Schedule B -- Schools, Colleges, and Universities	9/51	(1)
Schedule C -- Hospitals and Medical Research Organizations	9/51	(1)
Schedule D -- Section 509(a)(3) Supporting Organizations	9/52	(1)
Schedule E -- Organizations Not Filing Form 1023 Within 27 Months of Formation	9/52	(1)
Schedule F -- Homes for the Elderly or Handicapped and Low-Income Housing	9/56	(1)
Schedule G -- Successors to Other Organizations	9/56	(1)
Schedule H -- Organizations Providing Scholarships, Educational Loans, or Other Educational Grants	9/57	(1)
Assemble and Mail Your Application to the IRS	9/57	(1)
What to Expect from the IRS	9/59	(1)
The Federal Determination Letter	9/59	(1)
Final Steps in Organizing Your Nonprofit
Mail IRS Letter to Franchise Tax Board	10/2	(1)
Set Up a Corporate Records Book	10/2	(1)
Corporate Records Book	10/2	(1)
Corporate Kits	10/2	(1)
Corporate Seals	10/3	(1)
Corporate Membership Certificates	10/3	(1)
Prepare Offer to Transfer Assets from an Existing Business or Organization to Your Nonprofit	10/3	(1)
Transfers From a For-Profit Business	10/4	(1)
Transfers From an Informal Nonprofit Group	10/4	(1)
Prepare Your Offer to Transfer Form	10/5	(1)
Prepare Minutes of Your First Board of Directors' Meeting	10/9	(1)
Instructions for Preparing Minutes	10/10	(1)
Place Your Minutes and Attachments in a Corporate Records Book	10/18	(1)
Complying With the Bulk Sales Law	10/18	(1)
Prepare a Bill of Sale for Assets	10/19	(1)
Prepare Assignments of Leases and Deeds	10/22	(1)
File Final Papers for the Prior Organization	10/23	(1)
Notify Others of Your Incorporation	10/23	(1)
Apply for a Federal Nonprofit Mailing Permit	10/23	(1)
Apply for Your Property Tax Exemption	10/24	(1)
Timing Your Application	10/24	(1)
Applying for an Exemption	10/25	(1)
File a Domestic Corporation Statement	10/26	(1)
File an Initial Report With the Attorney General	10/26	(1)
Issue Membership Certificates	10/27	(1)
File Your Articles With the County Recorder	10/28	(1)
Register With the Fair Political Practices Commission	10/28	(1)
After Your Corporation Is Organized
Piercing the Corporate Veil---If You Want to Be Treated Like a Corporation, It's Best to Act Like One	11/2	(1)
Federal Corporate Tax Returns	11/3	(1)
Public Charities: Annual Exempt Organization Return	11/3	(1)
Groups Exempt From Filing Form 990	11/3	(1)
Private Foundations: Annual Exempt Organization Return	11/4	(1)
Unrelated Business Income: Annual Exempt Organization Tax Return	11/4	(1)
California Corporate Tax Returns and Reports	11/6	(1)
Public Charities: Annual Exempt Organization Return	11/6	(1)
Private Foundations: Annual Exempt Organization Return	11/6	(1)
Unrelated Business Income Tax Return and Quarterly Estimated Tax Payments	11/6	(1)
Attorney General Annual Periodic Report	11/7	(1)
Public Benefit Corporations' Annual Corporate Report	11/7	(1)
Federal and State Corporate Employment Taxes	11/8	(1)
Federal Employment Taxes and Forms	11/9	(1)
State Employment Taxes and Forms	11/10	(1)
Sales Tax Forms and Exemption from Sales Tax	11/12	(1)
Sales Tax	11/12	(1)
Groups Exempt From Collecting and Submitting Sales Tax	11/13	(1)
Licenses and Permits	11/13	(1)
Workers' Compensation	11/14	(1)
Private Insurance Coverage	11/14	(1)
Dissolving a Nonprofit Corporation	11/15	(1)
Voluntary Dissolution	11/15	(1)
Involuntary Dissolution	11/15	(1)
Religious Corporations	11/16	(1)
Winding Up Corporate Business and Distribution of Assets	11/17	(1)
Lawyers, Legal Research, and Accountants
Lawyers	12/2	(1)
Legal Research	12/3	(1)
Finding the Law You Need	12/3	(1)
Annotated Codes	12/4	(1)
Accountants and Tax Advice	12/4