Setting up a not for profit corporation is not dissimilar to setting up a regular for profit corporation or any other business entity. The difference between a not for profit corporation and a for profit corporation is in a non profit, profits generated actually don’t go to any particular individual, owner, director, officer, that type of thing. So folks who come to us to set up a not for profit corporation are typically looking to do something charitable, looking to do something in the education space. It’s a multistep process.

The first process to actually incorporate in New York state, you need a minimum of three directors, sometimes called trustees who are going to serve on the initial board of directors. So we get their information and then we need together to find a purpose. What is this not for profit corporation going to do? What charitable or educational or scientific or social mission are they going to serve?

So after we incorporate a not for profit corporation, the next thing we do is we host an initial meeting of the board of directors. At that meeting we approve bylaws which govern how the corporation is going to operate and also a conflict of interest policy, a whistleblower policy and other policies that are best practice and also required by the New York state law or the Internal Revenue Code.

And the third part, which actually gets the corporation exempt from taxation. So just forming a not for profit corporation does not grant it a tax exemption, you need to file an application with the Internal Revenue Service to obtain tax exemption. The application takes a bit to produce, it takes a lot of information, a budget, other operational information coming from the founders and we submit it to the Internal Revenue Service and it can take anywhere from two to approximately nine months to ultimately get the exemption from taxation.

And the fourth and final piece is once we get the Internal Revenue Service to grant the tax exemption for the organization. We also apply for New York state tax exemption, which gets a sales tax exemption and also a registration with the charities bureau of the New York Attorney General’s office.