Incorporating a Non Profit in Tennessee
You have an idea for a ministry or public service organization. Or perhaps you are already running a non-profit organization. The question naturally arises, Should we incorporate our non-profit group? The answer in most cases is: Yes. Consult with an attorney who is experienced in the area of non-profit corporations, contact Attorney Jim Purple.
What does it mean to incorporate, or form a corporation?
When you incorporate you create a separate entity, kind of an artificial person. From that point forward everything is done in the name of the corporation by officers, directors, employees, members who are acting on behalf of the corporation, a separate entity. This new entity is what is liable for debts or damages caused by members, volunteers or employees of the non-profit organization.
Why should a non profit organization incorporate?
There are several reasons to incorporate your non-profit organization. Perhaps the most important reason is liability. When your incorporate you create a level of protection from the liability of other persons. This is commonly referred to a “corporate veil“. For example, you are a public service organization that works with children. One of you volunteers fails to keep a good watch on one of the children, and the child gets hurt. If you are incorporated it is the corporation (and maybe the volunteer) that bears the liability, or financial responsibility, not you. (Be sure to seek the advice and counsel of an attorney about the issue of liability)
Incorporation Allows for Application for a 501 C 3 Designation
Many times non-profit organizations want to be recognized officially by the Internal Revenue Service as non profit and tax exempt. In most cases this requires recognition as a “501(c)3″ organization. This designation comes from the section of the Internal Revenue Code, and is the official non-profit, tax exempt designation. To obtain this designation you must complete a rather intensive and detailed application and submit it to the IRS for approval along with a fee.
At Purple Law Firm, in Chattanooga, TN, our attorneys are experienced in the formation of non-profit organizations and successful completion of the 501(c)3 application process. Attorney Jim Purple has formed numerous non-profit corporations, including ministries, and service organizations, as well as churches.
For Example: Dental Angel Fund Foundation Network 7 Media Center, Inc.
Contact a lawyer who is experienced in the area of non-profit organizations, contact attorney Jim Purple.