Non-profit organizations are formed for a variety of reasons and purposes. Some organizations are business related, such as chambers of commerce, others have a charitable focus. Whatever your purpose, the formation of a non-profit corporation will involve both legal and tax issues. This article discusses those issues generally in light of Florida law; however, each non-profit is different and you should consult a knowledgeable attorney and accountant in your jurisdiction to help you regarding your particular situation.

The formation of a non-profit involves two main steps: (1) formation of the non-profit corporation; and (2) applying to the Internal Revenue Service for tax-exempt status.

In order to form a non-profit corporation, you will need to file Articles of Incorporation with the Florida Secretary of State. Great care should be taken in drafting this document for two reasons: (1) along with the bylaws, it will control the management of the non-profit; and (2) its contents may affect whether or not your application for tax exempt status is approved by the Internal Revenue Service. While simple "bare bones" articles of incorporation often suffice for a for-profit corporation, that is not the case for a non-profit. Additionally, there are several differences in the legal requirements for the articles. For example, a Florida non-profit corporation must have at least 3 directors (for profit corporations can have just one). Additionally, it must state a specific purpose in its articles of incorporation - the standard "for any and all lawful purposes" found in for-profit articles of incorporation will not suffice.

Once the articles have been filed, the new board of directors must complete the formation of the corporation by approving the bylaws. While bylaws often gather dust and are not consulted in small closely held corporations, a non-profit corporation’s bylaws are extremely important. For instance, the Internal Revenue Service will review the bylaws carefully to confirm the non-profit nature of the corporation and to make sure that there are sufficient safeguards to ensure that the monies received by the corporation are used for non-profit purposes (and not pocketed by the individuals in charge of the entity).

At the same time as the drafting of the bylaws (if not before), you should work with your accountant on the preparation of the application for tax exemption. Unlike other tax applications (such as an "S" corporation or tax identification number application), this is not a quick and easy form to prepare. Instead, it requires a lot of information and supporting documentation. If the form is not prepared correctly, it will be rejected. Again, you should retain an accountant (with non-profit experience) to help you.

As the foregoing shows, the formation of a non-profit corporation is not a simple process. If you are considering forming a non-profit, talk to an attorney and accountant about your plans before taking any further steps – you will save money and effort and in the long run.