HOW TO FORM A NONPROFIT IN DISTRICT OF COLUMBIA ONLINE
What is a District-of-Columbia Nonprofit Corporation?
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A District of Columbia Nonprofit Corporation is sometimes called a District of Columbia Not-For-Profit Corporation.
A District of Columbia Nonprofit Corporation is an organization that is legally registered with the District of Columbia Department of Consumer and Regulatory Affairs.
While the federal government must approve the tax-exempt status of a District of Columbia Nonprofit Corporation,
a District of Columbia Nonprofit Corporation is not initially registered with any US government agency.
A District of Columbia Nonprofit Corporation is an organization that works to serve some kind of public interest
rather than to provide financial benefit to any particular individuals or entities.
Many District of Columbia Nonprofit Corporations have much in common with District of Columbia For-profit Corporations.
This includes the liability protection that comes with a legally registered District of Columbia Nonprofit Corporation.
A lot of District of Columbia Nonprofit Corporations hire managers and employees just like a District of Columbia For-profit Corporation does.
The application process for a District of Columbia Nonprofit Corporation is very similar to that of
a District of Columbia For-Profit Corporation.
Contrary to popular belief, District of Columbia Nonprofit Corporations can and do make money.
In a District of Columbia Nonprofit Corporation, any profits must legally go directly back into the District of Columbia Nonprofit Corporation.
Do I need a lawyer to Form a District of Columbia Nonprofit Corporation?
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The short answer is no. The state of District of Columbia does not legally require a lawyer to form a District of Columbia Nonprofit Corporation.
However, if there is anything about forming a District of Columbia Nonprofit Corporation that you're not sure about you
should seek the advice of a competent District of Columbia lawyer, a District of Columbia accountant, or both BEFORE you Incorporate.
Once you have made the decision to Form a District of Columbia Nonprofit Corporation, a lawyer can file your documents and act as a middle man for a few hundred
dollars an hour; or you can use an online service provider like All Business Documents to perform these services and save money that you
can use in your new District of Columbia Nonprofit Corporation.
What are the most common types of District of Columbia Nonprofit Corporations?
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A District of Columbia Nonprofit Corporation is formed to provide some kind of public or community benefit.
Unlike the other types of District of Columbia Corporations and LLCs, a District of Columbia Nonprofit Corporation
may be eligible
for certain benefits, including tax exemptions on both the state and federal levels.
Depending on the nature of the organization, some District of Columbia Nonprofit Corporations may not be eligible for tax exempt status.
A District of Columbia Nonprofit Corporation may also be eligible for public and private grants.
A District of Columbia Nonprofit Corporation is formed in a similar way as that of forming a District of Columbia For-profit Corporation.
District of Columbia Nonprofits must file Articles of Incorporation in the same way that District of Columbia For-profit Corporations do.
A District of Columbia Nonprofit Corporation comes with the same liability protection as the other types of District of Columbia Corporations.
The main difference between a District of Columbia Nonprofit Corporation and a District of Columbia For-profit Corporation is how
the profits of the District of Columbia Corporation are distributed,
In a District of Columbia For-profit Corporation profits can be distributed to shareholders.
District of Columbia Nonprofits are legally required to use the income to further a goal that benefits the community or some part of the public.
The most common types of District of Columbia Nonprofit Corporations are:
- District of Columbia Public-benefit Nonprofit Corporations
Organized for the general public benefit, rather than for the interest of its members or shareholders
Formed primarily for social, educational, recreational or charitable purposes
Examples are food banks and youth sports organizations
- District of Columbia Religious Corporation
Organized to promote religious purposes
Subject to less complicated filing and reporting requirements than other types of Corporations
May be exempt from regulations governing non-religious groups performing the same services
- District of Columbia Mutual-benefit Nonprofit Corporation
Serves its members in ways other than just distributing profits to them
Cannot obtain IRS tax-exempt status as a charitable organization
Pays the same taxes as For-profit Corporations
Examples are homeowners associations or a public utility companies
While most federal tax exempt organizations are Nonprofit Corporations, registering a District of Columbia Nonprofit Corporation
does not automatically qualify the District of Columbia Nonprofit for tax exempt status at the federal level.
The IRS recognizes various types of tax exempt Nonprofit Corporations.
To receive federal tax exempt status a District of Columbia Nonprofit Corporation must file forms with the Internal Revenue Service.
The forms can get very complex depending on the nature of the Nonprofit.
Also, a District of Columbia Nonprofit Corporation cannot legally use its resources for propaganda or to further a political cause
or to support a candidate for public office.
What is the difference between a District of Columbia Nonprofit Corporation and a District of Columbia Benefit Corporation?
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One of the major responsibilities of a District of Columbia For-profit Corporation is to increase shareholder value.
For most District of Columbia Corporations the pursuit of shareholder value is done without regard for specific benefits to the public.
The only benefits that matter are those that benefit the shareholders, who are the owners of the District of Columbia Corporation.
District of Columbia For-profit Corporations often face pressure to abandon social goals in order to increase their bottom line.
District of Columbia Nonprofit Corporations are formed to provide some kind of public benefit but may be restricted in their ability to raise capital
when they need to grow.
The state of District of Columbia has created a new kind of For-profit Corporation which has a legal responsibility to include some
kind of public benefit in their Corporate operating requirements.
A District of Columbia Corporation of this kind is called a District of Columbia Benefit Corporation or a District of Columbia B Corporation.
Benefit Corporations are a hybrid between a For-profit and nonprofit Corporation.
Operating capital is easier to raise for a District of Columbia Benefit Corporation and the District of Columbia Benefit Corporation is
required to provide some kind of public benefit.
Benefit Corporations do not have any special tax breaks or benefits.
Benefit Corporations are taxed just like any other District of Columbia Corporation is taxed.
To qualify as a District of Columbia Benefit Corporation, a Corporation must have an explicit social or environmental mission, and a legally binding
fiduciary responsibility to take into account the interests of workers, the community and the environment as well as its shareholders.
A District of Columbia Benefit Corporation must also publish independently verified reports on its social and environmental impact
alongside its financial results.
Some examples of the specific public benefit that a District of Columbia Benefit Corporation must provide, among others, include:
- Providing low-income or under served individuals or communities with beneficial products or services
- Promoting economic opportunity for individuals or communities beyond the creation of jobs in the normal course of business
- Preserving the environment
- Improving human health
- Promoting the arts, sciences or advancement of knowledge
If needed, we can help you form a Benefit Corporation in District of Columbia.
Who owns a District of Columbia Nonprofit Corporation?
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No one person or group of people can own a District of Columbia Nonprofit Corporation.
Once it is incorporated, the District of Columbia Nonprofit Corporation is a separate legal entity from its founders, directors, officers, and
employees.
The District of Columbia Nonprofit Corporation itself owns assets of the business and is entitled to receive all revenues from its operation.
Any equity in a District of Columbia Nonprofit Corporation belongs to the organization itself, not to the founders, board of directors or staff.
In addition, a District of Columbia Nonprofit Corporation cannot be sold to another individual, corporation or organization.
Can a District of Columbia Nonprofit Corporation make money?
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Contrary to popular belief a District of Columbia Nonprofit Corporation may actually make a profit.
Many District of Columbia Nonprofit Corporations derive much of their funding from tax-exempt donations.
Sometimes a District of Columbia Nonprofit Corporation can receive more in donations that the costs to actually run the organization.
A District of Columbia For-Profit Corporation may distribute any excess assets to its owners or shareholders.
There is no distribution of assets in a District of Columbia Nonprofit Corporation.
In a District of Columbia Nonprofit Corporation all of the money earned by or donated to the District of Columbia Nonprofit organization
is used in pursuing the organization's objectives as stated in its Articles of Incorporation.
Any excess capital after the close of the District of Columbia Nonprofit Corporation's fiscal year must be kept in the District of Columbia Nonprofit's accounts.
Are all District of Columbia Nonprofit Corporations Tax Exempt?
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The state of District of Columbia does not have a Corporate income tax so there is no need for a Nonprofit Exemption from District of Columbia Corporation income taxes.
What is a 501(c)(3) Nonprofit Corporation?
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501(c) refers to a section of IRS code which deals with tax exempt organizations including, but not limited to,
Nonprofit Corporations.
The most common type of tax-exempt organization falls under section 501(c)(3) of the IRS code.
This section of the IRS code allows a District of Columbia Nonprofit organization to be exempt from federal income tax if its activities include any of the
following purposes:
- Charitable
- Religious
- Educational
- Scientific
- Literary
- Testing for public safety
- Fostering amateur sports competition
- Preventing cruelty to children or animals
There are other types of 501(c) tax exempt organizations defined in the IRS code - 29 of them - but 501(c)(3) tax exempt organizations
are by far the most common in the state of District of Columbia and the US.
One advantage to qualifying to be a 501(c)(3) tax exempt organization is that most foundations will only make grants
to 501(c)(3) Nonprofits.
Tax exemption does not excuse a District of Columbia Nonprofit organization from maintaining proper records and filing any required annual or special-purpose tax
returns if they are required.
Failure to file required returns such as Form 990 (Return of Organization Exempt From Income Tax) may result in fines.
One prohibition for 501(c)(3) organizations is that they are prohibited from conducting political campaign activities to intervene
in elections to public office.
There are, however, provisions which may allow some 501(c)(3) organizations to legally lobby to influence legislation.
What information does a Nonprofit need before it can apply for 501(c)(3) Tax Exempt Status?
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BEFORE you apply with the IRS for 501(c)(3) Tax Exempt status it will need the following:
- Articles of Incorporation approved by the District of Columbia Department of Consumer and Regulatory Affairs
- Bylaws
- Federal Employer Identification Number (EIN)
- Statement of purpose that meets IRS requirements
- Statement that your Nonprofit Corporation will not engage in prohibited political or legislative activities
- A Plan of Dissolution describing the distribution of assets upon dissolution
There is also very specific language which needs to be included in your Articles of Incorporation which are filed with the District of Columbia
Department of Consumer and Regulatory Affairs if you want to get 501(c)(3) Tax Exempt Status.
When a Nonprofit Corporation dissolves all remaining assets
must be distributed to other active Nonprofits.
None of the remaining assets can be distributed to any directors, members or staff.
If you want to apply for 501(c)(3) Tax Exempt Status we will make sure your Articles of Incorporation include everything that the IRS needs
before we submit them to the state.
What happens when a District of Columbia Nonprofit Corporation wants to shut down?
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When a District of Columbia Nonprofit Corporation wants to cease operations, any assets of the District of Columbia Nonprofit Corporation
must be distributed to other Nonprofits which were formed for similar purposes as the District of Columbia Nonprofit Corporation which is
closing.
Under no circumstances can a District of Columbia Nonprofit Corporation distribute any remaining assets to its founders, directors or
employees.
How can I Form a District of Columbia Nonprofit Corporation Online?
If you are ready to Form a District of Columbia Nonprofit Corporation simply choose which District of Columbia
Nonprofit options that you want in the upper right corner of this screen then click the Next Step button.
You will be directed to a screen on which you can enter your specific a District of Columbia Nonprofit information and finalize your order.
If you have any questions regarding our District of Columbia Nonprofit services you can call us at 855-771-2477.
DISTRICT OF COLUMBIA NONPROFIT COST ESTIMATOR
Our DC Nonprofit Processing Services include:
(These services are included in our processing fees)
Optional District of Columbia Incorporation Services
(Choose options, cost is updated automatically)
- Express Mail - $35
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If you really need your original approved Articles of Incorporation in your hands quickly, the
Express Mail option can cut the delivery time in half.
The Express Mail option has no effect on the District of Columbia Department of Consumer and Regulatory Affairs's processing time.
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DC Registered Agent - $135
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Every District of Columbia Nonprofit is required to have an address within the state of District of Columbia where
official and legal correspondence can be delivered.
The individual or company that is registered with the state of District of Columbia to receive all correspondence
on behalf of the Nonprofit is called a Registered Agent.
You may act as your own Registered Agent, however, many Nonprofits hire a Registered Agent because they don't have a physical address within
District of Columbia or to provide a distinct level of privacy.
We can act as your District of Columbia Nonprofit Registered Agent.
This is an annual service.
We will forward all correspondence to you and will remind you when it is time to renew your DC Registered Agent services.
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Customized Bylaws - $75
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Bylaws are the rules by which your District of Columbia Nonprofit must operate.
Every new District of Columbia Nonprofit requires bylaws.
Almost anything may be written into the bylaws, however, the bylaws must not be in violation of any law or
your District of Columbia Nonprofit's Articles of Incorporation.
We can create customized initial bylaws for your District of Columbia Nonprofit that are based on your specific business requirements.
As your company grows over time, you may amend your bylaws as necessary.
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DC Good Standing Certificate - $95
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A District of Columbia Good Standing Certficate is proof of the existence of your new District of Columbia Nonprofit.
The Certificate is issued by the District of Columbia Department of Consumer and Regulatory Affairs and is proof that your DC Nonprofit is not behind on any
of its District of Columbia Department of Consumer and Regulatory Affairs Corporate obligations.
A District of Columbia Good Standing Certificate is often required for loans, to apply for business licenses, or for tax or other business purposes
in the state of District of Columbia or in any other state.
We can get your District of Columbia Good Standing Certificate immediately after the District of Columbia Department of Consumer and Regulatory Affairs has approved your Nonprofit application.
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Federal EIN - $65
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An FEIN is like a Social Security Number for your District of Columbia Nonprofit.
We can get your FEIN on the same day that your Articles of Incorporation are approved by the District of Columbia Department of Consumer and Regulatory Affairs.
You can get your FEIN before your articles are approved by the District of Columbia Department of Consumer and Regulatory Affairs but it's a good idea to wait until
after approval.
Your filing may be rejected or the Nonprofit name that you want may not be approved.
Changing information on an FEIN filing is not a trivial exercise with the IRS.
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Nonprofit Kit and Seal - $99
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While you're not required to have a Nonprofit Kit and Seal for your new District of Columbia Nonprofit they do come in handy.
The DC Nonprofit Kit consists of a beautiful customized binder, stock certificates, a stock ledger
and your custom Nonprofit Seal.
The Nonprofit Seal is used to emboss important company documents, such as stock certificates.
The binder also includes dividers so you can use it for all of your District of Columbia Nonprofit record keeping.