Some people think that by forming a nonprofit, their business is instantly tax-exempt. That’s not accurate. Being a tax-exempt organization entails more.

The group must complete a few preliminary steps before applying to become a tax-exempt nonprofit. A company must decide if it is a trust, corporation, or association. 

Your company will be spared penalties if you are aware of the non-exempt status criteria beforehand. Prior to starting, be aware that creating a nonprofit organization is a challenging approach to putting your desire to help others in your community or profession into action. It is important to make early preparations for the difficulty of creating and maintaining consistent income streams.

Your company might benefit from seeking tax-exempt status if it has previously operated under the principles and with the tactics of a non-profit. If so, get in touch with a professional who is qualified and offers accounting services in Palm Beach Gardens, FL.

Your charity organization should ascertain which of the following it is before submitting an application for tax-exempt status:


State law governs the creation of trusts. You ought to research the legislation that applies to your firm. A trust’s organizing document must have specific language in order for it to meet the requirements for 501(c)(3) tax-exempt status. Language suggestions can be found in Publication 557 (PDF).


Generally speaking, articles of incorporation are filed in order to create a corporation under state law. Before the articles take effect, the state usually datestamps them. The charter or articles of incorporation of a corporation must contain specific language in order for it to be recognized as a 501(c)(3) organization. Language suggestions can be found in Publication 557.


An association is, in general, a group that has been set up for a particular objective. The association needs to have a documented record of its formation in order to be recognized as a 501(a) of the Code. This document may serve as bylaws for an organization. The paper must be signed by two or more parties and be dated by the organization.

Under state law, an association may be defined in a variety of ways. The laws of the state where the organizations are registered should be consulted. An association’s articles of association must have specific language in order for it to be recognized as a 501(c)(3) tax-exempt organization.