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Frequently Asked Questions (FAQ)

Scroll down the page to read each FAQ or click on a title below to go directly to that question and answer.

What is a Corporation?
A corporation is a business or separate legal "person" that is separate from the individuals who create it, own it or manage it. Like a human, a corporation can own property, make contracts, conduct business, sue and be sued in court, pay taxes and generally act as a person would in the eyes of the law. All 50 states and the District of Columbia recognize the existence of corporations.

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What is a Nonprofit Corporation?
A nonprofit corporation carries on socially good works (helps the community) that may include charity, education, athletics, civic benefit, religious and other humanitarian causes. One key aspect of a nonprofit corporation is that no part of its "profit" is given to one or more individuals. A nonprofit corporation also does not have shareholders or owners and does not pay dividends.

Internet Nonprofit Center has information for and about nonprofits. This site provides a database of questions and answers regarding nonprofits that have been exchanged on the Internet.
http://www.nonprofits.org/

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What is a 501(c)(3) Corporation?
These organizations want to be exempt from federal income taxes and must file with the Internal Revenue Service (IRS) for consideration. The number 501(c)(3) refers to a specific section in the IRS code that deals with charities. The form you need to submit shows the IRS that your organization's purpose is to help religious, charitable, educational or scientific needs in the community.

You can purchase a kit (created by The Foundation Group) to help you with this process. The kit is called "Successfully Applying for 501(c)(3) Status" and is available from The Foundation Group by calling 1-888-361-9445.

The 501(c)(3) form and information can be found on the IRS Web site.
http://www.irs.gov/pub/irs-pdf/f1023.pdf
http://www.irs.gov/pub/irs-pdf/p557.pdf

Internet sites that further explain the 501(c)(3) are
www.foundationgroup.com
http://www.t-tlaw.com/np-01b.htm

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What are Articles of Incorporation?
The Articles (short for Articles of Incorporation) are the basic documents that create the corporation. For example, the articles list the name, place of business and purpose of the corporation. The purpose clause of the Articles is important for determining whether the corporation can be a nonprofit corporation and whether it can get a federal tax exemption.

Information and necessary forms can be found on the Ohio Secretary of State's Web site.
http://www.sos.state.oh.us/sos/businessservices/nonProf.aspx?Section=111

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What are the Bylaws?
Bylaws are specific, written details about the basic day-to-day rules used by the corporation. Bylaws define such things as the responsibilities of the officers, election procedures, financial procedures, who can be a member and corporate operations.
http://fdncenter.org/getstarted/faqs/html/samplebylaws.html
http://www.lectlaw.com/forms/f162.htm
http://www.wcnWebsite.org/howto/bylaws.htm

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What are Corporate Minutes?
Minutes are simply a detailed written summary of events during a meeting. Minutes include information like all the formal actions, votes, motions and decisions that happened during the meeting. The minutes are kept (usually by the Secretary) as a permanent written record of what happened during each meeting.
http://www.managementhelp.org/boards/minutes.htm
http://www.ctaconline.org/minutesl.asp

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Who is an Incorporator?
An incorporator is someone who creates any kind of corporation. S/he signs legal paperwork and sends it to the Ohio Secretary of State, which is the first step in creating a nonprofit corporation. The incorporators may or may not be the first directors (trustees) or officers.
http://www.sos.state.oh.us/SOSApps/Forms/Form.aspx?type=BusinessServices&code=532

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What is a Statutory Agent?
Ohio laws state that a corporation needs to decide on a person, called a statutory agent, to be the "contact person" for all legal matters. A statutory agent is the person who receives legal notices and documents. However, a statutory agent does not have to be an attorney.
http://www.sos.state.oh.us/sos/businessservices/corp.aspx?Section=106

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What Does a Corporate Board Do?
The board of directors is responsible for the overall operation of the corporation, making major decisions and setting corporate policies. The board supervises the officers and other employees who make the day-to-day decisions about the corporation.
http://www.hurwitassociates.com/l_roles_governingboards.html

A wonderful book that has information on forming and running nonprofits, Guidebook for Directors of Nonprofit Corporations Committee on Nonprofit Corporations, Editors, George W. Overton, Jeannie Carmedelle Frey, Second Edition, Section of Business Law American Bar Association, 2002.

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Who are the Officers and What Do They Do?
The corporate officers are usually the President, Vice-President, Secretary and Treasurer. They are responsible for the everyday running of the corporation and each officer has special duties. The President (or chairman, director, etc.) is the person in charge of the organization and of running the board meetings. You will also need a Secretary who is in charge of keeping records of your meetings, legal paperwork, communications, etc. Your Treasurer is the person who keeps track of the money and financial reports. Most organizations also like to have a "Vice-President" or someone who is able to step in and take charge in the absence of the President. An officer can also be a board member.
http://www.nonprofits.org/npofaq/03/02.html

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What Does the Secretary of State Do?
This is the elected official in Ohio that oversees corporation laws, nonprofit registration and maintains the legal paperwork filed by nonprofit corporations. The Secretary of State also sends updates to registered organizations/nonprofit corporations when changes occur in reporting and filing requirements.

The Ohio Secretary of State's Web site is http://www.sos.state.oh.us/About.aspx?Section=100

United States Internal Revenue Service (IRS)
http://www.irs.gov/eo

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What is Tax-exemption?
A tax-exempt organization means that it does not have to pay federal income taxes. These organizations must send paperwork to the Ohio Secretary of State and the Internal Revenue Service (IRS) to be considered for tax-exemption. The most important item is to make sure your organization's purpose is to help religious, charitable, educational or scientific needs in the community. Tax-exempt organizations may have to pay other types of taxes.

Government forms and information are available at:

Ohio Secretary of State's Web site
http://www.sos.state.oh.us/sos/businessservices/nonprof.aspx

United States Internal Revenue Service (IRS)
http://www.irs.gov/eo

Ohio Attorney General
www.ag.state.oh.us

You can purchase a kit (created by The Foundation Group) to help you with this process. The kit is called "Successfully Applying for 501(c)(3) Status" and is available from The Foundation Group by calling 1-888-361-9445.
www.foundationgroup.com

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If I Form an Ohio Nonprofit Corporation, Does it Get a Tax-exemption Right Away?
No. Tax-exempt status is created by the United States Internal Revenue Service under what is called section 501(c)(3) or a related section of the Tax Code. A nonprofit corporation can apply to the IRS for tax-exempt status, but does NOT automatically get that status just by filing the initial corporate documents with the Ohio Secretary of State.

Government tax-exempt forms and information are available at
http://www.irs.gov/formspubs/index.html

The Ohio Secretary of State's Web site
www.state.oh.us/sos

United States Internal Revenue Service (IRS) site
http://www.irs.gov/eo

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I Want to Do Some Good for My Community or Society in General. Must I Form a Nonprofit Corporation to Do That?
No, there are many other ways to help your community. You can donate money to an existing charity, you can work with an existing nonprofit pursuing goals that match your own.

Other examples of ways to help community can usually be found on the Internet or in local newspapers. Most communities have their own personal sites that can direct volunteers to where they're needed. You might volunteer for your local library, senior center, band boosters, help a neighbor in need or a wide variety of other causes you believe to be important. You can form a foundation, you can create a trust or you can form an unincorporated association. You can even assist many large national organizations within your own city with items like blood drives, walk-a-thons, environmental issues, book drives, political issues, etc.

Because of tax consequences, it is wise to check with an attorney or CPA before making a major commitment.

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What is a Foundation?
A foundation has many resources, usually money, set aside for a specific charitable purpose. An individual or group controlling the foundation makes decisions about how much money is to be donated to particular people, organizations or projects, in order to carry out the objectives of the foundation.

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What are the Advantages of Forming a Nonprofit Corporation?
The key benefit of a corporation is that it is a "legal person" separate from the people who own or run it. If the corporation is sued, the assets of the owners and employees involved are generally protected, because the corporate assets are separate and distinct from personal assets.

Another advantage of a corporation is that it can exist literally forever, as long as the proper documents are filed with the Secretary of State. A nonprofit corporation, properly run, can carry on good works and the mission that it was created for long after the initial incorporators have moved on.

A good site to research both advantages and disadvantages of forming a nonprofit is
http://www.mycorporation.com/nonprofitadv.htm

Nonprofit Organizations - All About Nonprofit Charitable Organizations
http://nonprofit.about.com/

Nonprofit Resource Guide Search - Find nonprofit organizations by state, type and name.
http://www.epodunk.com/nonprofits/

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