According to the US Internal Revenue Code, the non-profit organizations are exempted from paying the tax by law. These organizations are noted as 501c(3). The privately operating foundations, and public and private charity foundations are included among the 501C3 organizations.
Before understanding how to become a 501C3 in Florida, it is more important to understand that some other organizations are also listed as 501C organizations. These categories include 501C1, 501C28,and others. The 501 organizations, are administered and regulated by the US Department of the Treasury. This department works under the Internal Revenue Services.
If you need help starting a 501c3 non profit, call us at 407-344-1012, or email us at [email protected].
What are the Benefits of 501C3 for Non-Profit Organizations
The 501C3 categorizations exempts the non-profit organizations from taxes. Many people who want to know how to become a 501C3 in Florida do not know about the other benefits of 501C3 for non-profit organizations. Here are some other benefits.
- As stated earlier, the non-profit organizations, categorized as 501C3, do not pay any federal or state tax.
- The property taxes and state sale taxes also do not apply on these non-profit organizations in some states.
- Some of the public and private allocations are available only for the 501C3 organizations. The 501C3 organizations can apply for these allocations and grants in all states.
- The non-profit organizations send letters, newsletters, and a number of other mails to the IRS and public. The US Postal bulk mail provides discounts on postal mails and its other services.
Step-by-Step Guide on How to Become a 501C3 in Florida
The concept of how to become a 501C3 in Florida is a little complicated. Some of the US States offer flexible rules and regulations for becoming a 501C3 as compared to the rules in Florida. Therefore, we have divided the process of how to become a 501C3 in Florida into two sections. The first section discusses the basic rules required in all states and the second section includes the rules that are specific to the state of Florida.
Section 01: General Rules and Steps Required in All States
Following are the preliminary matters and important steps required in all states.
Describe Your Mission
You need to adhere to the IRS rules to stay updated about how to become a 501C3 in Florida.
According to the US Internal Revenue Service’s Code, it is essential that the non-profit organization must be working for the charity and religious purposes. You may need to describe your mission statement in order to prove that you are operating a charity or religious organization. Therefore, it is ideal to create a mission statement that clearly defines your goals. However, before creating your mission statement, it is more important to define your goals.
- Write down your organizational goals.
- Convert your goals into a formal mission statement.
Establish a Fundraising Plan
The process of how to become a 501C3 in Florida includes a descriptive fundraising plan for short-term and long-term non-profit organizations.
Describing your goals and creating a mission statement are the subjective applications of your non-profit organization. The objective applications include a practical approach to your goals. A fundraising plan includes references to the resources of fundraising, guide to donations, a plan about attracting and getting the donations, and a descriptive layout of the fundraising ideas.
Along with describing a fundraising plan, it is also ideal to evaluate the capabilities of your organization as a non-profit entity. An effective and capable non-profit organization contains:
- Employees who are confident enough to freely communicate with the donors and explain about their goals and ideologies
- A clear layout of your short-term and long-term goals
- A financial layout to define your practical approach towards achieving your goals
- A graphical illustration about the milestones and progress of your goals
- Bookkeeping capabilities including corporate records and professional accounting books
- A Certificate of 501C3 status and a Certificate of tax Exemption from the state of Florida
Create an Outline of your Annual Budget
Before moving on to know how to become a 501c3 in Florida, it is important to remember that the fundraising and non-profit organizations are more financially responsible than other businesses. Generally, people who donate their money or properties tend to follow up the non-profit organizations and hold them accountable for their spending.
A professional approach for all establishing non-profit organizations is to create a clear outline of the annual budget. The annual budget should include at least two plans:
- Plan A that describes your non-profit goals if your organization collects the estimated donations
- Plan B that describes your non-profit goals if your organization collects donations that are lesser than your estimates
Both the plans should include revenue and expenses categories.
The revenue category will contain the estimated donations, a list of resources to collect these donations, and goals that can be obtained within the estimated donations. Calculate the goals after calculating the expenses category.
The expenses include fundamental and non-profit expenses. The fundamental expenses include the following.
- Administrative expenses including equipment like computers and cameras
- Personnel expenses including salaries, fuel, transport, benefits, and more
- Fundraising expenses including marketing expenses, donations, event organization expenses, and others
After creating an annual budget, discuss the plan with the board of directors of your organization. The directors will approve the budget. This annual budget will be very helpful in describing your purposes and goals to the donors for collecting funds. Budgeting also offers a very practical approach about how to become a 501C3 in Florida.
Reassess before Incorporation
After the approval of your annual budget, the final step is to incorporate your organization. However, incorporation makes you legally bound and accountable for your activities. Therefore, an ideal approach is to reassess your decisions, plans, and activities before applying for incorporation.
Make sure that the organization, in any form, is not involved in any legislative or political activity, or any other activity that may hurt the minorities or provoke any type of terrorist or stereotypical activities in the country. Remember that the non-profit organizations are not only legally accountable but these are also morally and ethically accountable to the public and donors.
Incorporate Your Organization
If you want to know more about how to become a 501C3 in Florida then read the following basic steps to incorporate your organization in all states. We have given an outline of these steps here and discussed them descriptively in the Section 2.
- Choose a business name.
- Check the availability of your chosen business name in your state.
- Recruit the board of directors.
- Prepare articles of incorporation.
- Establish the bylaws.
- Prepare a schedule for organizational meetings.
- Prepare a bookkeeping set up.
- Get Employer Identification Number form your state.
- Apply for tax exemptions.
Section 02: General Rules and Steps Required in Florida
In this guide on how to become a 501C3 in Florida, we have already discussed the general rules and requirements in all states. Now, we will discuss the essential and practical steps along with some tips to setup a non-profit organization in Florida.
Choose a Business Name and Check its Status
The file of the Secretary of State contains a list of all the corporations that are working as non-profit organizations in Florida. According to the intellectual property laws, it is vital that the name of your organization does not clash with the name of any other organization listed on the file of the Secretary of State.
The name of your organization may contain terms like incorporation and corporation. However, the State of Florida restricts you from using the word ‘company’ in the name of your organization. Similarly, any other word that reflects your organization as a business may not be used in its name.
If you are confused about choosing a name for your organization then visit the Florida Division of Corporations for finding out the names available in the file or find out more information on how to become a 501C3 in Florida on the official website of the IRS.
According to the State-specific laws of Florida, all the non-profit organizations that fall under the category of 501C3 should have at least three directors. The only requirement for choosing the directors for your organization is that they should be eighteen years of age. There is no other age or educational restriction. However, it would be easier for you to set up your 501C3 non-profit organization if you choose professional people related with the subject of your organization. The directors may operate from any other state of America.
Incorporating your Non-Profit Organization
The process of how to become a 501C3 in Florida includes specific rules to incorporate your organization.
Incorporating your organization is essential to release your employees, directors, and other operating authorities from the legal restrictions in any lawsuit related with your organization. Incorporating your organization helps in continuing your organizational activities freely. The process of incorporating your non-profit organization comprises of four steps.
Preparing the Articles of Incorporation
The rules and regulations of incorporating your organization may be different for other states. The rules of incorporation are strict in Florida but the State of Florida also offers a number of benefits for the non-profit organizations.
The articles for incorporation of your non-profit organization or the charter document function you’re your organizational constitution. The filing fee ranges from $30 to $150. Also known as the charter of documents, it is basically a set of important documents that is used to enter your organization in the Florida Division of Corporations. The charter of documents includes the following.
- The name of your non-profit organization – It is the most important part of how to become a 501C3 in Florida. We have already described the details for choosing a name of your organization earlier in this section.
- Name and address of your registered agent – A registered agent is required to receive the state documents. The agent also helps you in fulfilling the legal requirements, obtaining the legal documents, and even pursuing the activities of the lawsuits. The State of Florida requires you to enter the name and address of your registered agent. Make sure that the address is not a P.O. Box address.
- Legal address – You need to enter the legal address of your non-profit organization. If you have sub-offices or divisions in other parts of Florida or country then make sure to enter their details as well or discuss this section of how to become a 501C3 in Florida with your attorney.
- Duration – Some of the non-profit organizations are established for short-term goals only. These organizations are abolished after achieving the goals. Make sure to enter the duration of your non-profit organization. If you are unaware of the duration then enter ‘perpetual’ in this section.
- Name of the Incorporators – Some states require the names of the chief incorporators only. These rules are flexible in Florida as well. However, an ideal approach is to enter the names of all incorporators along with their signatures.
- Names and addresses of the directors – If you have already recruited your directors then mention their names and legal addresses in the charter of document. However, if you have not selected the directors then the state will authorize the incorporators to operate as the directors. In the later case, you will enter the names and addresses of the incorporators in this section.
- Statement of Purpose – As explained earlier in the Section 01 of how to become a 501C3 in Florida, if you have already created a formal mission statement then you will define it in this section. The mission statement should include the subject and purpose of your non-profit organization.
- List of the items of non-profit activities – This includes details about the organizational properties, assets, vehicles, and other items that will be included to accomplish the goals of your non-profit organization.
Remember that the Designation of the Registered Agent fee in Florida is $35. You also need to submit your annual report to the Division of Corporations after completion of one year of your incorporation.
The process of how to become a 501C3 in Florida includes more important steps given below.
Creating the Bylaws
The file of bylaws contains the organizational laws and procedures required to fulfill your activities. There is no specific requirement to create the bylaws. It is not necessary to submit a copy of bylaws to the Secretary of State but you must keep a copy of it in the office.
Schedule an Organizational Meeting
The organizational meeting would include an outline of your employees and goals and purposes of your non-profit organization.
Creating the Records Book
The accounts managers are responsible for creating the records books. The records books will contain important information about the assets and properties used for the organizational purposes. It will also include the details of your budget and resources.
Getting an Employer Identification Number
The non-profit organizations need to inform the IRS and the State of Florida before hiring any employee.
The Employer Identification Number is obtained from the federation. You can apply for an online Employer Identification Number. The IRS may require you to submit specific information including withholding allowance certificates and work eligibility verification.
For information the state, contact Florida New Hire Reporting Center.
Registering with the State Offices
Annual registration with the Division of Consumer Services is necessary.
You also need to register with the Department of Revenue. For online registration with the Florida Department of Revenue Online Registration Service, click here.
Applying for Tax Exemptions
When someone asks you about how to become a 501C3 in Florida, you should always inform that person about the benefits of tax exemptions for non-profit corporations. The non-profit organizations should always apply for tax exemptions in order to save the expenses and activity costs. You can apply for tax exemptions from federal, state, and local taxes.
Before applying for the federal tax exemptions, it is ideal to evaluate your eligibility for the laws set by the IRS. The IRS has established an online eligibility evaluation process. You can evaluate your eligibility online by clicking here.
The second step is to apply for the tax-exempt status using the IRS forms.
- Evaluate your organization and make sure that it abides by the tax-exemption requirements set by your state.
- If the gross receipts of your organization are less than $5000 per annum then you dot need to apply for the federal tax exemption. According to the IRS, the non-profit organizations do not apply for tax exemptions if the total gross receipts in the first year are less than $7500, less than $12000 after two tax years, and less than $15000 after here tax years.
- Get a current copy of the Form 1023 from the IRS. Read the IRS instructions for filling the form 1023. The instructions are given on the website of the IRS.
- Get Form 2848 from the IRS. It is the Form for the Power of Attorney and Declaration of Representatives.
- Get a current Form 8821 from the IRS. It is the form of Tax Information Authorization.
- Submit your charter of document for incorporation.
- You can submit Form 1023 and other forms within 15 months from the date of incorporation. The earlier you submit, the earlier you are exempted from the taxes.
- The part X of the Form 1023 contains a request application for public charity classification. Make sure that you request this application on the form.
The local tax exemption rules apply for property, sales, and purchase taxes. A county tax assessor can help you evaluate the status of your properties for local tax exemptions.
Other important steps of how to become a 501C3 in Florida include these.
- Registering with the State’s Attorney General
- Opening a bank account
- Applying for Permit for Non-Profit Postal Address
- Obtaining necessary state and local licenses
- Getting insurance for your non-profit corporation
501C3 Tax Exemptions in Florida
Among all the benefits of 501C3 categorization, a majority of the non-profit organization are interested in tax exemptions. In this section, we will have a look on the tax exemptions on 501C3 non-profit organizations in Florida to understand the concept of how to become a 501C3 in Florida.
Charitable or Religious Purpose
According to the US Internal Revenue Service’s Code, it is essential that the non-profit organization operates under charitable or religious purposes. Some social club organizations, which also work under charitable or religious purposes, are also excluded from tax applications. However, the latter category is listed as 501C7 in the US Internal Revenue Service’s Code. Make sure that you don’t confuse the subject of how to become a 501C3 in Florida with other categories.
The state of Florida issues a Certificate of tax Exemption to these organizations. However, the organization may have to provide a proof of its charitable and religious purposes.
Tangible Personal Property
As a general rule of how to become a 501C3 in Florida, any organization has to pay the tangible personal property taxes if the property is used for personal purposes. However, if the non-profit organization uses the property for organizational purposes only, the property is exempted from the tangible property taxes.
Sales Tax on Donated Properties
Many people donate their personal properties to charity or religious organizations as goodwill or to escape the sales taxes. However, when the property taxes are audited, they find out that hefty sales tax applies on their properties. This is a very complicated yet common issue in the subject of how to become a 501C3 in Florida.
Now that you understand the concept of how to become a 501C3 in Florida, remember that the Florida State rules for tax exemptions are quite complicated as compared to other states. The rule 12A-1.005 of the Florida Administrative Code clearly describes the tax exemptions. It is highly recommended that you should consult Florida Administrative Code with your lawyer in order to understand the concepts and applications of tax exemption on public and private charity and religious organizations.
We have tried to include all steps in this guide about how to become a 501C3 in Florida. However, it is a complicated process and you must seek legal guidance to avoid legal disputes.
If you need help starting a 501c3 non profit, call us at 407-344-1012, or email us at [email protected].