Accountant Forums


Reply
Thread Tools

Change from a C-corp to Non-profit

 
 
Pete
Guest
Posts: n/a
Thanked:
 
      05-03-2005, 08:23 AM
I formed a C-corp last year to launch a new web based
service. I am still pre-launch and am considering changing
to a non-profit. Is this a difficult process. I am
incorporated in Delaware.

<< ------------------------------------------------->>
<< The Charter and the Guidelines for submitting >>
<< messages to this newsgroup are at www.asktax.org >>
<< ------------------------------------------------->>
 
Reply With Quote
 
 
 
 
Stuart A. Bronstein
Guest
Posts: n/a
Thanked:
 
      05-04-2005, 05:42 AM
"Pete" <> wrote:

> I formed a C-corp last year to launch a new web based
> service. I am still pre-launch and am considering changing
> to a non-profit. Is this a difficult process. I am
> incorporated in Delaware.


If you want a nonprofit corporation, you should start all
over. The articles are different, the bylaws are different.
And you probably need to get nonprofit status approved both
by the IRS and the state of incorporation. Even if granted,
as a small business you're not likely to save much if any
tax.

Remember also that when there is a nonprofit corporation,
you are no longer the owner. The state is the "owner" and
you have to run the business in what they consider to be a
commercially reasonable manner.

Consider an S-corp.

Stu

<< ------------------------------------------------->>
<< The Charter and the Guidelines for submitting >>
<< messages to this newsgroup are at www.asktax.org >>
<< ------------------------------------------------->>
 
Reply With Quote
 
 
 
 
Katie
Guest
Posts: n/a
Thanked:
 
      05-04-2005, 06:20 AM
Pete wrote:

> I formed a C-corp last year to launch a new web based
> service. I am still pre-launch and am considering changing
> to a non-profit. Is this a difficult process. I am
> incorporated in Delaware.


Well, it depends on what you want. If you just want it to
be a nonprofit for corporation law purposes, you can
probably reincorporate or do an F reorg into a corporation
organized under Delaware's not-for-profit statute.
Generally, what that means is that the articles of
incorporation and bylaws provide that when the corporation
is dissolved, its net assets will not inure to the benefit
of any individual, but will be contributed to a qualified
charity.

However, if you want it also to be tax exempt, you will have
to apply to the IRS (and probably also to your state) for
that status. How difficult that is depends on what the
corporation is planning to do, which will determine the
subsection of IRC Sec. 501(c) that you are applying for.
Assuming that the purposes of the corporation are
charitable, educational, or religious, or that it qualifies
for tax exemption under some other subsection, you can
probably get the tax exempt status approved retroactively to
the inception of the corporation. The exemption application
is a fairly complex process and professional help would be a
good idea.

Katie in San Diego

The foregoing is intended for educational purposes only and
does not constitute legal or professional advice.

<< ------------------------------------------------->>
<< The Charter and the Guidelines for submitting >>
<< messages to this newsgroup are at www.asktax.org >>
<< ------------------------------------------------->>
 
Reply With Quote
 
Harlan Lunsford
Guest
Posts: n/a
Thanked:
 
      05-04-2005, 06:20 AM
Pete wrote:

> I formed a C-corp last year to launch a new web based
> service. I am still pre-launch and am considering changing
> to a non-profit. Is this a difficult process. I am
> incorporated in Delaware.


I expect you didn't do your homework.

And you haven't told us what kind of "web based service"
you're talking about. Is it a commercial venture? Or a
true non profit endeavor?

I "suspect" the former. tell me I'm wrong?

ChEAr$,
Harlan Lunsford, EA n LA

<< ------------------------------------------------->>
<< The Charter and the Guidelines for submitting >>
<< messages to this newsgroup are at www.asktax.org >>
<< ------------------------------------------------->>
 
Reply With Quote
 
Bernard S
Guest
Posts: n/a
Thanked:
 
      05-04-2005, 06:39 AM
"Pete" <> wrote:

> I formed a C-corp last year to launch a new web based
> service. I am still pre-launch and am considering changing
> to a non-profit. Is this a difficult process. I am
> incorporated in Delaware.


You could just not make a profit. Do you me that it should
be a "not for Profit" organization. If it is to be a "not
for profit" organization, then your chaarter and bylaws must
say so. It must also be for qualified purposes and specified
how assets are to be distributed to other "not for profits"
or for those qualified purposes. You cannot take such assets
at your discretion for yourself else you would be violating
your fiduciary duty. This is, of couse, a vary simple
explanation and details get complicated.

<< ------------------------------------------------->>
<< The Charter and the Guidelines for submitting >>
<< messages to this newsgroup are at www.asktax.org >>
<< ------------------------------------------------->>
 
Reply With Quote
 
TaxSrv
Guest
Posts: n/a
Thanked:
 
      05-06-2005, 05:56 PM
"Pete" wrote:

> I formed a C-corp last year to launch a new web based
> service. I am still pre-launch and am considering
> changing to a non-profit. Is this a difficult process.
> I am incorporated in Delaware.


You will need to incorporate anew, and for IRS approval,
possibly not in Delaware if you don't live there. See also
IRS Pub 557 and Form 1023, describing the various exempt
purposes. What will this org do? If it will exist only in
cyberspace, it would seem to X out a civic league or social
club, or most of the allowable categories for that matter.

Reg,
Fred F.

<< ------------------------------------------------->>
<< The Charter and the Guidelines for submitting >>
<< messages to this newsgroup are at www.asktax.org >>
<< ------------------------------------------------->>
 
Reply With Quote
 
 
 
Reply

Thread Tools

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are On
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
M06: "Change Loan Terms" button does nothing in Change account set landau351 Microsoft Money 0 10-22-2007 02:26 PM
Price Change Export - ILCs change 360 Microsoft Point Of Sale 1 08-17-2006 08:57 PM
Pub 1346 File Spec Change #6 & Reord Layout Change #7 John H. Fisher Tax 0 12-20-2004 11:07 AM
LTD company change of plan? Toby Jennings UK Accountancy 1 12-13-2003 03:59 PM
Accountancy career change? Rick UK Accountancy 2 09-25-2003 09:35 PM


All times are GMT. The time now is 04:41 PM.
Posts in this forum do not constitute the advice of AccountantForums.com or its members. Financial advice should always be taken from qualified advisors before committing to a financial decision.