Guide to Set Up a Non Profit Organization

When you decide to set up a non profit organization there are certain steps which you must take in order to ensure that your non profit enjoys tax exempt status. The 501 (c)(3) tax exempt status is the most common type of non profit corporation and this status ensures tax exemption. Organizations which are organized under this status may employ paid staff, but any directors and officers must serve as unpaid volunteers.

There are several major advantages to incorporation for non profits. The most obvious is the tax exempt status which 501 (c)(3) status grants. These corporations are also eligible to receive grants from both public and private sources, and to offer tax deduction benefits to qualified donors. Another benefit of incorporation for non profits is limited liability protection for the officers, members and trustees of the non profit.

http://www.arl.org/sparc/publications/papers/setting_up_a_nonprofit.shtml