Business Formation, Not-for-Profit, Tax-Exempt Status

Self Employed but Not-for-Profit

A nonprofit organization is organized like a corporation to do work that benefits the public. The organization can receive both state and federal tax-exempt status. The business files a form 1023 with the IRS for recognition of exemption under Section 501(c)(3) of the IRS code and registers with their state. A fee applies to the application.

Tax-Exempt Purposes

The exempted purposes are set forth in Section 501(c)(3) of the Internal Revenue Code and include:

  • charity (relief of the poor, the distressed, or the underprivileged);
  • advancement of education or science;
  • testing for public safety;
  • fostering national or international amateur sports competitions;
  • preventing cruelty to children or animals,
  • advancement of religion;
  • advancement of literary work;
  • erecting or maintaining public buildings, monuments, or works;
  • lessening the burdens of government;
  • lessening neighborhood tensions;
  • eliminating prejudice and discrimination;
  • defending human and civil rights secured by law; and
  • combating community deterioration and juvenile delinquency.

Staying Exempt

Most tax-exempt organizations other than churches are required to file an annual information return or notice with the IRS.  Organizations that fail to file for 3 consecutive years automatically lose their tax-exempt status. A nonprofit organization can also jeopardize its exempt status by participating in nonexempt activities as listed on the IRS website “How to Stay Exempt;”

New Frontier Tax and Business Services can help you with your start-up activities, tax planning, bookkeeping, and payroll.  Give Pam or Robb a call at 785-594-1204 or send an e-mail to

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