Set Up A Non-Profit Corporation in Delaware

By Jeremy Reed Tuesday, June 23, 2020

How to Set Up A Non-profit CorporationOnce you have set up a Delaware Exempt corporation—also known as a non-profit corporation—you will need to file an application for non-profit status with the IRS.

Part of your application should include your non-profit corporation’s mission statement. The mission statement is generally a statement of what your organization wants and aims to accomplish.

Your non-profit corporation’s mission statement can either be straightforward and simple or intensive and complex; however, since it is typically included in much of the non-profit corporation’s marketing material as well as funding requests, it should be as compelling as possible.

Simply stating that your goal is to “feed the hungry” is not a good idea; be smart, be strategic and be specific--you want to be sure your organization will stand out so as to raise as much money as possible for your charity.

Instead of a broad, undefined mission statement like “feed the hungry,” try one like this: “We aim to reduce the number of hungry people in the Mid-Atlantic region of Delaware through the funding of mobile soup kitchens.” See the difference?

Whether or not your corporation is considered a non-profit, as opposed to a for-profit entity, depends on your surplus income; any surplus income derived from a non-profit entity must be used to further the mission of the non-profit corporation.

In other words, any income left after payment for day-to-day operations cannot be transferred to shareholders, employees or directors of the corporation. 

The next step that is essential to the 501 (c)(3) is the IRS application. The application is generally completed and filed with the IRS. You can process the application on your own or with the help of a tax professional or a certified public accountant. The IRS offers assistance via a 14-page instruction manual. 

IRS Form 1023 is the application for Recognition of Exemption under Section 501(c)(3). This 31-page application is very intricate. There is also a 1023EZ form that can be processed, which is the streamlined application for Recognition of Exemption under Section 501(c)(3). 

The IRS introduced the 1023-EZ to help small charities apply for the 501(c)(3) tax exempt status more easily. IRS Commissioner John Koskinen was quoted as saying:

“This is a common-sense approach that will help reduce lengthy processing delays for small, tax exempt groups and ultimately larger organizations as well. We believe that many small organizations will be able to complete this form without creating major compliance risks.”

With this application, the process is fast and easy to complete. We are happy to assist with the formation process of a non-profit corporation in Delaware. The application process takes about five minutes for us to complete by phone.

The most difficult questions our staff will ask is the name of the company you would like to create and the mission statement for your new non-profit corporation.

*Disclaimer*: Harvard Business Services, Inc. is neither a law firm nor an accounting firm and, even in cases where the author is an attorney, or a tax professional, nothing in this article constitutes legal or tax advice. This article provides general commentary on, and analysis of, the subject addressed. We strongly advise that you consult an attorney or tax professional to receive legal or tax guidance tailored to your specific circumstances. Any action taken or not taken based on this article is at your own risk. If an article cites or provides a link to third-party sources or websites, Harvard Business Services, Inc. is not responsible for and makes no representations regarding such source’s content or accuracy. Opinions expressed in this article do not necessarily reflect those of Harvard Business Services, Inc.

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There are 3 comments left for How to Set Up A Non-Profit Corporation

Maryanne NGBAN said: Wednesday, June 24, 2020

Please how can we apply for a IRS Tax exempt. Since I have already registered the company with Delaware

HBS Staff replied: Wednesday, June 24, 2020

If you already have a Delaware Exempt corporation, typically the next step for our clients is to file IRS Form 1023 for Recognition of Exemption under Section 501(c)(3). If you do not already have an Exempt corporation, our team would be happy to work with you to make the appropriate filings in Delaware.

Andree said: Saturday, January 4, 2020

Hi, can you set up a non profit in Delaware if you live in another state?

HBS Staff replied: Monday, January 6, 2020

Yes you can. You do not have to live in Delaware in order to form a Delaware company. Give us a call and our team would be happy to walk you through the process!

Laura Massimi said: Wednesday, July 17, 2019

I am interested in starting a non profit organization to stop bullying all over, and also teach our upcoming generation about bullying, and how it can be stopped.

HBS Staff replied: Friday, July 19, 2019

Laura, that sounds like a great cause. We don't offer services for creating your business plan or identifying your mission, but we would be happy to help you in filing and creating your non-profit corporation when you are ready. Please call or live chat with us if you are ready to get started.

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