Replies

1. 
   pzaxtl | Feb 26, 2008 01:03am | #1

   Yes, you need an attorney.  The process will depend on what state you live in.  You have to deal with both state and federal on this but the state you live in will determine the steps you need to take.   Generally, the first step you will need to take is to incorporate as a non-profit, and depending on what kind of operation you are looking to run, you will have incorporate under a specific article of your states non-profit corporate law.  Being that, I assume, you are already incorporated you will have to do one of two things:

   1. Amend your current articles of incorporation
   2. dissolve the current corporation and reincorporate as a non-profit.

   Keep in mind, that as a non-profit, you will have to elect trustees, maintain a board, etc.  You will also need an initial meeting of your board where you decide -- make a motion ratifying the decision -- to incorporate.  The minutes of this meeting must include names of board members, (trustees) terms of office, legal address for the business, etc. (you NEED an attorney).  Once this is taken care of, you can pursue the requisite steps to incorporate as a non-profit in your state.

   After you've successfully incorporated as a non-profit at the state level, you can apply for federal recognition of your exempt status -- i.e. 501c(3), 501c(4), etc.

   Best of luck -- it can be a frustrating experience, but is often worth it!

1. 
   woodenhead | Feb 26, 2008 01:22am | #2

   Thanks for your professional advice, i live in N.Y.

1. 
   pzaxtl | Feb 26, 2008 07:20am | #4

   I live in NY as well -- you need an attorney.  In addition, Alan provided you with some very important insight into the nature of non-profits.  Unless you have a very compelling reason to make this change, I wouldn't -- you will lose ownership and control of the corporation.  Even if you have family members sitting as trustees, it is possible for you to be out and someone else in as CEO or whatever position you hope to occupy.  You can develop a set of by-laws (which you'll need to have for NY and IRS recognition) that will provide you some security, but that most often applies to religious not-for-profits than others -- an attorney can advise you.  You also lose any and all tax write-offs that a for-profit corporation enjoys -- this can often times be more significant than the hoped for savings realized with exemption.

1. 
   woodenhead | Feb 26, 2008 03:45pm | #5

   Thanks for your professional input , there are some very intelligent woodworkers on this site. .

2. 
   alanplanesaw | Feb 26, 2008 06:09am | #3

   Woodenhead,

   May I ask why you want to change to a nonprofit?  If you still want control of the money, to make money for yourself -- that is not a non or not-for-profit. 

    As a forprofit, you can control the entity and where the money goes.  As a nonprofit, the board of directors will own the entity, determine who the executive is, and determine where the money goes.  And, there can be no private inurement.  No private gain from the profits.

   Some people have the mistaken idea that if they change to a nonprofit they can get donations while still controlling the profits.  Can't do.

   Maybe you have thought this through.  If not, make sure you get good advice.

   Alan - planesaw (executive of a nonprofit)