Business Guide Book

Eternal Zion presents -
Business guide, principles,

laws, taxes, and foundation
ETERNALZIONRECORDS@GMAIL.COM
ETERNAL ZION RECORDS
BUSINESS
GUIDE
Includes definitions of business entities
and fully breaks down the process of
creating a business. This guide is best for
those who reside in the U.S. other
countries will have different laws and
document.
OUR 3 MAJOR THEMES
PRINCIPLES AND DEFINITIONS DOCUMENTATION INITIALIZATION

WE'LL COVER A GREAT DEAL OF THIS GUIDE WILL INCLUDE A THIS GUIDE WILL INCLUDE THE
DEFINITIVE BUSINESS LAWS AND DETAILED REPRESENTATION OF FINALIZATION OF CONFIGURING
CONCEPTS NEEDED TO ALL DOCUMENTS NEEDED TO YOUR BUSINESS LEGALITIES AND
OFFICIALIZE A LAWFUL ESTABLISH YOUR BUSINESS UNDERSTAND ALL THINGS
BUSINESS. SUCCESSFULLY LAWFULLY CONNECTED TO YOUR
BUSINESS.
PLEASE FEEL FREE TO EMAIL US AT

EZ@IAMETERNALZION.COM FOR ANY
TABLE OF
QUESTIONS, COMMENTS AND CONTENTS
CONCERNS.
Eternal Zion presents -
Business guide, priniciples,
laws, taxes, and foundation
ETERNAL ZION RECORDS
TABLE OF CONTENTS
INDEX:
PAGES SUBJECT
3 - 13 BUSINESS TYPES
14 EIN, TIN, AND UBI
BUSINESS
15 - 18
DOCUMENTATION
NON PROFIT
19 - 23
DOCUMENTATION
24 - 26 508 (C)1A FORMATION
27 SOURCES
TYPES OF
BUSINESSES
Business definitions TIP: BEFORE CREATING ANY

BUSINESS IT IS BEST TO KNOW
THE PRINCIPLES AND
TERMINOLOGIES FIRST.
TYPES OF BUSINESSES
SOLE PROPRIETORSHIP C CORPORATION
PARTNERSHIP S CORPORATION
LLP NONPROFIT CORPORATION
LLC (5O1C3) (508C1A)
SERIES LLC BENEFIT CORPORATION
L3C
SOLE PROPRIETORSHIP
SOLE PROPRIETORSHIP IS THE DEFAULT STRUCTURE OF A BUSINESS THAT
HASN’T FILED ANY PAPERWORK TO CREATE A LEGAL ENTITY. IT IS THE
SIMPLEST FORM OF BUSINESS OWNERSHIP. THIS IS DIRECTLY CONNECTED
TO THE OWNERS SSN.
PROS OF SOLE
PROPRIETORSHIP:
SIMPLICITY: IN MOST CASES, SOLE PROPRIETORS OPERATING UNDER
THEIR OWN NAMES AND WORK WITHOUT FILING PAPERWORK WITH THE
STATE. THEY CAN ALSO AVOID APPLYING FOR CERTAIN LICENSING
AND REGISTRATION REQUIREMENTS,
CONTROL OVER THE BUSINESS: A SOLE PROPRIETORSHIP IS OWNED
BY A SINGLE PERSON. THERE’S NO NEED TO GET CONSENSUS BEFORE
MAKING DECISIONS ABOUT THE BUSINESS.
PASS THROUGH TAXATION: PROFITS FROM A SOLE PROPRIETORSHIP
PASS THROUGH TO THE OWNER’S PERSONAL INCOME, SIMPLIFYING
TAXES SIGNIFICANTLY. AS A PASS-THROUGH ENTITY, A SOLE
PROPRIETORSHIP QUALIFIES FOR THE 20% QUALIFIED BUSINESS
INCOME (QBI) DEDUCTION ESTABLISHED UNDER THE 2017 TAX CUTS
AND JOBS ACT
CONS OF SOLE
PROPRIETORSHIP:
LEGAL LIABILITY: A SOLE PROPRIETORSHIP PASSES MORE THAN
INCOME THROUGH TO ITS OWNER. LEGALLY, THE TWO ARE
INSEPARABLE. THAT MEANS ANY LAWSUITS OR OTHER CLAIMS
AGAINST THE BUSINESS ARE LAUNCHED PERSONALLY AGAINST THE
OWNER.
FINANCIAL RISK: IN ADDITION TO LEGAL RISKS, SOLE PROPRIETORS
TAKE ON ALL FINANCIAL RISK OF THE BUSINESS PERSONALLY. THE
OWNERS HOME, BANK ACCOUNTS, CARS, AND OTHER ASSETS CAN BE
SEIZED TO SATISFY CLAIMS BY CREDITORS IF THEIR BUSINESS HITS A
ROUGH PATCH FINANCIALLY
ACCESS TO FUNDING: BECAUSE OF THEIR INFORMAL STRUCTURES,
SOLE PROPRIETORSHIPS GENERALLY HAVE A HARDER TIME ACCESSING
LOANS AND INVESTMENT CAPITAL THAN OTHER BUSINESS OWNERSHIP
TYPES
Business definitions TIP: BEFORE CREATING ANY

BUSINESS IT IS BEST TO KNOW
THE PROS AND CONS OF EACH
BUSINESS.
TYPES OF BUSINESSES
PARTNERSHIP
PARTNERSHIPS, OFTEN CALLED GENERAL PARTNERSHIPS, ARE
BUSINESSES WITH MORE THAN ONE OWNER. IF YOU TEAM UP ON A
BUSINESS VENTURE WITHOUT FORMING A LEGAL BUSINESS ENTITY
THROUGH THE STATE, YOUR BUSINESS IS A PARTNERSHIP BY DEFAULT.
PARTNERSHIPS ARE USUALLY FOUNDED ON FORMAL PARTNERSHIP
AGREEMENTS OUTLINING THE OWNERSHIP SHARE, RIGHTS, AND
OBLIGATIONS OF EACH PARTNER.
PROS OF PARTNERSHIP:
SIMPLICITY: PARTNERSHIP IS A RELATIVELY SIMPLE STRUCTURE SINCE

IT DOESN’T REQUIRE FORMATION PAPERWORK
PASS-THROUGH TAXATION: PARTNERSHIPS ARE PASS-THROUGH
ENTITIES, WITH INCOME PASSING THROUGH TO PARTNERS
PROPORTIONALLY BASED ON SHARE OF OWNERSHIP.
CONTROL OVER THE BUSINESS: PARTNERSHIPS ALLOW THEIR OWNERS
TO PARTICIPATE IN THE BUSINESS DIRECTLY AND ALLOCATE PROFITS
AND CONTROL ACCORDING TO THEIR OWN WISHES.
CONS OF PARTNERSHIP:
LEGAL LIABILITY: LIKE SOLE PROPRIETORSHIPS, PARTNERSHIPS OPEN

THE PARTNERS UP TO LEGAL LIABILITY FOR THE FIRM’S OPERATIONS.
LIABILITY INSURANCE CAN ADDRESS THESE RISKS, BUT INSURANCE HAS
LIMITS.
FINANCIAL RISK: PARTNERS ALSO TAKE ON FINANCIAL LIABILITY FOR
THE BUSINESS, PUTTING THEIR PERSONAL ASSETS AT RISK IN CASE OF
FINANCIAL HARDSHIP OR BANKRUPTCY.
Business definitions TIP: CHOOSE WISELY HOW YOU

WISH TO REPRESENT YOUR
PRODUCT OR SERVICE BY
STRATEGICALLY CHOOSING A
BUSINESS STRUCTURE
TYPES OF BUSINESSES
LIMITED LIABILITY PARTNERSHIP
(LLP)
AN LLP IS A LEGAL ENTITY AVAILABLE IN SOME STATES TO PROVIDE THE
SIMPLICITY AND PASS-THROUGH TAXATION OF A PARTNERSHIP WHILE
LIMITING LIABILITY FOR THE PARTNERS. IN ADDITION TO A FORMAL
OPERATING AGREEMENT AMONG PARTNERS, LLP'S GENERALLY REQUIRE
REGISTRATION WITH THE SECRETARY OF STATE.
PROS OF LLP:
LIMITED LIABILITY: LIKE AN LLC, AN LLP IS A SEPARATE LEGAL

ENTITY WITH ITS OWN ASSETS AND OBLIGATIONS. THIS PROTECTS
PARTNERS FROM PERSONAL LIABILITY FOR LEGAL AND FINANCIAL
CLAIMS AGAINST THE FIRM, ALTHOUGH THE DEGREE OF PROTECTION
VARIES BY STATE.
OWNERSHIP AND CONTROL: LIKE PARTNERSHIPS, LLPS ALLOW OWNERS
TO ACTIVELY PARTICIPATE IN THE BUSINESS AND CONTROL HOW IT IS
RUN.
TAX OPTIONS: LLPS MAY BE CONSIDERED PASS-THROUGH ENTITIES,
WHICH CAN BE ADVANTAGEOUS FOR OWNERS, PARTICULARLY WITH THE
20% QBI DEDUCTION. THEIR TAX TREATMENT VARIES BY STATE,
HOWEVER
CONS OF LLP:
LIMITED AVAILABILITY: LLPS ARE NOT AVAILABLE IN EVERY STATE,

AND THEY MAY ONLY BE AVAILABLE TO CERTAIN TYPES OF
BUSINESSES.
INCREASED COMPLEXITY: LLPS ARE TREATED DIFFERENTLY IN
DIFFERENT STATES, PARTNERS WILL NEED TO RESEARCH THEIR STATE
REQUIREMENTS AND TAX LAWS THOROUGHLY BEFORE CHOOSING THIS
STRUCTURE.
Business definitions TIP: THINK ABOUT WHETHER

YOU WANT SHAREHOLDERS OR
SIMPLY A STRUCTURED
BUSINESS YOU HAVE MORE
CONTROL OVER.
TYPES OF BUSINESSES
LIMITED LIABILITY COMPANY
(LLC)
AN LLC IS A LEGAL ENTITY FORMED BY CREATING AN LLC OPERATING
AGREEMENT AND FILING ARTICLES OF ORGANIZATION WITH THE
SECRETARY OF STATE. LLCS ALLOW BUSINESS OWNERS TO RETAIN SOME
OF THE ADVANTAGES OF SOLE PROPRIETORSHIP WHILE LIMITING LEGAL
AND FINANCIAL LIABILITY, MAKING THEM A POPULAR BUSINESS
OWNERSHIP STRUCTURE FOR SMALL BUSINESSES.
PROS OF LLC:
LIMITED LIABILITY: WHEN FORMING AN LLC, IT CREATES A SEPARATE

LEGAL ENTITY WITH ITS OWN ASSETS AND OBLIGATIONS. ANY LEGAL
CLAIMS AGAINST THE BUSINESS REMAIN AGAINST THE BUSINESS, NOT
ITS OWNERS. MEMBERS OF AN LLC MAY STILL BE LIABLE FOR THEIR
PERSONAL CONDUCT, HOWEVER, SO LIABILITY INSURANCE IS
GENERALLY ADVISED.
ACTIVE OWNERSHIP: LLCS ALLOW OWNERSHIP BY TWO OR MORE
MEMBERS WHO CAN EXERT AS MUCH CONTROL AND INVOLVEMENT IN
THE BUSINESS AS THEY LIKE.
TAX OPTIONS: LLCS ARE PASS-THROUGH ENTITIES, WHICH CAN BE
ADVANTAGEOUS FOR OWNERS, PARTICULARLY WITH THE 20% QBI
DEDUCTION. LLCS ALSO PROVIDE ADDITIONAL FLEXIBILITY BY
ALLOWING MEMBERS TO CHOOSE TO BE TAXED AS A CORPORATION
INSTEAD. THIS IS GENERALLY ADVANTAGEOUS TO LARGER FIRMS, BUT
IT GIVES LLCS FLEXIBILITY AS THE BUSINESS GROWS.
CONS OF LLC:
COMPLEXITY: LLCS MUST BE FORMED BY FILING ARTICLES OF
FORMATION WITH THE STATE. OWNERS ALSO HAVE ONGOING
REGULATORY PAPERWORK TO ATTEND TO, INCLUDING MAINTAINING A
REGISTERED AGENT TO RECEIVE LEGAL DOCUMENTS AND FILING
PERIODIC REPORTS WHERE REQUIRED WITH THE STATE. ALL OF THIS
ADDS UP TO EXTRA ADMINISTRATIVE TIME AND COMPLEXITY.
ADMINISTRATIVE COSTS: AN LLC COSTS MORE TO CREATE AND
MAINTAIN THAN A SOLE PROPRIETORSHIP. STATE FILINGS GENERALLY
REQUIRE FEES, AND OWNERS MAY NEED SOFTWARE OR SUPPORT TO
COMPLETE THEM. OWNERS MAY NEED EXTRA LEGAL AND FINANCIAL
GUIDANCE TO ENSURE THAT THEY'RE GETTING THE MOST OUT OF THEIR
CHOICES, WHICH ADDS TO THE COSTS.
Business definitions TIP: CERTAIN BUSINESS

STRUCTURES AREN'T AVAILABLE
IN OTHER STATES WHEREAS
OTHERS ARE IN EVERY STATE
TYPES OF BUSINESSES
SERIES LLC
CURRENTLY AVAILABLE IN 18 STATES AND COUNTING, SERIES LLCS ARE
AN UP-AND-COMING TYPE OF BUSINESS OWNERSHIP STRUCTURE. THEY
ALLOW ONE PARENT LLC TO FORM MULTIPLE INTERNAL LLCS IN
SUBSIDIARY FASHION. THESE NESTED LLCS CAN BE USED TO ISOLATE
LIABILITY FOR DIFFERENT BUSINESS UNITS.
SERIES LLCS ARE COMPLEX, BUT WORTH DISCUSSING WITH ADVISORS IF
THE BUSINESS HAS DISTINCT UNITS THAT MIGHT BENEFIT FROM
INDIVIDUAL TREATMENT.
PROS OF SERIES LLC:
LIMITED LIABILITY: EACH LLC WITHIN A SERIES HAS SEPARATE

MEMBERS, ASSETS, AND LIABILITIES.
ACTIVE OWNERSHIP: SERIES LLCS ALLOW OWNERS TO ACTIVELY
PARTICIPATE IN THE OPERATION OF THEIR INDIVIDUAL LLCS.
TAX OPTIONS:SERIES LLCS RETAIN THE TAX ADVANTAGES AND
FLEXIBILITY OF TRADITIONAL LLCS.
UNIFIED FILING: DESPITE THE MULTIPLE LLCS, A SERIES LLC IS
REQUIRED TO REGISTER AND FILE TAXES THROUGH THE PARENT LLC.
THE REGISTRATIONS AND RETURNS MUST ENCOMPASS ALL LLCS,
CONS OF SERIES LLC:
COMPLEXITY: DESPITE THE UNIFIED FILING SETUP, IT’S CONSIDERABLY

MORE COMPLEX TO MANAGE MULTIPLE LLCS WITH SEPARATE ASSETS
AND OWNERS THAN A SINGLE ENTITY. TAXES IN PARTICULAR ARE
COMPLICATED BY THE SERIES STRUCTURE.
ADMINISTRATIVE COSTS: THE ADDED ADMINISTRATIVE BURDEN MEANS
ADDITIONAL COST AND GUIDANCE FROM PROFESSIONAL ADVISORS. IN
ADDITION, FEES MAY BE HIGHER FOR FORMING A SERIES LLC.
Business definitions TIP: CORPORATIONS ARE HUGE

INVESTMENTS OF TIME AND
TYPICALLY INVOLVES MORE
PAPERWORK AND MORE PEOPLE
WHO MAKE THE DECISIONS
TYPES OF BUSINESSES
C CORPORATION
A CORPORATION IS OWNED BY SHAREHOLDERS WHO MAY HAVE VARYING LEVELS OF
CONTROL AND INVOLVEMENT IN THE EVERYDAY OPERATIONS OF THE BUSINESS. IN
THE CASE OF STOCK CORPORATIONS, OWNERSHIP IS ISSUED IN SHARES OF STOCK.
A CORPORATION IS FORMED BY FILING ARTICLES OF INCORPORATION WITH THE
STATE. THE PROCESS OF INCORPORATION INCLUDES APPOINTING A BOARD OF
DIRECTORS TO OVERSEE THE BUSINESS AND ESTABLISHING BYLAWS FOR ITS
GOVERNANCE.
WITH GOVERNANCE MANAGED THROUGH A BOARD OF DIRECTORS AND OWNERSHIP
DISTRIBUTED AMONG SHAREHOLDERS, CORPORATIONS REPRESENT A FURTHER
DEGREE OF SEPARATION BETWEEN THE BUSINESS ENTITY AND ITS OWNERS.
BY DEFAULT, CORPORATIONS ARE C CORPORATIONS, BECAUSE THEY ARE TAXED
UNDER SUBCHAPTER C OF THE INTERNAL REVENUE CODE (IRC). UNLIKE SOLE
PROPRIETORSHIPS, PARTNERSHIPS, AND LLCS, C CORPORATIONS ARE NOT PASS-
THROUGH ENTITIES.
PROFITS BELONG TO THE CORPORATION AND ARE SUBJECT TO CORPORATE INCOME
TAX. THEY MAY ALSO BE DISTRIBUTED THROUGH DIVIDENDS TO SHAREHOLDERS.
PROS OF C-CORP:
LIMITED LIABILITY: LIKE AN LLC, A CORPORATION IS A SEPARATE

LEGAL ENTITY WITH ASSETS AND LIABILITIES OF ITS OWN. THE
LIABILITY OF ITS SHAREHOLDERS IS GENERALLY LIMITED TO THE
AMOUNT THEY HAVE INVESTED IN THE BUSINESS.
SELF-EMPLOYMENT TAXES: SHAREHOLDERS WHO WORK IN THE
BUSINESS ARE PAID AND TAXED AS EMPLOYEES, SPARING THEM FROM
SELF-EMPLOYMENT TAX. INCOME CAN BE KEPT IN THE BUSINESS AS
EQUITY AND DISTRIBUTED THROUGH SHARES AND DIVIDENDS,
PROVIDING GREATER FINANCIAL FLEXIBILITY.
ACCESS TO CAPITAL: C CORPORATIONS CAN ACCESS CAPITAL BY
ISSUING STOCK. THEY CAN MAKE UNLIMITED STOCK OFFERS TO
INDIVIDUALS OR BUSINESSES, INCLUDING FOREIGN OR DOMESTIC
INVESTORS. THEY CAN ALSO ISSUE MULTIPLE TYPES OF STOCK.
CONS OF C-CORP:
REGULATORY OVERSIGHT: CORPORATIONS ARE SUBJECT TO GREATER SCRUTINY
THAN LLCS, BEING REQUIRED TO DISCLOSE EARNINGS, GOVERNING DOCUMENTS,
AND OTHER INFORMATION ANNUALLY TO SHAREHOLDERS AND IN SOME CASES THE
PUBLIC.
CORPORATE TAX: THE PROFITS OF C CORPORATIONS ARE SUBJECT TO CORPORATE
TAX. SHAREHOLDERS WHO WORK IN THE BUSINESS AND TAKE A SALARY, AS WELL
AS SHAREHOLDERS WHO EARN DIVIDENDS, ALSO PAY PERSONAL INCOME TAX ON
THEIR EARNINGS. THIS RESULTS IN TWO LAYERS OF TAXATION ON THE
BUSINESS’S PROFITS.
COMPLEXITY AND COSTS: CORPORATIONS ARE MORE COMPLEX AND COSTLY TO
FORM AND MAINTAIN THAN OTHER BUSINESS ENTITIES.
LESS CONTROL: OWNERSHIP IS SPREAD AMONG SHAREHOLDERS, AND
GOVERNANCE AMONG A BOARD OF DIRECTORS, CORPORATIONS MAKE IT HARDER
TO EXERT INDIVIDUAL CONTROL OVER THE BUSINESS.
Business definitions TIP: THINK CAREFULLY ABOUT

HOW EACH BUSINESS IS TAXED
AND HOW TO BEST AVOID
DOUBLE TAXATION HIGH FEES
TYPES OF BUSINESSES
S - CORPORATION
SOME CORPORATIONS CAN ENJOY THE BENEFITS OF PASS-THROUGH
TAXATION BY ELECTING TO BE TAXED AS AN S CORPORATION. TO
QUALIFY, THE CORPORATION MAY NOT HAVE MORE THAN 100
SHAREHOLDERS AND MAY ISSUE ONLY ONE CLASS OF STOCK.
ONLY INDIVIDUALS, CERTAIN ESTATES AND TRUSTS, AND CERTAIN TAX-
EXEMPT ORGANIZATIONS MAY OWN SHARES IN AN S CORPORATION.
AN S CORPORATION IS FORMED THROUGH THE SAME STEPS AS A C
CORPORATION, WITH AN ADDITIONAL ELECTION MADE THROUGH A FILING
WITH THE INTERNAL REVENUE SERVICE.
PROS OF S - CORPORTAION:
LIMITED LIABILITY: LIKE ALL CORPORATIONS, S CORPORATIONS LIMIT
THE OWNERS’ PERSONAL LIABILITY FOR THE BUSINESS’S DEBTS AND
LEGAL OBLIGATIONS.
ACCESS TO FUNDING: S CORPORATIONS CAN ATTRACT INVESTMENT
CAPITAL AND OTHER FUNDING.
PASS-THROUGH TAXATION: S CORPORATIONS QUALIFY FOR PASS-
THROUGH TAXATION, WHICH CAN REDUCE THE TAX BURDEN FOR
INDIVIDUAL SHAREHOLDERS AS WELL AS FOR THE BUSINESS.
CONS OF S - CORPORATION:
HIGHER STARTUP COSTS: LIKE ANY CORPORATION, S CORPORATIONS

COST MORE TO START AND OPERATE THAN LLCS AND SOLE
PROPRIETORSHIPS.
INCREASED COMPLEXITY: S CORPORATIONS MUST REGULARLY REPORT
EARNINGS AND OTHER INFORMATION TO SHAREHOLDERS.
LIMITS ON OWNERSHIP: S CORPORATIONS MAY BE OWNED ONLY BY
INDIVIDUALS WHO ARE U.S. CITIZENS OR RESIDENTS, AND THEY CAN
ISSUE ONLY ONE TYPE OF STOCK.
WHAT IS PASS THROUGH TAXATION?
“PASS-THROUGH” MEANS THAT ANY PROFITS OR LOSSES FROM OPERATING

THE BUSINESS ARE PASSED TO THE INDIVIDUAL OWNERS, WHO PAY TAXES
ON THEIR RETURNS. MOST SMALL BUSINESSES ARE OPERATED IN THIS
WAY. A BUSINESS OWNER MUST HAVE POSITIVE TAXABLE INCOME TO
QUALIFY FOR A PASS-THROUGH DEDUCTION.
Business definitions TIP: ANY NON PROFIT SHOULD HAVE

MAJOR CAUSE AND IN EFFECT HELP
THE PUBLIC IN SOME BENEFICIAL WAY
TYPES OF BUSINESSES
NON - PROFIT ORGANIZATIONS 501(C)3
MOST NONPROFITS ARE FORMED AS CORPORATIONS THAT APPLY FOR TAX-EXEMPT
STATUS UNDER SECTION 501(C) OF THE IRC. THEIR ENTITY FORMATION PROCESS IS
THE SAME AS THAT OF OTHER CORPORATIONS, WITH ARTICLES OF INCORPORATION
FILED WITH THE SECRETARY OF STATE, A BOARD OF DIRECTORS, AND BYLAWS FOR
GOVERNANCE.
NONPROFITS MAY BE FORMED SOLELY FOR THE TAX-EXEMPT PURPOSES SPECIFIED IN
SECTION 501(C), HOWEVER, AND THEY ARE SUBJECT TO SPECIFIC REGULATORY
REQUIREMENTS IN EACH STATE.
CONTRARY TO POPULAR BELIEF, NONPROFITS CAN AND SHOULD GENERATE PROFITS.
THE DIFFERENCE BETWEEN A NONPROFIT ENTITY AND A FOR-PROFIT ENTITY IS HOW
THOSE PROFITS ARE INVESTED. RATHER THAN BEING DISTRIBUTED TO
SHAREHOLDERS, PROFITS ARE REINVESTED IN THE NONPROFIT’S OPERATIONS TO
SERVE ITS CHARITABLE MISSION.
PROS OF NON - PROFIT ORGANIZATIONS:

LIABILITY PROTECTION: NONPROFIT CORPORATIONS PROVIDE THE SAME
LIMITS ON LIABILITY AS OTHER CORPORATIONS, PROTECTING YOU FROM
PERSONAL LIABILITY FOR THE NONPROFIT’S OPERATIONS.
TAX EXEMPTION: NONPROFITS MAY QUALIFY FOR EXEMPTION FROM
FEDERAL TAXES AS WELL AS MANY STATE AND LOCAL TAXES. THIS
ALLOWS NONPROFITS TO STRETCH THEIR BUDGETS AND APPLY MAXIMUM
RESOURCES TOWARD THEIR MISSIONS. FEDERAL TAX EXEMPTION IS NOT
A BLANKET EXEMPTION FROM ALL TAXES, HOWEVER. NONPROFITS THAT
ACHIEVE FEDERAL TAX-EXEMPT STATUS GENERALLY NEED TO APPLY
SEPARATELY FOR EXEMPTION FROM STATE AND LOCAL TAXES SUCH AS
SALES TAX.
CONS OF NON - PROFIT ORGANIZATIONS:

LIMITED ACTIVITIES: NONPROFITS MUST LIMIT THEIR ACTIVITIES TO THE
PURSUIT OF CHARITABLE PURPOSES.
LIMITED ACCESS TO FUNDING: NONPROFIT ORGANIZATIONS RELY ON
GRANTS AND CHARITABLE CONTRIBUTIONS TO FUND THEIR
OPERATIONS.
INCREASED REGULATORY OVERSIGHT: IN ADDITION TO THE USUAL
DUTIES OF CORPORATIONS, NONPROFITS HAVE UNIQUE REGISTRATION
AND REPORTING REQUIREMENTS TO MANAGE AT THE STATE AND
FEDERAL LEVELS.
Business definitions TIP: CREATING A FAITH BASED

ORGANIZATION IS ONE WAY TO
BUILD A MAJOR FOUNDATION
FOR ITS MEMBERS AND THE
SPIRITUAL WELL BEING OF
HUMANITY
TYPES OF BUSINESSES
NON - PROFIT ORGANIZATIONS 508(C)1A
SECTION 508(C)(1)(A) STATES THAT “CHURCHES, THEIR INTEGRATED AUXILIARIES,
AND CONVENTIONS OR ASSOCIATIONS OF CHURCHES” ARE A MANDATORY EXCEPTION
TO SECTION 501(C)(3), THEY ARE ALREADY TAX EXEMPT WITHOUT NOTIFYING OR
APPLYING TO THE GOVERNMENT UNDER SECTION 501(C)(3). CHURCHES RECEIVE THE
SAME TAX EXEMPT STATUS AND BENEFITS AS A 501(C)(3) ORGANIZATION, WITHOUT
THE PARTNERSHIP WITH THE GOVERNMENT. THE 508(C)(1)(A) FAITH BASED
ORGANIZATION (FBO) IS A RELIGIOUS, NON-PROFIT, TAX EXEMPT ORGANIZATION.
PROS OF FAITH BASED ORGANIZATIONS:
LIABILITY PROTECTION: NONPROFIT CORPORATIONS PROVIDE THE SAME

LIMITS ON LIABILITY AS OTHER CORPORATIONS, PROTECTING YOU FROM
PERSONAL LIABILITY FOR THE NONPROFIT’S OPERATIONS.
TAX EXEMPTION: NONPROFITS MAY QUALIFY FOR EXEMPTION FROM
FEDERAL TAXES AS WELL AS MANY STATE AND LOCAL TAXES. THIS
ALLOWS NONPROFITS TO STRETCH THEIR BUDGETS AND APPLY MAXIMUM
RESOURCES TOWARD THEIR MISSIONS. FEDERAL TAX EXEMPTION IS NOT
A BLANKET EXEMPTION FROM ALL TAXES, HOWEVER. NONPROFITS THAT
ACHIEVE FEDERAL TAX-EXEMPT STATUS GENERALLY NEED TO APPLY
SEPARATELY FOR EXEMPTION FROM STATE AND LOCAL TAXES SUCH AS
SALES TAX.
AVOID PUBLIC SCRUTINY: FAITH BASED ORGANIZATIONS GENERALLY
AVOID ANY SCRUTINY FROM THE PUBLIC OR GOVERNMENTAL
AUTHORITIES THAT WISH TO SILENCE POLITICAL VIEWS.
CONS OF FAITH BASED ORGANIZATIONS:

LIMITED ACTIVITIES: NONPROFITS MUST LIMIT THEIR ACTIVITIES TO THE
PURSUIT OF CHARITABLE PURPOSES.
LIMITED ACCESS TO FUNDING: NONPROFIT ORGANIZATIONS RELY ON
GRANTS AND CHARITABLE CONTRIBUTIONS TO FUND THEIR
OPERATIONS.
INCREASED REGULATORY OVERSIGHT: IN ADDITION TO THE USUAL
DUTIES OF CORPORATIONS, NONPROFITS HAVE UNIQUE REGISTRATION
AND REPORTING REQUIREMENTS TO MANAGE AT THE STATE AND
FEDERAL LEVELS.
Business definitions
TYPES OF BUSINESSES
BENEFIT CORPORATION
BENEFIT CORPORATIONS ARE CORPORATIONS FORMED TO SERVE A PUBLIC BENEFIT
IN ADDITION TO THE USUAL CORPORATE MISSION OF EARNING PROFITS. THEY ARE
STRUCTURED LIKE OTHER CORPORATIONS WITH A BOARD OF DIRECTORS AND
BYLAWS, YET THE BOARD IS RESPONSIBLE FOR MEASURING AND REPORTING ON ITS
SOCIAL IMPACT AS WELL ITS FINANCIAL PERFORMANCE.
BENEFIT CORPORATIONS ARE AN INCREASINGLY POPULAR STRUCTURE FOR
ENTREPRENEURS WHO WANT TO DO GOOD WHILE DOING BUSINESS
PROS OF BENEFIT CORPORATIONS:
LIMITED LIABILITY: A BENEFIT CORPORATION LIMITS ITS

SHAREHOLDERS’ LIABILITY FOR FINANCIAL AND LEGAL CLAIMS.
ACCESS TO FUNDING: BENEFIT CORPORATIONS CAN TAKE ADVANTAGE
OF INVESTOR CAPITAL AND REVENUE FROM COMMERCIAL ACTIVITIES TO
ACCOMPLISH THEIR SOCIAL MISSIONS.
PROFIT DISTRIBUTION: LIKE OTHER CORPORATIONS, BENEFIT
CORPORATIONS CAN DISTRIBUTE PROFITS TO SHAREHOLDERS AS
DIVIDENDS.
CONS OF BENEFIT CORPORATIONS:
VARYING REGULATIONS: BENEFIT CORPORATIONS ARE CURRENTLY

AVAILABLE IN 35 STATES. EACH STATE HAS ITS OWN RULES FOR WHAT
TYPES OF SOCIAL BENEFITS QUALIFY AND HOW THEY MUST BE
MEASURED AND REPORTED, WHICH MEANS ADDITIONAL COMPLEXITY IN
FORMING AND RUNNING THE BUSINESS.
INCREASED REGULATORY OVERSIGHT: BENEFIT CORPORATIONS MUST
MEET ALL OF THE USUAL REGULATORY REQUIREMENTS OF
CORPORATIONS PLUS REPORT ON THEIR SOCIAL AND FINANCIAL IMPACT
ANNUALLY TO SHAREHOLDERS.
CORPORATE TAX: BENEFIT CORPORATIONS ARE SUBJECT TO FEDERAL
CORPORATE INCOME TAX.
Business definitions TIP: IT'S GOOD TO KNOW ALL

OF THESE BUSINESS
STRUCTURES SO THAT THEY CAN
BE EASILY IDENTIFIED AND PUT
TO GOOD USE
TYPES OF BUSINESSES
LOW - PROFIT LIMITED LIABILITY COMPANY L3C
L3C IS A RELATIVELY RARE BUSINESS TYPE THAT COMBINES THE LEGAL STRUCTURE
OF AN LLC WITH THE CHARITABLE MISSION OF A NONPROFIT. AN L3C CAN
DISTRIBUTE MODEST PROFITS TO ITS MEMBERS, YET THIS MUST ALWAYS BE
SECONDARY TO THE PRIMARY PURPOSE OF FURTHERING A CHARITABLE MISSION.
L3CS MAY NOT BE FORMED FOR POLITICAL OR LEGISLATIVE PURPOSES.
L3CS WERE CONCEIVED AS AN INVESTMENT VEHICLE FOR FOUNDATIONS, WHICH MUST
GIVE 5% OF THEIR ASSETS TO A CHARITABLE PROGRAM OR PROGRAM-RELATED
INVESTMENT (PRI) EACH YEAR. THAT PLAN RAN INTO SOME HURDLES WITH THE IRS,
HOWEVER, AND THE L3C STRUCTURE HAS NOT BEEN WIDELY ADOPTED AS A RESULT.
PROS OF BENEFIT L3C:
LIABILITY PROTECTION: L3CS PROVIDE THE SAME LIMITS ON LIABILITY

AS LLCS, PROTECTING YOU FROM PERSONAL LIABILITY FOR THE
BUSINESS’S OPERATIONS.
FLEXIBLE OWNERSHIP: MEMBERS OF AN L3C CAN MAINTAIN OWNERSHIP
AND CONTROL AND ACTIVELY PARTICIPATE IN THE DAY-TO-DAY
OPERATIONS OF THE BUSINESS.
PASS-THROUGH TAXATION: L3CS QUALIFY FOR PASS-THROUGH
TAXATION.
CONS OF L3C:
LACK OF TAX EXEMPTION: L3CS DO NOT QUALIFY FOR FEDERAL TAX-

EXEMPT STATUS, AND ARE THEREFORE LESS ATTRACTIVE THAN
INCORPORATION FOR SOCIAL ENTERPRISES.
REGULATORY UNCERTAINTY: THE IRS HAS NOT OFFICIALLY SANCTIONED
L3CS AS PRIS FOR FOUNDATIONS, THEIR USEFULNESS AND LONGEVITY
ARE UNCERTAIN. THEY ARE CURRENTLY PERMITTED IN ONLY NINE
STATES.
NOW THAT WE'VE COVERED ALL OF THE DIFFERENT BUSINESS STRUCTURES

AVAILABLE THINK ABOUT WHICH BUSINESS STRUCTURE FITS WHAT NEEDS
TO BE ACCOMPLISHED FOR A SPECIFIC PRODUCT OR IDEA AND HOW IT
COULD BE THE MOST BENEFICIAL.
IDENTIFICATION
NUMBERS
Business IDENTIFICATION TIP: FEDERAL AND GOVERNMENT

ESTABLISHMENTS HAVE THEIR
OWN PERSONAL EINS AS
SEPARATE ENTITIES USE THAT
TO APPLY TO
IDENTIFICATION NUMBERS
AN IDENTIFICATION NUMBER IS A NUMBER THAT IDENTIFIES WHAT A BUSINESS IS
AND ALLOWS THE BUSINESS TO REPRESENT ITSELF AS AN INDIVIDUAL ENTITY.
WHAT IS AN EIN?
THE EMPLOYER IDENTIFICATION NUMBER (EIN), ALSO KNOWN AS THE
FEDERAL EMPLOYER IDENTIFICATION NUMBER (FEIN) OR THE FEDERAL
TAX IDENTIFICATION NUMBER, IS A UNIQUE NINE-DIGIT NUMBER
ASSIGNED BY THE INTERNAL REVENUE SERVICE (IRS) TO BUSINESS
ENTITIES OPERATING IN THE UNITED STATES FOR THE PURPOSES OF
IDENTIFICATION
IN CALIFORNIA, HOWEVER, CORPORATIONS RECEIVE SEVEN-DIGIT
CORPORATION NUMBERS FROM THE CALIFORNIA SECRETARY OF STATE
OR FRANCHISE TAX BOARD, AND LLCS RECEIVE A 12-DIGIT CORPORATE
NUMBER. THE COMPANY CAN THEN USE THIS NUMBER TO APPLY FOR AN
EIN. IN MOST STATES, THOUGH, A CORPORATE NUMBER IS THE
EQUIVALENT OF AN EIN
WHAT IS AN ITIN?
THE MAIN DIFFERENCE BETWEEN AN SSN AND ITIN IS THAT
SSN IS ISSUED TO US CITIZENS AND AUTHORIZED NON-
CITIZENS, WHILE ITIN IS ISSUED TO THE RESIDENT WITH
FOREIGN STATUS OR UNDOCUMENTED IMMIGRANTS
WHAT IS A UBI?
A UBI NUMBER IS A NINE-DIGIT NUMBER THAT REGISTERS
YOU WITH SEVERAL STATE AGENCIES AND ALLOWS YOU TO
DO BUSINESS IN WASHINGTON STATE. A UBI NUMBER IS
SOMETIMES CALLED A TAX REGISTRATION NUMBER, A
BUSINESS REGISTRATION NUMBER, OR A BUSINESS LICENSE
NUMBER. USE THE BUSINESS LICENSE APPLICATION TO
APPLY FOR A UBI NUMBER
HOW TO APPLY FOR AN EIN NUMBER?
AN EIN NUMBER CAN BE OBTAINED BY GOING TO THE IRS.GOV WEBSITE AND
FILLING OUT THE NECESSARY PAPERWORK. APPLYING FOR AN EIN IS A GREAT
WAY TO BEGIN SEPARATING YOUR BUSINESS FROM YOUR PERSONAL START A
BUSINESS ACCOUNT AND BEGIN BUILDING BUSINESS CREDIT. FUNNEL ALL
INCOME FROM PRODUCT OR SERVICES SALES THROUGH THE ACCOUNT
ASSOCIATED WITH YOUR EIN.
HERE'S A LINK TO APPLY FOR AN EIN:
HTTPS://WWW.IRS.GOV/BUSINESSES/SMALL-BUSINESSES-SELF-
EMPLOYED/APPLY-FOR-AN-EMPLOYER-IDENTIFICATION-NUMBER-EIN-ONLINE
DOCUMENTATION
Business dOCUMENTATION TIP: FIRST DETERMINE WHAT

TYPE OF LEGAL ENTITY IS
BEING FORMED BEFORE FILING
ANY PAPERWORK
DOCUMENTATION
ALL DOCUMENTATION AND FILINGS DEFER BY STATE. EVERY STATE HAS A
SECRETARY OF STATE WEBSITE WHERE IN MOST CASES DOCUMENTATION FOR
BUSINESS FORMATION CAN BE FILED ELECTRONICALLY. EVERY DOCUMENT CAN ALSO
BE MAILED. IRS.GOV ALSO HAS FORMS A BUSINESS OWNER CAN DOWNLOAD, PRINT,
AND FILE.
HERE IS A WEBSITE WITH A LIST OF ALL 50 STATES AND THEIR SECRETARY OF
STATE WEBSITE AND ACCESS TO FORMS NEEDED:
HTTPS://WWW.LANGUAGEPEOPLE.COM/SECRETARY-OF-STATE-WEBSITES/
WHAT DOCUMENTS BUSINESS ENTITIES NEED TO FILE?
EIN SS-4 DOCUMENT
SS-4 IRS FORM. THIS DOCUMENT SHOULD BE FILED WITH
THE SECRETARY STATE TO RECEIVE A FINALIZED EIN FOR
THE BUSINESS ENTITY. THIS NUMBER WILL BE USED WHEN
FILING TAXES. OPENING BUSINESS ACCOUNTS, BUSINESS
CREDIT ETC.
NAME RESERVATION APPLICATION

BEFORE FILING ANY LEGAL ENTITY FORMATION DOCUMENTS CHOOSE A NAME FOR
THE ENTITY AND RUN AN AVAILABILITY SEARCH TO DETERMINE IF IT'S ALREADY
TAKEN. THE OWNER CAN RUN A NAME AVAILABILITY SEARCH ON THE WEBSITE OF
THE SECRETARY OF STATE OR CORPORATIONS BUREAU.
GENERALLY, STATES HAVE SPECIFIC RULES FOR ENSURING THAT A BUSINESS
NAME DIFFERS ENOUGH FROM THOSE OF EXISTING BUSINESSES TO QUALIFY.
FOR EXAMPLE, UTAH SPECIFIES THAT USING A PLURAL FORM OF A WORD IS NOT
ENOUGH TO DISTINGUISH ONE BUSINESS NAME FROM ANOTHER. IF THE NAME
"MAD REBEL" IS TAKEN, YOU CANNOT CHOOSE "MAD REBELS."
BESIDES AVAILABILITY, CHECK WHETHER THE NAME IS PERMISSIBLE. EACH STATE
HAS UNIQUE NAMING RULES INCLUDING PROHIBITED AND RESTRICTED WORDS.
IN UTAH, FOR EXAMPLE, YOU CANNOT USE THE WORD "THRIFT" IN A BUSINESS
NAME WITHOUT REQUESTING PERMISSION FROM THE DEPARTMENT OF FINANCIAL
INSTITUTIONS. EACH STATE ALSO HAS SPECIFICATIONS FOR INCLUDING
CORPORATE DESIGNATIONS SUCH AS LLC, CORP, ETC IN THE BUSINESS NAME.
ONCE A VIABLE NAME IS CHOSEN, IT'S OPTIONAL TO FILE A NAME RESERVATION
FORM WITH THE STATE (THOUGH IT’S NOT REQUIRED) TO HOLD IT WHILE FILING
LEGAL ENTITY PAPERWORK.
THIS INFO CAN BE FOUND ON THE SECRETARY OF STATE WEBSITE.
REGISTER WITH THE STATE:

THE SECRETARY OF STATE’S (DIFFERS BY STATE) WEBSITE IS
WHERE TO REGISTER THE LEGAL NAME OF THE BUSINESS AND
SET UP ACCOUNTS SUCH AS UNEMPLOYMENT TAXES, TAX
WITHHOLDING, AND A BUSINESS LICENSE.
MOST STATES WILL TAKE YOU THROUGH SEVERAL PAGES OF

REGISTRATION AND, AT SOME POINT, WILL TELL YOU TO
REGISTER FOR AN EIN AND RETURN WITH THE NUMBER TO
COMPLETE THE PROCESS.
DOCUMENTATION
Business dOCUMENTATION
DOCUMENTATION
ARTICLES OF ORGANIZATION
TO FORM A LEGAL ENTITY, SUBMIT TO THE STATE ARTICLES OF

ORGANIZATION, ALSO CALLED A CERTIFICATE OF ORGANIZATION (OR
CERTIFICATE OF FORMATION IN SOME STATES). THE APPROPRIATE
FORM CAN BE DOWNLOADED FROM THE SECRETARY OF STATE
WEBSITE.
WHEN FILING THIS FORM, MAKE SURE TO INCLUDE THE CORRECT
NUMBER OF COPIES. IT'S OFTEN REQUIRED OR PERMITTED TO SUBMIT
TWO COPIES, ONE FOR THE STATE TO KEEP AND ONE TO STAMP AND
RETURN FOR RECORD KEEPING. FAILING TO INCLUDE THE PRESCRIBED
COPIES IS A COMMON CAUSE OF REJECTED FILINGS.
EACH STATE HAS ITS OWN REQUIREMENTS, BUT ARTICLES OF
ORGANIZATION GENERALLY INCLUDE THE FOLLOWING:
BUSINESS NAME: BE SURE TO WRITE THE FULL, LEGAL BUSINESS
NAME EXACTLY AS IT MUST APPEAR ACCORDING TO THE STATE'S
RULES.
BUSINESS PURPOSE: SOME STATES REQUIRE A SPECIFIC PURPOSE,
WHILE OTHERS ALLOW THE OWNER TO STATE BROADLY THAT THE
BUSINESS WILL ENGAGE IN LAWFUL BUSINESS ACTIVITIES. FOR
EXAMPLE, IN ILLINOIS, PROFESSIONAL LLCS MUST STATE THE
SPECIFIC PROFESSIONAL SERVICES THEY WILL ENGAGE IN.
DURATION: SOME STATES ASKS TO SPECIFY WHETHER THE LLC HAS
A DISSOLUTION DATE. A FEW STATES SET A STATUTORY LIMIT ON
THE DURATION OF AN LLC, BUT IN MOST CASES, THE AGREEMENT
MAY BE DESIGNATED AS PERPETUAL.
PRIMARY BUSINESS ADDRESS: THIS IS THE PHYSICAL LOCATION
THAT SERVES AS THE BASE OR HEADQUARTERS OF THE BUSINESS
OPERATIONS.
OWNERSHIP: THE AGREEMENT MUST LIST ALL MEMBERS OF YOUR
COMPANY WITH FULL CONTACT INFORMATION. IT WILL ALSO NEED
TO BE INDICATED WHAT SHARE OF THE BUSINESS EACH MEMBER
OWNS.
MANAGEMENT: THE AGREEMENT MUST SPECIFY WHETHER THE LEGAL
ENTITY IS MANAGED BY ITS MEMBERS OR BY DESIGNATED
MANAGERS. NAMES AND FULL CONTACT INFORMATION FOR ALL
MANAGERS MUST BE PROVIDED.
REGISTERED AGENT: THE BUSINESS MUST APPOINT A REGISTERED
AGENT WHO IS AVAILABLE DURING REGULAR BUSINESS HOURS TO
ACCEPT DELIVERY OF NOTICES OF LAWSUITS, KNOWN AS SERVICE
OF PROCESS, AND OTHER OFFICIAL DOCUMENTS. THERE ARE
COMPANIES THAT PROVIDE PROFESSIONAL REGISTERED AGENT
SERVICES FOR A FEE.
DOCUMENTATION
DOCUMENTATION
OPERATING AGREEMENT
AN OPERATING AGREEMENT, ALSO KNOWN AS A COMPANY AGREEMENT,

ESTABLISHES THE GROUND RULES FOR RUNNING A LEGAL ENTITY AND THE RIGHTS
AND RESPONSIBILITIES OF ITS MEMBERS. IT ALSO CONFIRMS HOW PROFITS AND
LOSSES WILL BE DISTRIBUTED AMONG THEM. USUALLY, MEMBERS RECEIVE PROFITS
AS INCOME BASED ON THEIR SHARE OF OWNERSHIP.
OPERATING AGREEMENTS ARE NOT USUALLY REQUIRED BY STATES AS PART OF THE
FORMATION PROCESS, BUT THEY ARE ESSENTIAL FOR ESTABLISHING HOW THE LEGAL
ENTITY WILL BE GOVERNED. ALL MEMBERS MUST SIGN THE DOCUMENT TO VALIDATE
THE AGREEMENT.
IF THE OWNER WISHES TO WRITE AN OPERATING AGREEMENT, SAMPLES CAN BE
FOUND ONLINE, BUT SINCE THIS IS THE LEGAL FOUNDATION OF THE BUSINESS, IT
MAKES SENSE TO GET INPUT FROM LEGAL COUNSEL BEFORE SIGNING. GENERALLY,
OPERATING AGREEMENTS INCLUDE THE FOLLOWING:
BUSINESS NAME AND ADDRESS
REGISTERED AGENT ADDRESS
FORMATION DATE AND DURATION
MEMBER NAMES, ROLES, AND CONTACT INFORMATION
CONTRIBUTIONS AND SHARES OF OWNERSHIP
DISTRIBUTION OF PROFITS AND LOSSES AND COMPENSATION PLANS
MANAGER NAMES AND CONTACT INFORMATION
MEETING SCHEDULES AND VOTING RIGHTS OF MEMBERS
THE PROCESS FOR ADDING OR REMOVING MEMBERS
INITIAL AND ANNUAL REPORTS
STATES NEED TO HAVE ACCURATE, UP-TO-DATE RECORDS

ON BUSINESSES OPERATING WITHIN THEIR BORDERS. TO
MAINTAIN THEM, MOST STATES REQUIRE LEGAL ENTITIES
TO FILE PERIODIC REPORTS TO CONFIRM BASIC
INFORMATION ABOUT THEIR OPERATIONS.
STATES USE A WIDE RANGE OF NAMES FOR THESE REPORTS,
INCLUDING ANNUAL REPORTS, STATEMENTS OF
INFORMATION, FRANCHISE TAX REPORTS, BUSINESS ENTITY
REPORTS, AND ANNUAL CERTIFICATES.
THEY ARE OFTEN DUE ANNUALLY OR BIENNIALLY
FOLLOWING THE YEAR OF FORMATION, BUT IN SOME
CASES, THEY'RE DUE LESS FREQUENTLY. PENNSYLVANIA,
FOR EXAMPLE, COLLECTS THEM EVERY TEN YEARS.
A FEW STATES, INCLUDING ALASKA, CALIFORNIA, NEVADA,
AND WASHINGTON, REQUIRE LLCS TO FILE AN INITIAL
REPORT OR STATEMENT OF INFORMATION AT THE TIME OF
LLC REGISTRATION.
DOCUMENTATION
DOCUMENTATION
TAX REGISTRATIONS
IN MANY STATES, THE LEGAL ENTITY WILL NEED TO

REGISTER WITH THE DEPARTMENT OF REVENUE FOR ONE OR
MORE TAX TYPES. THESE MAY INCLUDE GENERAL BUSINESS
ENTITY TAXES, EMPLOYER TAXES, AND SALES AND USE
TAXES.
USUALLY, TAX REGISTRATION REQUIREMENTS AND FORMS ARE

INCLUDED WITH BUSINESS FORMATION RESOURCES IN THE
STATE'S BUSINESS PORTAL.
BUSINESS LICENSES
DEPENDING ON THE NATURE AND LOCATION OF THE

BUSINESS, THE BUSINESS MAY NEED ONE OR MORE BUSINESS
LICENSES. TYPICAL LICENSES FOR SMALL BUSINESSES
INCLUDE THE FOLLOWING:
HOME OCCUPANCY PERMITS
PREMISES PERMITS FOR FEATURES SUCH AS SIGNS, ALARM
SYSTEMS, AND ELEVATORS
LICENSES FOR REGULATED ACTIVITIES SUCH AS FOOD
PREPARATION AND DAYCARE
PROFESSIONAL LICENSES FOR SERVICES SUCH AS
ENGINEERING AND ARCHITECTURE
IN MOST CASES, LICENSES CAN BE APPLIED FOR ONLINE
THROUGH THE STATE CORPORATIONS DIVISION.
WITH ALL OF THESE DOCUMENTS, IT PAYS TO BE
METICULOUS. MISSING A DETAIL CAN RESULT IN REJECTED
PAPERWORK, SENDING IT BACK TO START OVER AND DELAY
APPROVAL. GETTING SOUND LEGAL AND FINANCIAL ADVICE
WHILE FORMING A BUSINESS IS A WISE INVESTMENT.
RETAIN ALL FOUNDING DOCUMENTS FOR THE LIFE OF THE
BUSINESS. A DOCUMENT MANAGEMENT SYSTEM CAN SIMPLIFY
THE PROCESS TREMENDOUSLY.
DOCUMENTATION
DOCUMENTATION NON - PROFIT

WHAT DOCUMENTS NON PROFITS AND/OR CORPORATIONS NEED TO
FILE?
STEPS TO STARTING A NON PROFIT:
APPOINT A REGISTERED AGENT
CREATE A STRATEGIC PLAN
GET AN EMPLOYER IDENTIFICATION
REGISTER YOUR NAME
NUMBER (EIN)
APPOINT A BOARD OF DIRECTORS
APPLY FOR TAX-EXEMPT STATUS
DRAFT BYLAWS
REGISTER FOR CHARITABLE
WRITE A CONFLICT OF INTEREST POLICY
SOLICITATION
INCORPORATE
MAINTAIN COMPLIANCE
CREATE A STRATEGIC PLAN
A NON PROFIT ORGANIZATION IS STILL KNOWN AS A

CORPORATION SO THE FOUNDER SHOULD BE AWARE THAT A
NON PROFIT IS FOR THE PUBLIC TO BENEFIT FROM. ITS VERY
IMPORTANT THAT SOME TYPE OF MARKET RESEARCH IS
IMPLEMENTED WITHIN THE CONSTRUCTION OF A NON PROFIT
ORGANIZATION.
THAT'S WHY IT'S IMPORTANT TO DO THE SAME SORT OF

MARKET RESEARCH AS WITH ANY BUSINESS STARTUP.
CONSIDER THESE KEY QUESTIONS:
WHAT IS THE NONPROFIT'S MISSION? WHAT NICHE WILL IT
FILL THAT IS CURRENTLY UNDERSERVED IN THE
COMMUNITY?
WHAT CONSTITUENCIES WILL THE NONPROFIT SERVE?
WHAT GEOGRAPHIC AREA WILL IT COVER?
ARE THERE NONPROFITS IN THE AREA THAT ALREADY
PROVIDE THE SERVICES THIS ONE WANTS TO DELIVER?
CAN THE MISSION BE ACCOMPLISHED BY TEAMING UP WITH
EXISTING PROVIDERS?
HOW WILL IT BE FINANCED FOR OPERATIONS? WITH
GRANTS, DONATIONS, OR FUNDRAISING EVENTS? HOW
MUCH WILL BE NEEDED TO COVER EXPENSES?
WILL VOLUNTEERS BE INCLUDED?
WILL IT HAVE PAID EMPLOYEES? WHO WILL MANAGE THE
NONPROFIT?
WHAT IS THE VISION FOR THE ORGANIZATION? WHERE
WILL IT BE IN ONE YEAR? FIVE YEARS?
A GREAT SITE TO REFER TO FOR STATISTICS ON NON PROFITS

WOULD BE NON PROFIT IMPACT MATTERS
DOCUMENTATION

FILE?
REGISTER YOUR NAME
EACH STATE HAS UNIQUE RULES FOR NAMING BUSINESSES, USUALLY AVAILABLE
ON THE SECRETARY OF STATE’S WEBSITE. MAKE SURE THE NAME DOESN'T
INCLUDE ANY RESTRICTED WORDS. IN MICHIGAN, FOR EXAMPLE, CAN'T USE THE
WORD ACADEMY IN THE NAME WITHOUT PRIOR APPROVAL FROM THE EDUCATION
DEPARTMENT.
ENSURE THE NAME ISN'T ALREADY BEING USED BY ANOTHER ORGANIZATION IN
THAT STATE. THIS CAN BE DETERMINED WITH A QUICK NAME AVAILABILITY
SEARCH THROUGH THE SECRETARY OF STATE’S WEBSITE.
ONCE A VIABLE NAME IS SELECTED, FILE A FICTITIOUS NAME REGISTRATION WITH
THE SECRETARY OF STATE. THIS CAN BE SUBMITTED ONLINE ALONG WITH A
SMALL PROCESSING FEE.
APPOINT A BOARD OF DIRECTORS (NON PROFIT AND CORPORATIONS)
MOST STATES REQUIRE NONPROFITS TO HAVE A MINIMUM OF

ONE TO THREE BOARD MEMBERS, OFTEN SERVING IN SPECIFIC
POSITIONS. TO BE INDEPENDENT AND AVOID CONFLICTS OF
INTEREST, THE BOARD SHOULD NOT INCLUDE FAMILY
MEMBERS OR BUSINESS PARTNERS. CHECK THE WEBSITE OF
THE STATE CHARITIES OFFICE TO ENSURE THAT ALL
REQUIREMENTS ARE MET.
DRAFT BY LAWS
BYLAWS ARE THE NONPROFIT'S CONSTITUTION, SPELLING OUT THE ROLES

AND DUTIES OF BOARD MEMBERS AND EXECUTIVES, HOW DECISIONS WILL BE
MADE, AND HOW THE ORGANIZATION WILL MANAGE CHANGES SUCH AS
LEADERSHIP TRANSITIONS.
STATES HAVE SPECIFIC LAWS GUIDING NONPROFIT GOVERNANCE. STATE'S
SPECIFICATIONS CAN BE FOUND THROUGH THE WEBSITE OF THE ATTORNEY
GENERAL OR SECRETARY OF STATE.
SAMPLES AND TEMPLATES OF BYLAWS CAN BE FOUND ONLINE TO GUIDE
WORK. IT'S IMPORTANT FOR THE FOUNDING BOARD AND ED TO DISCUSS EACH
ASPECT OF THE DOCUMENT TO ENSURE CONSENSUS. THE BYLAWS SHOULD
COVER THESE KEY ITEMS:
NUMBER OF BOARD MEMBERS, THEIR POSITIONS, AND THEIR POWERS AND
RESPONSIBILITIES
HOW BOARD MEMBERS ARE CHOSEN AND ELECTED
MEETING DATES AND FREQUENCY
HOW AND WHEN VOTES WILL BE TAKEN
HOW MANY VOTES CREATE A QUORUM, THE NUMBER NEEDED TO VALIDATE A
DECISION
TERMS FOR BOARD MEMBERS, INCLUDING HOW AND WHEN THEY'LL RETIRE
HOW DISPUTES WILL BE RESOLVED
THE IRS GUIDE TO NONPROFIT GOVERNANCE IS AN EXCELLENT RESOURCE FOR
ASSEMBLING A SUCCESSFUL BOARD AND DRAFTING EFFECTIVE BYLAWS.
DOCUMENTATION

FILE?
WRITE A CONFLICT OF INTEREST
CONFLICT OF INTEREST POLICY IS ONE OF THE MOST IMPORTANT CORPORATE
DOCUMENTS THE NONPROFIT WILL CREATE. A CONFLICT OF INTEREST OCCURS
WHEN A PERSON'S PRIVATE INTERESTS CONFLICT WITH THEIR OFFICIAL DUTIES TO
THE ORGANIZATION.
FOR EXAMPLE, IF A BOARD MEMBER OWNS A HOTEL AND THE NONPROFIT IS
LOOKING FOR AN EVENT VENUE, THE BOARD MEMBER COULD BENEFIT
PERSONALLY IF THE NONPROFIT CHOSE THAT HOTEL OVER ANOTHER.
THE POLICY SHOULD REQUIRE BOARD MEMBERS TO DISCLOSE ANY CONFLICTS OF
INTEREST AND TO WITHDRAW FROM VOTING ON ANY MATTERS IN WHICH THEY
HAVE A CONFLICT. IT SHOULD ALSO COVER HOW AND WHEN CONFLICTS MUST BE
DISCLOSED AND WHAT MEASURES WILL BE USED TO ENFORCE THE POLICY, AMONG
OTHER MATTERS.
THE IRS OFTEN REVIEWS CONFLICT OF INTEREST POLICIES AS PART OF ITS
OVERSIGHT OF THE NONPROFIT, AND SOME STATES REQUIRE THEM. A FEW, SUCH
AS NEW YORK, REQUIRE SPECIFIC LANGUAGE TO BE INCLUDED. BE SURE TO
CHECK THE STATE'S REQUIREMENTS BEFORE DRAFTING THE POLICY.
THE STATE CHAPTER OF NCN IS A GREAT RESOURCE FOR A CONFLICT OF INTEREST
POLICY AND OTHER ASPECTS OF FOUNDING A NONPROFIT.
INCORPORATE (ARTICLES OF INCORPORATION) NON - PROFIT AND

CORPORATIONS
FILE ARTICLES OF INCORPORATION WITH THE STATE WHEN FORMING
ANY TYPE OF CORPORATION.
THE APPLICATION IS NORMALLY AVAILABLE ON THE SECRETARY OF
STATE'S WEBSITE. IN MOST CASES, THE FORM CAN BE SUBMITTED
DIRECTLY ONLINE ALONG WITH A FILING FEE AND ANY REQUIRED
SUPPORTING DOCUMENTS.
MOST STATES WILL ALSO REQUIRE AN ANNOUNCEMENT OF THE NEW
CORPORATION IN NEWSPAPERS OR TRADE MAGAZINES. MAKE SURE
TO COMPLETE THIS STEP AND KEEP THE PUBLISHED NOTICES IN THE
PERMANENT CORPORATE RECORDS.
APPOINT A REGISTERED AGENT
IN MOST STATES, ITS REQUIRED TO PROVIDE A PHYSICAL OFFICE

LOCATION WHERE SOMEONE IS AVAILABLE DURING REGULAR BUSINESS
HOURS TO RECEIVE NOTICES OF LAWSUITS (SERVICE OF PROCESS) AND
OTHER IMPORTANT BUSINESS DOCUMENTS. THIS IS YOUR REGISTERED
AGENT ADDRESS, ALSO CALLED REGISTERED OFFICE OR AGENT FOR
SERVICE OF PROCESS IN SOME STATES.
IT'S GENERALLY BEST TO HIRE A PROFESSIONAL SERVICE THAT IS
RELIABLE AND SECURE TO HANDLE LEGAL DOCUMENTS FOR THE NON
PROFIT.
DOCUMENTATION

FILE?
APPLY FOR AN EIN
APPLY FOR AN EMPLOYER IDENTIFICATION NUMBER ON THE IRS.GOV WEBSITE BY
FILING AN SS-4 DOCUMENT.
TAX EXEMPTION LETTER ONLY APPLIES TO 501(C)3

ONCE THE LEGAL ENTITY IS FORMED, APPLY FOR TAX EXEMPTION ONLINE USING
IRS FORM 1023 OR THE SHORT FORM, 1023-EZ. AS OF JANUARY 2020, THE IRS NO
LONGER ACCEPTS PAPER APPLICATIONS. THE FORM 1023 CAN BE SIGNED WITHOUT
USE OF ELECTRONIC SIGNATURE SOFTWARE.
IT CAN TAKE MONTHS FOR THE IRS TO REVIEW AND APPROVE THE 501(C)(3)
APPLICATION, SO PLAN AHEAD. ONCE THE APPLICATION IS APPROVED, THE IRS
WILL SEND A DETERMINATION LETTER CERTIFYING IT AS AN OFFICIAL 501(C)(3)
TAX-EXEMPT ORGANIZATION.
THIS ALLOWS DONORS TO CLAIM TAX DEDUCTIONS FOR DONATIONS TO THE
NONPROFIT. PEOPLE WILL ALSO BE ABLE TO FIND IT IN THE IRS NONPROFIT
SEARCH TOOL.
ONCE FEDERAL TAX-EXEMPT STATUS IS ACHIEVED, OTHER TAX EXEMPTIONS CAN
BE APPLIED FOR AT THE STATE AND LOCAL LEVELS WHERE AVAILABLE. MANY
TAXES, SUCH AS PAYROLL TAXES, ARE NOT SUBJECT TO EXEMPTION.
THE IRS PROVIDES FREE ON-DEMAND COURSES ON APPLYING FOR TAX-EXEMPT
STATUS AND OTHER CRITICAL TASKS FOR NONPROFITS. WATCHING THEM WITH THE
TEAM IS A GREAT WAY TO LEARN WHAT'S NEEDED TO KNOW.
REGISTER FOR CHARITABLE SOLICITATION
MOST STATES REQUIRE CHARITIES TO REGISTER BEFORE SOLICITING

DONATIONS FROM THEIR RESIDENTS. IN SOME CASES, STATES
REQUIRE REGISTRATION WHEN DONATIONS REACH A CERTAIN
THRESHOLD. IF FUNDRAISING ONLINE, IT'S POTENTIALLY
SOLICITING IN ALL 50 STATES, SO IT MAY BE REQUIRED TO
REGISTER WIDELY TO COMPLY WITH THE LAWS. THIS IS ESPECIALLY
TRUE IF SUBSTANTIAL DONATIONS ARE RECEIVED FROM OTHER
STATES. THIS STATE GUIDE PROVIDES A HELPFUL SUMMARY OF THE
LAWS.
IN 25 STATES, NONPROFITS MUST ALSO INCLUDE SPECIFIC
CHARITABLE DISCLOSURE LANGUAGE ON ALL SOLICITATIONS TO
THEIR RESIDENTS.
IN ADDITION TO THE IRS 501(C)(3) LOOKUP TOOL, STATES HAVE
DATABASES WHERE THE PUBLIC CAN SEARCH FOR INFORMATION
ABOUT THE NONPROFIT, INCLUDING WHETHER IT'S REGISTERED FOR
FUNDRAISING.
DOCUMENTATION

FILE?
MAINTAIN COMPLIANCE AS A NON PROFIT
ONCE REGISTERED, THE NONPROFIT IS A LEGAL ENTITY WITH ONGOING
COMPLIANCE DUTIES SUCH AS:
FILING FORM 990 ANNUALLY WITH THE IRS
SUBMITTING ANNUAL OR PERIODIC REPORTS TO KEEP THE SECRETARY
OF STATE UP TO DATE ON THE GROWING ORGANIZATION
RENEWING STATE TAX EXEMPTIONS
RENEWING FUNDRAISING REGISTRATIONS
APPOINT A BOARD MEMBER OR EMPLOYEE TO MAINTAIN COMPANY
DOCUMENTS AND ENSURE COMPLIANCE. DOCUMENT MANAGEMENT
SOFTWARE CAN MAKE THIS TASK MUCH EASIER. CONSULT A LEGAL
ADVISOR PERIODICALLY TO ENSURE THAT LEGAL OBLIGATIONS ARE
BEING MET.
CERTIFICATE OF EXISTENCE
A CERTIFICATE OF GOOD STANDING IS A LEGAL DOCUMENT THAT

CONFIRMS THAT A BUSINESS IS COMPLIANT WITH STATE REGULATIONS.
IN CERTAIN STATES THIS TITLE MAY VARY FOR EXAMPLE; IN
CALIFORNIA, A CERTIFICATE OF GOOD STANDING IS KNOWN AS A
CERTIFICATE OF STATUS. CERTIFICATES OF GOOD STANDING ARE ALSO
KNOWN AS CERTIFICATES OF EXISTENCE OR CERTIFICATES OF
COMPLIANCE.
WHAT IS A 508 (C) 1A?
A 508 (C)1A IS A FAITH BASED ORGANIZATION THAT HAS MAJOR KEY

DIFFERENCES TO A 501 (C)3 THESE WILL ALL BE EXPLAINED WITHIN
THE NEXT FEW PAGES. ITS VERY IMPORTANT TO NOTE THAT A FBO
SHOULD NOT BE FORMED UNLESS FOR A GENUINE COMMUNITY PURPOSE.
THIS PARTICULAR ORGANIZATION CAN BE USED TO CREATE A MULTITUDE
OF COMPANIES AND IF FORMED STRATEGICALLY CAN BE USED TO
LEVERAGE TAX DEDUCTIONS FROM OTHER ENTITIES THE FOUNDER HAS
FORMED OUTSIDE OF THE FAITH BASED ORGANIZATION. SIMPLY BY
DONATING FROM THE BUSINESS ENTITY TO THE FBO CAN BE WRITTEN
OFF ON THE TAXES FROM THE ENTITY THAT DONATED AND NOT
TAXABLE TO THE FBO SINCE ITS A DONATION.
AN FBO IF FILED CORRECTLY CAN BECOME A LOAN AGENCY AND ALLOW

CREDIT TO BE DISPERSED TO OTHER ENTITIES OWNED BY THE FOUNDER.
MANY LOOPHOLES EXIST WHEN CREATING CORPORATIONS AND

SEPARATE ENTITIES.
DOCUMENTATION
WHAT IS A 508 (C)1A?
WHAT IS A FAITH BASED ORGANIZATION?
FAITH BASED ORGANIZATIONS (FBO’S), HAVE RIGHTS THAT NO OTHER

NON-PROFITS ENJOY. THE FIRST AMENDMENT GUARANTEES THE RIGHT
OF “FREE” EXERCISE OF RELIGION. THE FIRST AMENDMENT ALSO
GUARANTEES THE RIGHT OF “FREEDOM” OF SPEECH. ONLY FBO NON-
PROFITS ENJOY THESE DUAL RIGHTS. ANY LAW OR RULE PASSED THAT
CONFLICTS WITH THESE RIGHTS WOULD BE UNCONSTITUTIONAL. FBO’S
HAVE THE RIGHT TO SPEAK FREELY ABOUT SOCIAL AND POLITICAL
ISSUES WITHOUT LOSING TAX EXEMPT STATUS, HOWEVER MOST
VOLUNTARILY WAIVE THIS CONSTITUTIONAL RIGHT IN APPLYING AND
RECEIVING A “LETTER OF DETERMINATION” AS A 501(C)(3). ALL 501(C)
(3) FBO’S HAVE WAIVED THEIR RIGHTS. CORPORATIONS, LIKE PEOPLE,
CAN WAIVE RIGHTS. IT'S POSSIBLE TO WAIVE RIGHTS TO A HEARING,
WAIVE RIGHTS TO SPEEDY TRIAL, EVEN WAIVE MIRANDA RIGHTS IF
ARRESTED. A WAIVED RIGHT CAN BE FINAL ON APPEAL.
THE TAX CODE IS FULL OF EXCEPTIONS TO RULES AND REQUIREMENTS.

FOR EXAMPLE, ALL 501(C)(3) ORGANIZATIONS HAVE TO FILE A TAX
RETURN, EXCEPT CHURCHES, AND, ALL 501(C)(3) ORGANIZATIONS CAN
BE AUDITED THE SAME AS CAN FOR PROFIT CORPORATIONS, EXCEPT
CHURCHES. IN ADDITION, THE TAX CODE PROVIDES NO DEFINITION OF
“CHURCH”, NOR DO THE TREASURY REGULATIONS, NOR HAS THE U.S.
SUPREME COURT. THERE IS NO STATUTE ANYWHERE THAT SAYS A
“CHURCH” HAS TO BE A 501(C)(3). NOWHERE IN SECTION 501(C)(3) IS
THE WORD “CHURCH” USED. IN PRACTICE THE IRS HAS DEVELOPED THEIR
OWN DEFINITION FOR “CHURCH” AND THE GUIDELINES FOR THESE
ENTITIES TO BE DESCRIBED AS 501(C)(3) ORGANIZATIONS, YET THEIR
DEFINITION IS NOT BASED ON STATUTORY AUTHORITY.
IF AN FBO CHOOSES TO APPLY AND THEN RECEIVES RECOGNITION OF

EXEMPTION FROM THE IRS THEY ALSO WAIVE RIGHTS. FIRST, IN
ORGANIZING FOR THEIR EXEMPT PURPOSE FBO’S ARE REQUIRED TO
WAIVE FREE EXPRESSION OF RELIGION AND FREE SPEECH IN ORDER TO
QUALIFY. SECOND, IN OPERATING FOR THEIR EXEMPT PURPOSE THE IRS
HAS SOLE DISCRETION TO VACATE FBO’S TAX EXEMPT STATUS AT THE
IRS’ DISCRETION AND INTERPRETATION FOR ANY VIOLATION OF 501(C)
(3) RESTRICTIONS.
508 (C)1A
WHAT IS A 508 (C)1A?
WHAT IS A FAITH BASED ORGANIZATION?

CHURCHES, INTEGRATED AUXILLARIES, AND ASSOCIATION OF CHURCHES
DO NOT HAVE TO APPLY AS A 501(C)(3) IN ORDER TO BE TAX EXEMPT
AND OFFER TAX DEDUCTIBILITY FOR CONTRIBUTIONS. ALL
ORGANIZATIONS SEEKING TAX EXEMPT STATUS MUST APPLY TO THE IRS
EXCEPT FBO’S. FBO’S CAN BE FORMED UNDER SECTION 508(C)(1)(A)
AND ENJOY “MANDATORY EXCEPTIONS” FROM THESE REQUIREMENTS.
SECTION 508(C)(1)(A) WAS CODIFIED IN THE INTERNAL REVENUE CODE
(IRC) IN ORDER TO FORMALLY ESTABLISH THE RIGHT TO “FREE”
EXERCISE OF RELIGION WHICH HAD BEEN A TACIT STANDARD UPON
WHICH AMERICA WAS FOUNDED AND GOVERNED SINCE IT GAINED ITS
INDEPENDENCE. A 508(C)(1)(A) IS, BY THE VERY NATURE OF ITS
CREATION, A RELIGIOUS, NON-PROFIT, TAX-EXEMPT ORGANIZATION.
FBO’S CAN BE ORGANIZED AND OPERATE UNDER SECTION 508(C)(1)(A)

OF THE TAX CODE THE SAME AS THEY CAN BE ORGANIZED AND OPERATE
UNDER ANY OTHER SECTION OF THE TAX CODE. A 508(C)(1)(A) FBO HAS
A CONSTITUTIONAL AND LEGAL RIGHT TO FORM; THEREFORE, THERE IS
NO REQUIRED APPLICATION TO SEEK APPROVAL OF TAX EXEMPT
STATUS.
A 508(C)(1)(A) FBO TAX EXEMPTION STEMS FROM THE FIRST AMENDMENT

AND IS NOT A GOVERNMENT SUBSIDY. SOME ARGUMENTS HAVE BEEN
PRESENTED SUPPORTING SPEECH RESTRICTIONS ON POLITICS AND
LEGISLATION FOR CHURCHES AS NECESSARY SO GOVERNMENT DOES NOT
SUBSIDIZE RELIGION. THIS VIEWPOINT DOES NOT COMPORT BY
DEFINITION AND IS A WELL SETTLED MATTER OF CASE LAW. THE LEGAL
DEFINITION OF “EXEMPTION” IS “FREEDOM FROM A DUTY, LIABILITY, OR
OTHER REQUIREMENT; AN EXCEPTION”.59 THE LEGAL DEFINITION OF A
“SUBSIDY” IS “A GRANT, USUALLY MADE BY THE GOVERNMENT, TO ANY
ENTERPRISE WHOSE PROMOTION IS CONSIDERED TO BE IN THE PUBLIC
INTEREST. ALTHOUGH GOVERNMENTS SOMETIMES MAKE DIRECT
PAYMENTS (SUCH AS CASH GRANTS), SUBSIDIES ARE USUALLY
INDIRECT…”IT IS CLEAR THAT 508(C)(1)(A) FBO’S DO NOT RECEIVE A
GOVERNMENT SUBSIDY. A SUBSIDY OCCURS WHEN MONEY CHANGES
HANDS BETWEEN THE GOVERNMENT AND THE ORGANIZATION. A SUBSIDY
IS DETERMINED BY THE GOVERNMENT WHEREAS AN EXEMPTION IS NOT.
A SUBSIDY IS ALLOCATED AND MONITORED BY THE GOVERNMENT
WHEREAS AN EXEMPTION IS NOT. THEREFORE, TAX EXEMPTION OF
CHURCHES DOES NOT AMOUNT TO SUBSIDIZING SPEECH.
ALL DONATIONS TO A 508(C)(1)(A) FBO’S ARE TAX DEDUCTIBLE TO

DONORS TO THE FULLEST EXTENT OF LAW. SECTION 170(B) OF THE IRC
STATES DONATIONS ARE AUTOMATICALLY TAX DEDUCTIBLE TO
“CHURCHES OR A CONVENTION OR ASSOCIATION OF CHURCHES.”
508 (C)1A
WHAT IS 508 (C)1A?
CHARITIES REGISTRATION EXEMPTION LETTER

CHARITABLE ORGANIZATIONS ARE GOVERNED BY THE SOLICITATION OF
CHARITABLE FUNDS ACT FOUND IN S.C. CODE OF LAWS TITLE 33,
CHAPTER 56. ALL CHARITABLE ORGANIZATIONS THAT SOLICIT
CONTRIBUTIONS OR HAVE CONTRIBUTIONS SOLICITED ON THEIR BEHALF
MUST REGISTER WITH THE SECRETARY OF STATE’S OFFICE PRIOR TO ANY
SOLICITATION ACTIVITY AND ON AN ANNUAL BASIS UNLESS THEY FALL
UNDER ONE OF THE STATUTORY EXEMPTIONS FROM REGISTRATION.
HOW TO FORM 508 (C)1A

THESE USC CODES WILL HELP PROTECT FORMATION OF FBO IF ANY
CASES SHOULD CHALLENGE THE LEGITIMACY OF THE ORGANIZATION:
US CONSTITUTION AMENDMENT ONE

26 U.S.C. § 508
26 U.S.C. § 6033(A)(3)(A)
26 U.S.C. § 501(C)(3)
26 U.S.C. § 170 – CHARITABLE
42 U.S. CODE § 2000BB – RELIGIOUS FREEDOM RESTORATION ACT
18 U.S. CODE § 247 – DAMAGES TO FREE EXERCISE OF RELIGION
26 U.S. CODE § 6104 – PUBLICITY OF INFORMATION REQUIRED FROM
CERTAIN EXEMPT ORGANIZATIONS
HTTPS://HELPINGHANDOUTREACH.ORG/FEDERAL-LAW/
LISTED BELOW ARE ALL DOCUMENTS NEEDED TO OFFICIALIZE YOUR

508(C)1A ALL THINGS HAVE BEEN PREVIOUSLY DISCUSSED WITHIN THIS
BOOKLET.
THE ARTICLES OF ORGANIZATION PG - 16

CERTIFICATE OF INCORPORATION PG - 21
UBI NUMBER PG - 4
SS-4 AND TAX IDENTIFICATION NUMBER PG - 4
CERTIFICATE OF EXISTENCE/AUTHORIZATION PG - 23
CHARITIES REGISTRATION EXEMPTION LETTER SIGNED BY THE
SECRETARY OF STATE LISTING THE 508 AS A TAX EXEMPT
ORGANIZATION (BE SURE THAT ITS A 508(C)1A) PG -
REGISTERED AGENT SERVICES PG -26
BY LAWS PG - 20
BOARD MEETING AT LEAST 3 BOARD MEMBERS PG -20
SEE NON PROFIT ORGANIZATION FORMATION TO GET FULL DETAILS OF

THESE REQUIREMENTS. THE MAIN DIFFERENCE IS NOTIFYING THE
SECRETARY OF STATE THAT ITS A 508(C)1A FBO NOT A 501(C)3
508 (C)1A
SOURCES AND HELPFUL

WEBSITES
SOURCES
IRS.GOV:
INTERNAL REVENUE SERVICE SITE. A SITE THAT DELIVERS ALL
INFORMATION NEEDED FOR GOVERNMENT DOCUMENTS, USC CODES, AND
FORMATIONS OF BUSINESS.
HELPINGHANDOUTREACH.COM:
A NONPROFIT FBO THAT IS HELPING SPREAD MORE KNOWLEDGE ON
WHAT A 508 (C)1A IS AND WHAT THE BENEFITS ARE.
FOOL.COM:
A GREAT WEBSITE TO DIVE DEEP INTO SPECIFIC BUSINESS FORMATIONS
WITH SOURCE LINKS AND DETAILED BREAKDOWN OF HOW TO FORM A
BUSINESS FROM SCRATCH.
ROCKETLAWYER.COM OR LAWDEPOT.COM:
THESE WEBSITES ARE PERFECT FOR GETTING TEMPLATES FOR BUSINESS
REQUIRED DOCUMENTATION
SECRETARY OF STATE (DIFFERS BY STATE):
HTTPS://WWW.LANGUAGEPEOPLE.COM/SECRETARY-OF-STATE-WEBSITES/
THE ABOVE LINK WILL BE DIRECTED TO A WEBSITE THAT HAS

ORGANIZED ALL STATE OF SECRETARY WEBSITES IN ALPHABETICAL
ORDER BY STATE.
THIS LINK IS TO APPLY FOR EIN NUMBER:
HTTPS://WWW.IRS.GOV/BUSINESSES/SMALL-BUSINESSES-SELF-
EMPLOYED/APPLY-FOR-AN-EMPLOYER-IDENTIFICATION-NUMBER-EIN-
ONLINE
ETERNAL ZION IS NOT A LAWYER AND IS NOT GIVING ANY LEGAL

ADVICE WITHIN THIS BOOKLET. THIS BOOK IS TO DEFINE BUSINESS
ENTITIES AND INCLUDES PROS AND CONS THAT ARE BIASED AND BASED
ON PERSONAL REVIEW AND RESEARCH. PLEASE REFER TO ALL SOURCES
LISTED ABOVE FOR THE MOST THOROUGH AND ACCURATE INFORMATION
ON THE SUBJECTS DISCUSSED IN THIS BOOK.
FOR QUESTIONS AND CONCERNS FEEL FREE TO CONTACT

EZ@IAMETERNALZION.COM AND WE WILL RESPOND TO YOU SHORTLY.
AFTER PURCHASING THIS BOOK YOU HAVE AGREED TO THE TERMS AND CONDITIONS THAT
CLEARLY STATE ANY CREATIVE CONTENT, LITERATURE, BOOKS, MUSIC, ETC ANYTHING
RELATED TO ETERNAL ZION IS NOT TO BE REDISTRIBUTED OR RESOLD AND CAN POTENTIALLY
LEAD TO A LAWSUIT. PLEASE REFRAIN FROM SHARING THIS DOCUMENT WITH ANYONE WHO HAS
NOT PURCHASED IT. THANK YOU FOR DOING BUSINESS WITH ETERNAL ZION WE HOPE TO SEE
YOU RETURN.
END OF BOOK

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Eternal Zion presents -

Business guide, principles,

ETERNAL ZION RECORDS

OUR 3 MAJOR THEMES

PRINCIPLES AND DEFINITIONS DOCUMENTATION INITIALIZATION

PLEASE FEEL FREE TO EMAIL US AT

ETERNAL ZION RECORDS

14 EIN, TIN, AND UBI

24 - 26 508 (C)1A FORMATION

Business definitions TIP: BEFORE CREATING ANY

Business definitions TIP: BEFORE CREATING ANY

SIMPLICITY: PARTNERSHIP IS A RELATIVELY SIMPLE STRUCTURE SINCE

LEGAL LIABILITY: LIKE SOLE PROPRIETORSHIPS, PARTNERSHIPS OPEN

Business definitions TIP: CHOOSE WISELY HOW YOU

LIMITED LIABILITY: LIKE AN LLC, AN LLP IS A SEPARATE LEGAL

LIMITED AVAILABILITY: LLPS ARE NOT AVAILABLE IN EVERY STATE,

Business definitions TIP: THINK ABOUT WHETHER

LIMITED LIABILITY: WHEN FORMING AN LLC, IT CREATES A SEPARATE

Business definitions TIP: CERTAIN BUSINESS

LIMITED LIABILITY: EACH LLC WITHIN A SERIES HAS SEPARATE

CONS OF SERIES LLC:

COMPLEXITY: DESPITE THE UNIFIED FILING SETUP, IT’S CONSIDERABLY

Business definitions TIP: CORPORATIONS ARE HUGE

LIMITED LIABILITY: LIKE AN LLC, A CORPORATION IS A SEPARATE

Business definitions TIP: THINK CAREFULLY ABOUT

HIGHER STARTUP COSTS: LIKE ANY CORPORATION, S CORPORATIONS

WHAT IS PASS THROUGH TAXATION?

“PASS-THROUGH” MEANS THAT ANY PROFITS OR LOSSES FROM OPERATING

Business definitions TIP: ANY NON PROFIT SHOULD HAVE

PROS OF NON - PROFIT ORGANIZATIONS:

CONS OF NON - PROFIT ORGANIZATIONS:

Business definitions TIP: CREATING A FAITH BASED

PROS OF FAITH BASED ORGANIZATIONS:

LIABILITY PROTECTION: NONPROFIT CORPORATIONS PROVIDE THE SAME

CONS OF FAITH BASED ORGANIZATIONS:

PROS OF BENEFIT CORPORATIONS:

LIMITED LIABILITY: A BENEFIT CORPORATION LIMITS ITS

CONS OF BENEFIT CORPORATIONS:

VARYING REGULATIONS: BENEFIT CORPORATIONS ARE CURRENTLY

Business definitions TIP: IT'S GOOD TO KNOW ALL

LIABILITY PROTECTION: L3CS PROVIDE THE SAME LIMITS ON LIABILITY

LACK OF TAX EXEMPTION: L3CS DO NOT QUALIFY FOR FEDERAL TAX-

NOW THAT WE'VE COVERED ALL OF THE DIFFERENT BUSINESS STRUCTURES

Business IDENTIFICATION TIP: FEDERAL AND GOVERNMENT

HERE'S A LINK TO APPLY FOR AN EIN:

Business dOCUMENTATION TIP: FIRST DETERMINE WHAT

NAME RESERVATION APPLICATION

REGISTER WITH THE STATE:

MOST STATES WILL TAKE YOU THROUGH SEVERAL PAGES OF

TO FORM A LEGAL ENTITY, SUBMIT TO THE STATE ARTICLES OF

AN OPERATING AGREEMENT, ALSO KNOWN AS A COMPANY AGREEMENT,

STATES NEED TO HAVE ACCURATE, UP-TO-DATE RECORDS

IN MANY STATES, THE LEGAL ENTITY WILL NEED TO

USUALLY, TAX REGISTRATION REQUIREMENTS AND FORMS ARE

DEPENDING ON THE NATURE AND LOCATION OF THE

DOCUMENTATION NON - PROFIT

CREATE A STRATEGIC PLAN

A NON PROFIT ORGANIZATION IS STILL KNOWN AS A

THAT'S WHY IT'S IMPORTANT TO DO THE SAME SORT OF

A GREAT SITE TO REFER TO FOR STATISTICS ON NON PROFITS