California corp.

"Rob Thomas" wrote in message .. .
I chose to go with a LLC and deal with the $800 excise tax every year. It's
really silly that they charge that much for the "opportunity to conduct
business within California." However, the LLC provides me with protection
and allows me not to have to deal with maintaining two entities for tax
purposes (my LLC is where I make my income BTW). The $800 is also
deductable, so depending on your tax bracket you should recoup $200 or so.

The California C-Corp has a minimum tax of $800, so any year that it doesn't
bring in income, you still owe $800. Many folks get burned by that by not
properlyl shutting down the C-Corp after they are done with it and the State
merilly charges $800 and fees and penalties. Then someone is shocked to see
a $5000 bill from the State a few years down the road.

That's what I like about the Mutual Benefit Corp. You're already set
up as non-profit the moment your articles are approved.

"Robert M. Gary" wrote in message
m...
"Rob Thomas" wrote in message
.. .
I chose to go with a LLC and deal with the $800 excise tax every year.
It's
really silly that they charge that much for the "opportunity to conduct
business within California." However, the LLC provides me with
protection
and allows me not to have to deal with maintaining two entities for tax
purposes (my LLC is where I make my income BTW). The $800 is also
deductable, so depending on your tax bracket you should recoup $200 or
so.

The California C-Corp has a minimum tax of $800, so any year that it
doesn't
bring in income, you still owe $800. Many folks get burned by that by
not
properlyl shutting down the C-Corp after they are done with it and the
State
merilly charges $800 and fees and penalties. Then someone is shocked to
see
a $5000 bill from the State a few years down the road.

That's what I like about the Mutual Benefit Corp. You're already set
up as non-profit the moment your articles are approved.

Wrong!

As a former president of the board of a nonprofit corporation in
California I am very familiar with the requirements for a nonprofit
corporation. Go to the IRS website and research the requirements for a
federal 501(c)(3) determination before you go any further.
The state of California does NOT determine the nonprofit status of a
corporation. The IRS issues a letter of determination. The Attorney General
and Franchise Tax Board, providing some other requirements are met, rely on
the IRS determination.
Nonprofit status is NOT automatic. There is significant paperwork to
submit for to the feds to establish the status.
The fact that a corporation does not show a profit does NOT make it a
nonprofit corporation.
The fact that a nonprofit corporation increases its net worth year after
year does not invalidate its nonprofit status.

"Casey Wilson" wrote in message . ..
"Robert M. Gary" wrote in message
m...
"Rob Thomas" wrote in message
.. .
I chose to go with a LLC and deal with the $800 excise tax every year.
It's
really silly that they charge that much for the "opportunity to conduct
business within California." However, the LLC provides me with
protection
and allows me not to have to deal with maintaining two entities for tax
purposes (my LLC is where I make my income BTW). The $800 is also
deductable, so depending on your tax bracket you should recoup $200 or
so.

The California C-Corp has a minimum tax of $800, so any year that it
doesn't
bring in income, you still owe $800. Many folks get burned by that by
not
properlyl shutting down the C-Corp after they are done with it and the
State
merilly charges $800 and fees and penalties. Then someone is shocked to
see
a $5000 bill from the State a few years down the road.

That's what I like about the Mutual Benefit Corp. You're already set
up as non-profit the moment your articles are approved.

Wrong!

As a former president of the board of a nonprofit corporation in
California I am very familiar with the requirements for a nonprofit
corporation. Go to the IRS website and research the requirements for a
federal 501(c)(3) determination before you go any further.

IRS?? IRS is federal.

The state of California does NOT determine the nonprofit status of a
corporation. The IRS issues a letter of determination. The Attorney General
and Franchise Tax Board, providing some other requirements are met, rely on
the IRS determination.

Incorrect. The California Franchise Tax Board does. The form is FTB
3500. There is no requirement that you file anything with the IRS
before filing out this form (nor does the form even ask about Federal
Status). In fact the state is VERY explicit that state non-profit
status is determined independent of feder. You fill this out when you
incorporate.


Nonprofit status is NOT automatic. There is significant paperwork to
submit for to the feds to establish the status.
The fact that a corporation does not show a profit does NOT make it a
nonprofit corporation.

But since the fed's don't have a minimum tax, no one cares about
federal status. Unless of course you have a company that is paying
saleries, etc.

"Robert M. Gary" wrote in message
om...

But since the fed's don't have a minimum tax, no one cares about
federal status.

You should, because they'll want at least 15% of your
retained earnings if you don't obtain non-profit status.

Unless of course you have a company that is paying
saleries, etc.

That has nothing to do with anything. Paying salaries
(and those filing requirements) are the same regardless
of profit or non-profit, corporation, partnership or
whatnot.

Please do yourself a favour, now that you have your
corporation and plane, by reading up on exactly what
you've let yourself in for. Nolo press have a good
selection of guides and books at www.nolo.com.
Setting out on the right foot will be cheaper and less
hassle than trying to correct mistakes later on.

"Robert M. Gary" wrote in message
om...
"Casey Wilson" wrote in message news:ooe2c.70522
As a former president of the board of a nonprofit corporation in
California I am very familiar with the requirements for a nonprofit
corporation. Go to the IRS website and research the requirements for a
federal 501(c)(3) determination before you go any further.

IRS?? IRS is federal.

The state of California does NOT determine the nonprofit status of a
corporation. The IRS issues a letter of determination. The Attorney
General
and Franchise Tax Board, providing some other requirements are met, rely
on
the IRS determination.

Incorrect. The California Franchise Tax Board does. The form is FTB
3500. There is no requirement that you file anything with the IRS
before filing out this form (nor does the form even ask about Federal
Status). In fact the state is VERY explicit that state non-profit
status is determined independent of feder. You fill this out when you
incorporate.

Maybe not before, but...

As copied from the California Codes

CALIFORNIA CODES
GOVERNMENT CODE
..
(f) "Nonprofit organization" means any organization qualifying
under Section 501(c)(3) of the Internal Revenue Code in the preceding
tax year...

.....oh, by the way, the corporation is filing the 990 or 990EZ federal
income tax statements, right?
The one at http://www.irs.gov/pub/irs-pdf/i990-ez.pdf?