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ITSA General Assembly: December 5th - 12th

Author Topic: Registering a legal entity  (Read 4708 times)

ta0

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Registering a legal entity
« on: November 05, 2014, 11:54:13 PM »

I have looked into what it takes to register a non-profit organization in Texas. There are two types, (a) unincorporated nonprofits and (b) nonprofit corporations. I think for future growth and also to eventually obtain in the coveted nonprofit status under federal taxes [501c3] we should incorporate.

To incorporate as a nonprofit under Texas law we only need to fill a two page form (pdf) and pay a $25 fee. We need a name for the association and agent with address in Texas (myself). We have to decide if the management is vested on the board of directors (and give at least three names of directors who can even reside in other countries) or if it is vested on its members. And finally, we need a statement of purposes. That's it!

Registration as a nonprofit (either incorporated or unincorporated) does not mean we are automatically exempt form taxes. It does mean the association becomes a legal entity separated from its members. It can own property and conduct transactions. If it ever closes, its assets can only be transferred to another nonprofit. Etc.
Texas does not have income tax. We would still have to pay sales tax and federal income tax. We would never reach the minimum to pay franchise tax.

To obtain federal nonprofit status for income tax we would need to register as a 501(c)(3) organization which include: to Foster National or International Amateur Sports Competition. There is another section that we could apply under: 501 c(7): Social and Recreational Clubs. This section would cover the hobby in general (e.g. collecting and turning) but will not allow the donors to deduct contributions from their taxes. In particular: "Due to the tax deductions associated with donations, loss of 501(c)(3) status can be highly challenging to a charity's continued operation, as many foundations and corporate matching programs do not grant funds to a charity without such status, and individual donors often do not donate to such a charity due to the unavailability of the deduction."

The federal registration requires a few more forms (bylaws, statues) but not much. The cost of applying for 501c(3) is either $400 or perhaps free (I still need to understand some of the definitions).

For the amount of funds we expect to handle, the reporting requirements are minimal. Texas may require a report once every 4 years, listing current officers, etc.  For 501c3 the IRS asks for an electronic postcard once per year. Of course, we need to keep records of the use of funds and minutes of the board meetings.
« Last Edit: November 06, 2014, 12:44:03 AM by ta0 »
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Kirk

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Re: Registering a legal entity
« Reply #1 on: November 15, 2014, 08:51:19 PM »

I think for future growth and also to eventually obtain in the coveted nonprofit status under federal taxes [501c3] we should incorporate.
I know that churches do not need to be incorporated in order to have 501c3 status. (although many are incorporated) I do not understand the advantages and disadvantages of non profits being incorporated.
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ta0

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Re: Registering a legal entity
« Reply #2 on: November 16, 2014, 11:40:17 AM »

I think for future growth and also to eventually obtain in the coveted nonprofit status under federal taxes [501c3] we should incorporate.
I know that churches do not need to be incorporated in order to have 501c3 status. (although many are incorporated) I do not understand the advantages and disadvantages of non profits being incorporated.

As I understand it, non-incorporated non-profits are more like a partnership. The incorporated non-profit is an entity that can continue after the founders are gone. This is not strictly correct but the general idea.
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Dick Stohr

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Re: Registering a legal entity
« Reply #3 on: November 16, 2014, 04:11:44 PM »

Non-profit religious organizations can incorporate in order for purposes of liability. Corporate liability relives individual personal finances from exposure.   
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ta0

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Re: Registering a legal entity
« Reply #4 on: January 19, 2015, 12:22:57 AM »

It is official. Effective January 1st the International Top Spinners Association [ITSA] became a non-profit corporation registered in the state of Texas:



Yeah!

Next step: bylaws.

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jim in paris

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Re: Registering a legal entity
« Reply #5 on: January 19, 2015, 11:17:30 AM »

eh eh good news
we're  street legal now ???  ;D

next move
the by-laws
the memberships
the international contacts

i assume the last sentence doesn't concern us : we are not a trademark

jim
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Dick Stohr

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Re: Registering a legal entity
« Reply #6 on: January 19, 2015, 11:52:22 AM »

I think that the last sentence means if there is someone else that has trademarked the name we chose the State of Texas is not overriding their trademark. Is there anyone else using ITSA? They can come after us and Texas will not back us. Anyone else (maybe someone with legal training) have thoughts on this idea?
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ta0

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Re: Registering a legal entity
« Reply #7 on: January 19, 2015, 12:01:45 PM »

Dick is correct. And there are in fact several associations with the acronym ITSA, as The Earl pointed out when we were choosing the name. But trademarks only collide if they are in the same space (or are famous) and can be confused. I think it is highly unlikely that we would be accused of diluting anybody else trademark. If that would ever happen, we just change the acronym to TOPS  ;)

Funny that it says "Domestic" while our name says International. In this case it means we were registered in Texas first and are not a preexisting corporation from somewhere else.
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the Earl of Whirl

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Re: Registering a legal entity
« Reply #8 on: January 19, 2015, 12:51:55 PM »

I think TOPS might even be more used than ITSA.  Take Off Pounds Sensibly meets at our church, TOPS grocery markets are big in the northeast and TOPS gymnastic club is a group in our area (to name a few).

Anyway, ITSA we are and ITSA gonna work out and ITSA going to be nice. 

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Jack

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Re: Registering a legal entity
« Reply #9 on: January 19, 2015, 05:02:42 PM »

It is official. Effective January 1st the International Top Spinners Association [ITSA] became a non-profit corporation registered in the state of Texas:

Yeah!

Next step: bylaws.

i have a question: is that a document acknowledging that you have filed for the creation of a corperation, or is that a document informing you of the succesful and finalized incorperation?
« Last Edit: January 19, 2015, 06:42:10 PM by ta0 »
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ta0

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Re: Registering a legal entity
« Reply #10 on: January 19, 2015, 06:48:05 PM »

i have a question: is that a document acknowledging that you have filed for the creation of a corporation, or is that a document informing you of the successful and finalized incorporation?
It is basically the second. ITSA is already a legal entity. We still need to write the bylaws, register with tax authorities, etc.
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Jack

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Re: Registering a legal entity
« Reply #11 on: January 19, 2015, 06:54:06 PM »

i have a question: is that a document acknowledging that you have filed for the creation of a corporation, or is that a document informing you of the successful and finalized incorporation?
It is basically the second. ITSA is already a legal entity. We still need to write the bylaws, register with tax authorities, etc.

in that case yippie! we should find a way to mark this happening @-@
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