Journey of a non-profit - We're approved!

Kids Klub Foundation, Inc. is official with the State of Arizona. I got the stamped articles of incorporation earlier this week. The next step is to publish in accordance with Arizona law. I am pleasantly surprised to find out this is much more affordable that I had previously thought.

Of course, incorporating is actually the easy part. Now we start to navigate through the process of obtaining our 501(c)(3) status through the IRS. I will not be doing this part myself. We are hiring a CPA who specializes in this. She is, generously, discounting her fees to keep our costs down.

Like I said in an earlier post...it is ironically somewhat costly to start a non-profit, tax exempt corporation. But, the ball is rolling and I'm pleased with our progress.

New IRS Law Allows Refiling of '08 Tax Returns to get a quick refund for a portion of Net Operating Loss Carrybacks!

Arizona Association of Mortgage Brokers -- One of our member brokers told us how he benefited from a new IRS law. It allows small business owners to refile their 2008 income tax returns to recapture some of the taxes paid, if they showed a loss on their 2008 tax return.
This particular member was able to recapture $2,300 of taxes paid in previous years with an amended return.

Here is the scoop from the IRS:
"The Internal Revenue Service announced today that small businesses with deductions exceeding their income in 2008 can use a new net operating loss tax provision to get a refund of taxes paid in prior years.

To accommodate the change in tax law, the IRS today updated the instructions for two key forms — Forms 1045 and 1139 — that small businesses can use to make use of the special carryback provision for tax year 2008. These forms are used to accelerate the payment of refunds.

The new provision, enacted as part of the American Recovery and Reinvestment Act of 2009, enables small businesses with a net operating loss (NOL) in 2008 to elect to offset this loss against income earned in up to five prior years. Typically, an NOL can be carried back for only two years. The IRS released legal guidance today in Revenue Procedure 2009-19 (Update: please see superceding Revenue Procedure 2009-26) outlining specific details. Some taxpayers must make the election to use this special carryback by April 17, 2009.

“The new net operating loss provisions could throw a lifeline to struggling businesses, providing them with a quick infusion of cash,” said IRS Commissioner Doug Shulman. “We want to make it as easy as possible for small businesses to take advantage of these key tax benefits.”

With the economic downturn and the new law, the IRS expects record numbers of small businesses to be eligible for the refunds. The IRS is putting in special steps to ensure timely processing of these refunds to help small businesses during this difficult period.
Small businesses with large losses in 2008 may be able to benefit fully from those losses now, rather than waiting until claiming them on future tax returns."

If you happened to show a loss on your 2008 tax return, you may benefit from this new tax law. Note: this information is not intended as professional tax advice. Consult your accountant or other tax professional to evaluate your specific situation.

Source: Arizona Association of Mortgage Brokers. Newsflash 07/15/09.

Journey of a non-profit - We're ready to file - part 2

I hit a brief snag. I should have learned my lesson from filing PLLCs for Realtors in that the requirements for the Arizona Corporation Commission (ACC) are much looser than those of the Department of Real Estate.

Turns out that for non-profit corporations, the requirements for the ACC are much looser than the IRS. And, the IRS is not something we want to mess with. When we're ready to apply for our tax exempt status, we want all of our ducks in a row.

It turns out that the IRS requires 5 board members and not 1 like I read in the books that I took out of the library. Even though we had originally decided on 3 board members, I will change the Articles to include 2 more. Lesson to be learned for do-it-yourselfers...this is truly a complex process. Legal advice is worth the cost.

Under the category heading of providence, I end up sitting right next to a paralegal at a meeting this morning who just finished starting her own non-profit/tax-exempt corporation. She was quite helpful with a few pointers so now I feel like we're really ready to file.

• Said paralegal, by the way, charges $600 PLUS the filing and publishing fees for LLCs and PLLCs. And, she cannot dispense legal advice either. At $279, we're looking like a bargain!

It's better to hit the snag and overcome it BEFORE filing and publishing (otherwise you have to pay twice and we're starting this foundation on a shoe string). The true test will be tomorrow when I actually go down to the ACC to file. Say some prayers, people!

Journey of a non-profit - We're ready to file

I'm feeling pretty good about things right about now. What I really wanted was a little pro-bono help from the local LLC attorney, but he didn't bite. He did, however, suggest that I turn to the Internet to look for answers. Armed with Google and a few library books on starting and running a non-profit I'm feeling a little bit more educated.

Reliable LLC Filings, LLC is a document filing company. We specialize in LLCs and PLLCs. As I mentioned in a previous post, we don't know much about corporations...not to mention non-profit corporations.

So, I start investigating the blanks that I need to fill in on the forms. The non-profit corporation forms are a tad bit more complicated than the ones I'm used to. I'm a smart girl. I know I can figure this out.

Several hours later I'm pretty confident I've got all the info I need and I complete the form. Tomorrow I'll present it to the Board and get their buy in. I've got two reference books and several samples I pulled from the Internet to back up my how-do-I-fill-in-this-blank decisions.

With any luck I'll have signatures from all the Board members and we can file by the end of the week. Yippee!

ACC and Attorney General Warning

Board of Business Compliance Not Affiliated
with Arizona Corporation Commission

PHOENIX—The Arizona Corporation Commission and Attorney General Terry Goddard are warning Arizona business owners that an organization calling itself the “Board of Business Compliance” is sending out official-looking documents to advertise its service of preparing annual meeting minutes for corporations. The solicitation, requesting payment of a $125 fee, is not a Corporation Commission document and the Board of Business Compliance is not in any way affiliated with the Arizona Corporation Commission. Business owners and their representatives are not required to file with the Board of Business Compliance, nor are business owners required to pay the $125 fee.

The document looks very similar to Corporation Commission filing documents and the private firm making the solicitation creates confusion by using language in its solicitation that is similar to that in Corporation Commission documents. The Board of Business Compliance forms carry an official-looking time deadline for filing and include the Arizona Corporation Commission file number assigned to the business. Further, a search of the Board of Business Compliance return address, places it at a UPS Store in downtown Phoenix.

If you believe you are a victim of fraud or if you have received this document, please contact the Arizona Attorney General’s Office in Phoenix at (602) 542-5763, in Tucson at (520) 628-6504, or outside the Phoenix and Tucson metro areas at 1-(800)-352-8431. To file a complaint online, please visit the Attorney General’s web site at www.azag.gov. To file a complaint in person, the Attorney General’s Office has 37 satellite offices throughout Arizona with volunteers available to help. Locations and hours are posted on the Attorney General’s web site.

Source: Arizona Corporation Commission, http://www.azcc.gov/Divisions/Administration/news/2_080722%20BBC.pdf, originally published July, 2008