A Non-Profit Startup: Why A Lawyer Is A Must

Starting a company or an organization is not an easy feat, no matter what its type or size may be. When starting an organization, owners and decision-makers must be completely aware of the steps they must follow, the professionals who will be involved, and the need for hiring a competent lawyer who will make sure that all transactions that the organization is involved in are smooth, legal and legitimate.

Although the steps to create a non-profit startup are quite similar to that of any other startup or business entity. Owners of such organizations are required to do some additional research and data mining to ensure that things run smoothly.

There are many reasons why an individual would want to create a non-profit startup, all of which may or may not depend upon the immediate circumstances of the individual. For instance, the person may want to change or remedy a particular problem that his or her society is facing at large. The person may also believe in a particular (but not directly related) cause and might want to start a new entity or organization whose purpose is not to create a revenue stream for the owner.

While the idea itself is noble, the process of creating and successfully running a startup involves several difficult issues. And while it is easy to create a non-profit startup, making sure that the startup actually survives beyond the stage of creation is difficult and complicated at best. It is then up to the owner to decide whether he or she is truly committed to making the non-profit startup run successfully, and understand that the time and energy required in doing so may involve certain sacrifices on their part. The owner must also understand the importance of discovering sponsors and investors and communicating with them, as it is these relationships which will help make the non-profit startup up-and-running.

In order to successfully create a non-profit, the owner(s) must make sure that proper paperwork has been submitted to the Internal Revenue Service within 60 days of the establishment of the organization. The owner must also see to it that the organization is classified on the basis of the service it provides to the community (i.e. if it propagates social welfare, is a charitable service, offers spiritual and religious services, etc). In order to get classified, the aims of the non-profit must be put on paper and legitimized by a competent lawyer who is hired to help create and run the non-profit. Once the initial IRS documentation is approved, the organization will be awarded its tax-exempt status and will be allowed to proceed legally with its mentioned goals.

What are the processes that need completion?

Thanks to the internet and advancement in technology, those looking forward to creating a non-profit startup now have an advantage in the form of “checklists” that list the various items required. These checklists are available online and can easily be downloaded.

While that does make the owner more informed on the processes that need to be completed, the owner still must make sure that these processes are actually followed. Every procedure and method that will be utilized in this regard must be thoroughly researched and fully understood. For instance, if the owner plans to incorporate the non-profit, he or she must understand that how the organization stands will attract charitable profits raised by entities.

First and foremost, the owner must create a suitable name for the organization. Having an apt name is vital for the brand value of the organization, and the right one may create a sense of bonding with the people. When the organization is armed with the right kind branding, it will be remembered by consumers (as well as clients and other investors) instantly – without any need of reminders. Depending on the law of the state in which the non-profit is created, the name may require “corporation,” “incorporated,” or “limited” added to its name.

Once this stage is crossed, the owner should make sure that the organization’s name and purpose are provided to the public along with all possible sources of income. In other words, the organization must keep all of its operations and income-related information completely transparent to the public. Thereafter, the owner can proceed to register the name in the state or even country-wide. Registering a business name is quite like a trademark, where the company’s name is registered for services and/or products sold to clients and/or customers.

Why is a lawyer a must in a non-profit startup?

As mentioned earlier, any owner who is looking forward to creating a non-profit startup must have a competent lawyer who will be responsible for all legal matters and will ensure that the organization runs smoothly and perfectly. Any business entity needs a lawyer for several different reasons, chief among them being preventing any legal problems from cropping up and crippling the entity. Through service, processes, and performance for a client, legal representatives make sure that all documents are valid and all the relevant officials are being properly communicated to. The lawyer also sees to it that the methods and rules for creating the startup are being adhered to properly.

A non-profit has several added factors which require proper legal attention. For instance, establishing a non-profit startup has a lot to do with achieving the tax-exempt status and filling forms with the Internal Revenue Service. In case these processes are not done properly and correctly, the non-profit will be held liable and may even be dissolved. A non-profit startup, therefore, must be established with the form filled in, which should be returned to the IRS within 60 days of its creation.

Once this is done, the lawyer who is involved with the non-profit startup should examine the all of its goals, bylaws, and overall internal paperwork. He or she must make sure that these things align rightfully with the type of organization that has been filed with the IRS. The lawyer must also see to it that the structure of the entity, as well as the internal procedures used, remain aligned with the purpose and spirit of the business, point out any discrepancies to the owner or group and suggest solutions for the same.

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