Incorporate

Why Incorporate?

There are several reasons why a YP network might choose to incorporate.  Primarily it is to create a separate legal entity that may provide limited protection to YP officers and members from personal liability when acting on behalf of the network. (NDYP is not a legal resource and suggests network representatives visit with an attorney to obtain additional information regarding the liability protection incorporation provides.)

Incorporation makes a YP network a legally recognized entity. This helps put in place structure and continuity for the group from year to year, and can provide an opportunity to apply for 501(c) tax-exempt status. While an unincorporated organization can obtain this status, it is often easier to qualify as a corporation.

Steps to Incorporate

To begin the process of incorporation, file articles of incorporation with the North Dakota Secretary of State. Once this is done and the entity has been created, the governing board should (if not already done) set up bylaws describing how the entity is organized, how the group will be run, things the board can or cannot do, board member responsibilities, etc.

The process and documents that need to be completed for networks wanting to incorporate can be found on North Dakota Secretary of State website.

Incorporated Networks

  • Fargo-Moorhead-West Fargo YP (through affiliation with Chamber)
  • Dickinson YP
  • Greater Grand Forks YP

501(c) Tax-Exempt Status

A tax-exempt status provides networks exemption from some federal, state and local taxes. Depending on the type of 501(c) a network applies for, donors may be able to write off network contributions on their individual tax returns.

501(c)(3)

A 501(c)(3) status allows for federal tax exemption of nonprofit organizations, specifically those that are considered public charities, private foundations or private operating foundations. One of the most distinct provisions unique 501(c)(3) organizations, as compared with other tax exempt entities, is that it allows for tax deductible contributions and matching gifts to be donated to the organization. It is also eligible for foundation and other grant funding. This type of organization is restricted in the amount of political and legislative lobbying activities it conducts.

In order to receive 501(c)(3) status, a network must apply to the IRS for recognition by filing Form 1023, Application for Recognition of Tax Exemption.

501(c)(6)

A 501(c)(6) status allows for federal tax exemption of nonprofit business leagues, chambers of commerce, real estate boards, and boards of trade. A business league is a group of people with common business interests whose purpose is to promote those interests. This type of organization is primarily supported by membership dues and other income from activities related to the organization’s purpose. Contributions are not tax deductible by individuals and it is gernerally not eligible for grants. However, businesses are allowed to deduct contributions as a business expense. Compared to 501(c)(3), this status does allow the network to engage in any amount of legislative activity affiliated with the business interests of the organizations’ members.

In order to receive 501(c)(6) status, a network must apply to the IRS for recognition by filing Form 1024, Application for Recognition of Tax Exemption.

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