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4:30 PM, Aug. 12, 2008
What is the benefit of non-profit incorporation?
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I received this question from a homeschool group treasurer about filing for nonprofit incorporation:
I am the treasurer of a large-ish homeschool group. Almost 40 families. I bought your book for our group. I read through it and passed it on to the president of our board. I am supposed to be filling out an application for non-profit corporation status through the Texas Sec. of State.
Because this is public record, we do not want our home addresses on the application. So we got a post office box. That's fine for the officers' addresses, but it is asking for a physical address for the registered office. We don't have an office, per se.
I forget, why do we want to do this? What is the benefit of non-profit status?
Thank you and we have found your book very helpful.
~C
Dear C,
I'm glad you found the book (Homeschool Co-ops: How to Start Them, Run Them and Not Burn Out) helpful.
Sorry you've run into some road blocks. The State needs a physical address, so it can send notices, letters, "service of process," etc to a physical location. As you could imagine it might be too easy to set up a sham organization if all that is needed is a PO Box.
Also, as a protection against consumer fraud, a business (even a nonprofit business), must be traceable to an individual (the registered agent). You can imagine the frustration of someone cheated by a small business only to find out they they cannot find the responsible individual or any physical address. So that's the reason why at least one physical address needs to be given.
You can use someone that is not a board member as the Registered Agent. They must be a resident of your state (Texas). For example, I am the Registered Agent of a homeschool nonprofit here in Ohio. They figured their board members will change, but I'll be around longer. I will always know how to reach the organization, even if their leaders change.
The advantages of nonprofit incorporation include:
- limited liability for your leaders
- continued existence
- avoid taxation on any surplus
- enter into leases or employment contracts
You can read more in the articles Seven Great Reasons to Incorporate and Do We Need to Incorporate? on my website.
I hope that helps!
Carol
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