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Rescue Group Best Practices: incorporating and applying for 501(C)(3) tax-exempt status

WHY: Incorporating as a business in your state is an easy way to show the world that your rescue group is a legitimate business venture and that you are treating it as such. Further, the corporate formation protects individuals in the organization from legal liability and debt incurred by the rescue group. More importantly, your organization has a significantly better chance of being approved for 501(c)(3) taxexempt status if you incorporate. And having that tax-exempt status is crucial for your organization’s ability to grow. Not only is the organization exempt from federal income tax, but you can entice donors with a tax deduction for any contributions and apply for the many grants that are awarded only to nonprofit organizations. Nonprofits can also apply for a mailing permit that gives them a special reduced rate for mailings.

HOW: Check your state’s requirements for incorporating a nonprofit with your state’s corporate filing office (usually called the department of state, secretary of state or something similar) and check out other resources. Contact the state office responsible for businesses to find out what your state’s specific requirements are or check out the comprehensive state-specific resources. Many offices will provide a packet of information on how to incorporate along with sample documents. You will also need to draft articles of incorporation and bylaws in conjunction with incorporating your organization, which are the primary rules governing the management of your corporation. Even if your state does not require bylaws as a matter of law, it is still a good idea to draft them as they define your business structure and specify how your organization will conduct its affairs.

You can find samples for drafting articles of incorporation and state specific samples. When you are ready to apply for tax-exempt status, all the information you need is on the IRS website. Keep in mind that it can take many months to obtain 501(c)(3) status, so do not get discouraged. Moreover, you may want to consult with an attorney or accountant who specializes in nonprofits, even if it is just to review the completed application.

Also remember to check if your state has specific licensing requirements, if any, for operating a shelter or rescue group. You can usually find any laws pertaining to animals in your state’s agriculture code.