What Is A Non-Stock Corporation?
What Is A Non-Stock Corporation?
What Is A Non-Stock Corporation?
civic leagues
labor organizations
business leagues
recreational clubs
other organizations (such as amateur athletic organizations)
that unify a common social goal
educational organizations,
mutual insurance companies, or
municipal corporations.
Related Articles
4The Major Accounting Differences Between Profit & Non Profit Organizations
The terms corporation, incorporation and nonprofit refer to the formation and structure of legal
entities. A corporation is an entity that the law treats as a person. Incorporation refers to the actions that
form a corporation. A nonprofit is a type of corporation whose structure and purposes differ from a business
corporation. The description of the organization as a business or nonprofit can drive whether the participants
wish to become a corporation and the actions needed to bring the corporation to life.
Corporation
A corporation may own property, sue and be sued and conduct business in its own
name. Ownership interests, called shares, in a corporation can be sold, given and
inherited; the corporation survives its owners. The shareholders' liability for business
obligations is limited to their investment; they do not risk their personal assets unless a
lender or seller requires them to guarantee payment of the debts. A board of directors,
elected by shareholders, manages the corporation.
Incorporation
Incorporation is the process that creates the corporation. The organizers must file
articles of incorporation, or charter, with the state's corporations office. The
corporation's birth certificate identifies the corporations name, which must be distinct
from that of another corporation in the state and may not mislead. Other charter
provisions include the address of the corporations main office, its life span -- which
may be indefinite -- and a description of its anticipated business and activities or that
the corporation is organized for all lawful purposes. The corporation is born when the
articles are filed, unless the articles have a later effective date.
Nonprofit
Nonprofit organizations use their earnings, funds and other resources to further their
purposes and programs, rather than to distribute to owners and investors. The
participants may, but do not have to, form a corporation. Typically, a nonprofit that
depends on minimal funding and conducts limited activities does not need to
incorporate. If the nonprofit does not incorporate, it is not required to file any
organizing documents unless it seeks tax-exempt status from the Internal Revenue
Service.
The charter for a nonprofit corporation will, as with a business corporation, have a
distinct name, main office address and provide for a board of directors. Typically,
nonprofits will state that the earnings or proceeds will not be paid to directors, officers
or participants, except as payment for services they render to the nonprofit. To obtain
a tax-exemption as a 501(c)(3) charitable organization, the corporation must, in the
articles, state only a purpose defined as charitable, such as poverty relief, or that its
purposes are limited to those in 501(c)(3). A nonprofit corporation does not have
shareholders. It may have members who vote for the board of directors; if the
corporation has no members, the board is self-chosen.