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(1) That's hard to answer... What I mean is that you can run the LLC, but you cannot be an "interested person", in that you are also an employee of the non-profit and get paid for "services rendered". There's a conflict of interest here. You can do this if there is a board and the members of the board that are interested persons make up 49% or less of the board.
(2) Yes, they can fundraise, but donations will only be tax-deductible once is it is a 501(c)(3) organization. Thus, after you convert the LLC to a non-profit, you can apply for 501(c)(3) status. To apply for recognition by the IRS of exempt status under section 501(c)(3) of the Code, use Form 1023, Application for Recognition of Exemption
and its instructions
(3) Yes, domestic (i.e. California) non-profit LLCs are legal in California. See California Business Corporations
Code section 17002(a): "...a limited liability company may engage in any lawful business activity, whether or not for profit
Registration of a limited liability company (LLC) with the California Secretary of State (SOS) will obligate an LLC that is not taxed as a corporation
to pay to the Franchise
Tax Board (FTB) an annual minimum tax of $800.00 and a fee based on the annual total income of the entity. PLEASE NOTE: A domestic nonprofit LLC is a taxable entity and subject to the tax requirements stated above unless the LLC has applied for tax-exempt status and the FTB determines the LLC qualifies for tax-exempt status.
Therefore, until such a determination is made, a nonprofit LLC must file a return and pay the associated tax (and, if applicable, the fee) every year until the LLC is formally canceled. If the LLC intends to seek tax exempt status:
-At the time of filing its Articles of Organization with the SOS, the LLC must include, in an attachment to that document, additional statements as required by the law under which the LLC is seeking exemption. Please refer to the FTB’s Exemption Application Booklet (FTB 3500 Booklet) for information regarding the required statements and for suggested language.
-After filing its Articles of Organization with the SOS, the LLC may apply for tax-exempt status by mailing an Exemption Application (Form FTB 3500), along with an endorsed copy of the Articles of Organization and all other required supporting documentation, to the FTB, P.O. Box 942857, Sacramento, California 94257- 4041.
-The FTB 3500 Booklet and Form FTB 3500 can be accessed from the FTB’s website at www.ftb.ca.gov or can be requested by calling the FTB at 1-800-338-0505. For further information regarding franchise tax exemption, refer to the FTB’s website or call the FTB at(NNN) NNN-NNNN
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