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DanielleCPA
DanielleCPA, Certified Public Accountant (CPA)
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Experience:  Years of Experience in Business & Personal Taxes
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In forming a 501 (3) - Can employees raise money and be paid

Resolved Question:

In forming a 501 (C) 3-- Can employees raise money and be paid a salary while the IRS form is being approved?

Submitted: 2 years ago.
Category: Tax
Expert:  DanielleCPA replied 2 years ago.
Welcome and thanks for your question!

There is nothing precluding a newly-formed charitable organization from operating while it is waiting approval from the IRS for its Form 1023 (Tax Exempt Status) Application. Tax-exempt status is usually retroactive to the date the organization was formed.

However, before paying salary to employees and soliciting donations, you should make sure you are a registered organization in the state of Texas. This helps protect the organization. To register, certain paperwork will need to be filed with the Secretary of State (more info on those forms can be found here). These forms will need to be completed after Legalzoom completes the initial paperwork for forming the organization.

Please let me know if you need any additional clarification and I will gladly assist you. If this satisfactorily answers your question, please give the answer a positive rating. Thanks and have a great day! Best wishes to you and your non-profit!
DanielleCPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 716
Experience: Years of Experience in Business & Personal Taxes
DanielleCPA and 3 other Tax Specialists are ready to help you

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