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It is not difficult to convert to a non-profit but it is technical and requires the proper State and IRS filings to create a non-profit. Here is a general outline provided by Small Business
Magazine that my clients have found helpful:
In general the IRS will not grant a single member LLC owned by an individual tax exempt status. Therefore, it is likely required to convert an LLC to a Corporation
. Again, this may be accomplished but it is a technical endeavor.
The initial filings and on going compliance such as the business
operation needing to be ancillary to your business is essential and I would recommend using a local business attorney that routinely assists non-profit organizations. Once the non-profit is given its non-profit status by the State and IRS it is key to not lose the status as all the benefits of a non-profit will be terminated and be subject to penalty and potential tax liability.
I would budget a $1800 to $4000 to properly retain local counsel to complete all necessary forms and to provide assurance a non-profit has been set up appropriate in order to be grant exempt status. Here is a link to the California State Bar
Lawyer Referral service that can provide you contact information of a non-profit business lawyer: www.calbar.ca.gov/Public/LawyerReferralServicesLRS.aspx
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All states have intricacies in their laws and any information given is simply information only and specifically is not intended to be, nor does it constitute, legal advice. This communication does not establish an attorney-client relationship with you.