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A nonprofit corporation is a legal entity that is formed for specific purposes. Nonprofits may be involved in a wide range of areas relating to the arts, charities, early childhood education, healthcare, politics, religion, research, sports or some other endeavor.

Nonprofit organizations are normally formed by incorporating in the state in which they expect to do business. The creation of this entity generally requires the preparation and filing of certain documents with The Secretary of State (or other appropriate department) in your state of formation. The act of incorporating creates a legal entity enabling the organization to be treated as a corporation under law and to enter into business dealings, form contracts, and own property as any other individual or for-profit corporation may do.

A nonprofit operates like a regular corporation. It has directors (often called trustees) and officers. But, there are no shareholders and no stock. The profit the company earns is used to advance the nonprofit corporation’s stated purpose. The directors, officers, and employees can earn reasonable salaries.

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