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Incorporating in Utah: What is a Non-Profit Corporation?

by Norris Law Group on October 23, 2014

In previous blogs this week, we have covered a number of types of corporations recognized by the state of Utah, including business corporations, S corporations, and professional corporations. While they differ from one another, one common feature of these corporations is that they are all for profit. In this post, we will discuss Utah nonprofit corporations, as outlined in How to Do Business in Utah,a free online guide available from the Utah Governor’s Office of Economic Development.

According to How to Do Business in Utah, “a nonprofit corporation may be formed in Utah for any lawful purpose, but not for financial profit.” Nonprofit corporations are typically set up “to help people achieve a common purpose.” They can be comprised of only a few people or of thousands of people. Structuring as a nonprofit is typically inexpensive and can help groups work toward a common cause. Charities, political action committees, churches and community organizations often structure themselves as nonprofit corporations.

Utah nonprofits do not require a great deal of capital to set up, but they must follow some very specific rules:

  • A Utah nonprofit may not have shareholders or pay dividends.
  • A Utah nonprofit may compensate its members, trustees, and officers at a reasonable rate for any work they do.

Many nonprofits are set up based on the idea that they will not have to pay taxes. While this may be true, simply setting up a nonprofit corporation does not guarantee that the IRS will grant the nonprofit tax exempt status. Nonprofits must apply for tax exempt status with the IRS.

Attorney Graham Norris and his associates at the Norris Law Group serve the residents of Utah County, UT and throughout Utah, Wyoming and Idaho. Contact them today at 801-932-1238 or online for a free consultation.

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