How To Start a Non-Profit Corporation

The non profit sector is one of the fastest growing in North America today.  With over 15,000 registered charities in Canada alone, it is important for newly formed non profits to fill an existing need in the community.  Non profit organizations must have a clear understanding of their mission and goals in forming the organization in order to not impede on existing corporations and to find success as an organization.

Similarly to corporations, non profits need to also address the legal requirements associated with starting their organization.  Non profit corporations are required to have a board of directors.  Likely this will be a group of founding members of the organization.  The board should be established right off the bat so that all other decisions are made by those who have a vested interested in the corporation.  Mission, roles, responsibilities, headquarters and financing will need to be hashed out before any legal paperwork can be started.  Most importantly, the board will need to establish a name for the organization and whether to incorporate the organization, become a registered charity, or both.

After selecting and registering your corporate name, you may choose to incorporate your non profit.  Though not essential to do so, incorporating will give the organization a legal status and with it rights and responsibilities.  The process to incorporate a non profit is generally the same as a corporation.  You can incorporate federally or provincially and requirements are dependent upon the jurisdiction in which you incorporate.  The one difference is the option to also register for charitable status.

In order to be granted charitable status, you must apply through the Canada Customs and Revenue Agency by fulfilling a number of requirements. In order for an organization to be registered its purpose needs to either relieve poverty, provide advancement in education, advancement in religion, or benefit the community in certain ways in which a court has deemed acceptable.  The process can take up to 8 months to complete, but after completion your non profit will have the advantage of providing tax receipts to charitable donors as well as receiving certain tax deductions. 

Following these first steps will help your non profit corporation achieve success in its mission and future activities in the community!

Click here to find out more about non profit incorporation and to start the incorporation process!

Register Your Non-Profit and Donate to the Canadian Cancer Society!

Many of us have known someone who has been diagnosed with cancer and have an understanding of the strength and perseverance needed to battle this disease. Statistics show that 40% of Canadian women and 45% of men will develop cancer during their lifetimes. However, 62% of Canadians will survive at least five years after a cancer diagnosis compared to 56% a decade ago. Much of the reason for this increase can be attributed to the hard work that organizations like the Canadian Cancer Society have provided not only to help with preventative measures, but to also give encouragement and support to those who are living with cancer.

Between April 23^rd and May 4^th you can start your own non-profit or charity and help fight cancer.

April is the Canadian Cancer Society’s Daffodil Month and CorporationCentre.ca wants to give back by donating $25 for every non-profit incorporation or charitable status application ordered through our services. Donating to the Canadian Cancer Society provides much needed funding towards research, advocacy, prevention and support for cancer patients and their treatment.

Simply click here to find out more information on non-profit incorporation and applying for charitable status and to proceed with placing your order. A donation of $25 from each order placed between April 23^rd and May 4^th will then be given to the Canadian Cancer Society in support of Daffodil Month.

If you have any questions, please feel free to contact Customer Service at 1-866-906-2677.

How the Self-Employed Can Save on Taxes

If you are like more than two million Canadians, you own your own business, either fulltime or part-time. Despite the sometimes heartaches of being self-employed, there are many advantages. Many entrepreneurs, though, are unaware of the various tax benefits available to them. In fact, running your own business can increase your after-tax income and contribute to family wealth.

Entrepreneurship and self employment promote a spirit of innovation, ultimately contributing to economic growth and vibrancy. As such, the government encourages entrepreneurship by taxing it at lower rates than regular income.

It is not uncommon for a new business to incur losses as it gets off the ground. These losses can be used to offset revenue from other sources, assuming you have a reasonable profit expectation as the business progresses. As your business begins to turn a profit, you can incorporate and the profits can remain in the corporation as a reinvestment in your operations. It is also possible to leave the profits in the business if you do not need a salary immediately. Thus, you can defer paying personal income tax. A salaried individual cannot schedule when to pay taxes. However, when you are self-employed, you can time payments to yourself when the tax payments are to your benefit.

Profits held in the corporation are taxable in the year they are earned. But, the corporate tax rate is low on the first $500,000 of active business income. While rates vary between provinces, all are below 20%. Personal tax rates on comparable amounts can be as high as 45%. It is also possible to pay salaries to family members in the business and have it taxed at their lower rates. Another possibility is to pay dividends to family members who own shares of the company and, thus, benefit from capital gains exemptions.

There are numerous possibilities for self-employed Canadians to benefit from management of taxes and income. All possibilities and options should be discussed at length with your tax advisor.

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How Important are Credit Checks for your Small Business?

Imagine conducting business in an ideal world – a world where everyone is honest and truthful and the thought of cheating someone never enters the conscious mind. Nice fantasy but hardly reflective of our modern society.

Not to cast disparaging remarks on the average consumer. Most of us are honest and hardworking. We pay our taxes and our bills on time. However, many a small business owner has fallen victim to the customer who has been extended credit and fails to pay the bill, leaving the business owner absorbing the debt.

Credit, both extending and receiving, has become a way of life in our world. Truthfully, it is not a modern concept. Credit has existed probably for as long as commerce and trading. Similarly, the unpaid debt has probably existed equally as long. Today, though, there are modern tools to help afford the business owner a certain degree of protection.

The credit check is a tool that can save the business owner much grief and heartache. Before extending credit to an unknown customer, it is wise to invest in a credit report, especially if a large amount of credit is being considered.

A credit report, obtainable for a fee through several agencies, gives complete information about the customer. The report will include the customer's historical payment data, records of any bankruptcies, lawsuits, liens, or any other court judgments. Based on the data, the report will also offer a risk rating that predicts the likelihood of bill payment by the individual.

Credit in business is partially risk. Risk management, via a credit report, is an advisable investment for your business.
 
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Nonprofits: A Growth Sector in Canada: Part II

Database Management, Consultants, Staffing and Branding

Despite large operating budgets, the bigger Canadian charities don't invest so much into IT such as economical database or web-based CRM programs that they could use to help with volunteer management, according to Artez Interactive CEO Philip King. Though mom-and-pop businesses are being employed by a few charities, “Few sophisticated, modern businesses have turned their attention to the charitable sector,” he says.

According to CharityVillage.com, the top 1% of nonprofits in Canada that have large budgets and earn about 59% of all revenue have too many consultants as it is. And 42% of Canadian charities operate with $30,000 or less. Charity consultant Alex Gill points to mid-sized charities as having potential because they are looking for efficient ways to improve their operations.

One area these groups may be willing to invest in is consultants and staff for projects in areas such as finance, fundraising and HR; if there are quality professionals available for less money. These may be easier to find in the current economy.

Another area is branding. Even though some ad agencies will work pro-bono for nonprofits, some charities are willing to invest in paying an agency that specializes in their sector and can work within a limited budget to develop the organization's identity.

However, King cautions that it takes awhile to build up a trusting work relationship with many charities and those groups are not so free with spending money. On the other hand, “For smart, patient people, it’s a good business — and a rewarding business,” he says.


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