In this transcript, Clay Clark (U.S. Chamber National Blue Ribbon Quality Award Winner and Business Coach) and Wes Carter (Published attorney) discuss the importance of starting non-profits on Thrive15.com, the business sales training program.
Clay: Do I call “bababababoop” and the IRS say, “How can I help you?” Then you say, “I’m looking for an EIN.” They say, “Two.” Is that how it works, they just give you a number over the phone?
Wes Carter: No. Well, you can do it through paper. Most of us know how to use our computers and file it online.
Clay: Computer’s never going to catch on, says the business coach.
Wes Carter: You file a number, it’s tied to someone’s social security number. Usually it’s a owner or director of the non-profit, owner of a for profit. You need someone’s social security number, put that in, they shoot out an EIN number.
Clay: Step one from a business coach, is I have to find an attorney who can help me through this process. They will get me the Employee Identification Number. Are they also going to get me these things, these Articles of Incorporation?
Wes Carter: Yeah. Attorneys usually are going to do the whole package for you. They’re going to get you incorporated, do your bylaws, get the taxpayer number, hopefully set you up with some initial minutes for your first meetings as a corporation, as a non-profit.
Clay: Do I need Articles of Incorporation for a non-profit?
Wes Carter: You do. You have to have Articles of Incorporation to have a corporation, and I highly suggest you have a corporation as your entity if you’re going to be a non-profit.
Clay: Allow the business coach to read this definition to you about Articles of Incorporation just to give some clarity for the Thrivers. If you can add some description as to, kind of, what that means and some context, that’d be awesome. A written agreement embodying the purposes or other terms and conditions of the association of a number of persons for the prosecution, what, prosecution of a joint enterprise. Specifically, a written agreement, duly executed and filed so as to have the force of a charter under general incorporation laws. I don’t know what that means.
Wes Carter: It’s the piece of paper you file with the state to create your business or non-profit entity.
Clay: Do you ever think about making a website called “Wes-ter?” Instead of Webster, where you just put up your own definitions and it’s real talk.
Wes Carter: Lawyers like very long, Latin, words. That’s what we learn in law school, how to read Latin.
Clay: This is why I’m a big fan of you though, you speak “Wes-ter.” I love it, just real talk with Wes. It’s like a spin-off coffee-talk kind of show.
Do I need to make bylaws if I’m forming a non-profit?
Wes Carter: You do.
Clay: Again, my attorney will help me with this?
Wes Carter: Yes and they are super important.
Clay: Just so that, when you talk to your attorney and they start to mention what by … Well, we need to form an EIN, we need to get Articles of Incorporation, and we need to get bylaws. Just so you know what that means, I’m going to read you the definition of bylaw and you can add some clarity on that. That’s be great. A rule that an organization (such as a club or company) makes that its members must follow. “Wes-ter,” what does that mean?
Wes Carter: Bylaws are the rules, the laws of your non-profit. They talk about how are people kicked out, how do people come in, if we get in a fight how do we settle it, what’s our purpose. Just all of the rules that go along with running a non-profit.
Clay: How long should it take for me to form a non-profit?
Wes Carter: We’re talking about actually forming it, articles, EIN, by-laws.
Clay: Done. Signed, sealed, delivered, boss!
Wes Carter: Unless you take a long time to tweak your bylaws, you can have it all done in a week.
Clay: A week? I want to speak to some Thrivers. We have some great questions pouring in this week. People saying, “I don’t have any idea how to form a non-profit, could you help me?” I hope this is helping you. Step one, find that local attorney. Two, they’re going to walk you through the process of getting an EIN, Articles of Incorporation, the bylaws. They’re going to help you. How much does it cost though?
Wes Carter: Cost varies a lot because some people have really unique ideas for non-profits, you have to do some special things with. I would say, bottom-end 750, going up there 1500, 2000. That’s not including, even the time frame, your actual IRS application. That’s just to create the organization itself.
Clay: How much does that cost?
Wes Carter: The IRS part of it is a little more expensive. You’re talking, usually an $850.00 filing fee. That’s what the IRS charges you just to send in the paperwork.
Clay: That’s a great cash cow for the IRS. The good folks at the fun place.
Wes Carter: Yeah, and then on top of that your attorney’s fees, whatever your attorney charges you.
Clay: Now, okay, so real quick here, tell the business coach. You’re going to charge me 850. If I called you today, roughly, I mean [inaudible 00:04:38] charge me 850 just to file it. Plus, whatever the attorney fee is. This is just the IRS fee, 850. Plus the attorney fee, plus that 1500, or so, to do all this. I mean, it might be five Gs.
Wes Carter: You’re talking probably a bottom line of somewhere around $2500.00, to $3000.00 for a simple non-profit to get it from a glimmer in your eye to a 501c3.
Clay: What are you attorneys doing all the time? I mean, what are you doing that costs so much money? Are you guys like, “I’m going to use my gold fork to eat my lobster, than drink it down with my Perrier?” Walk me through why it costs so much?
Wes Carter: Well, you see, all we have is our time so we have to charge for it. We have lots of people underneath us that help us get our job done that are very important that we have to pay.
Clay: How long did you go to school? Was it for like two or three weeks? Did you mail in some stuff, boom you have a degree? How long did you go?
Wes Carter: Man, it seemed like twenty years.
Clay: How long does an attorney have to go typically?
Wes Carter: Law school’s three years.
Clay: On top of the four years?
Wes Carter: Right, on top of your undergraduate degree. It’s a doctorate, we don’t get to call … I’ve always been aggravated with that. Why am I not Dr. Carter? I have a Juris Doctorate.
Clay: I’ll tell you that, because you are the “Wes-ter,” and you break it down for the people who need to understand this. Now, final question, and I’m done harassing you. If I want to start a non-profit right now, I’m doing this thing, let’s go. I need to call an attorney, he’s going to help me through this. What else do I need to do? What else can I do? Thrive15.com can help you by showing you specific sales training videos and access to a business coach.
Wes Carter: You just need to talk to someone who’s done this so they can walk you through it. There’s no need to reinvent the wheel. Find someone who’s done this, that knows what they’re talking about, and get good counsel.
Clay: If you get a chance to watch on National Geographic, the story of the volcano guy who went inside … It’s a tragic story, how he ended up burning up into the lava, but I will tell you it was a fascinating story to watch with my kids. This isn’t funny, this is real. I’m watching with my five kids, my oldest is nine. They’re like, “The volcano guy, how does he not kill himself?” I’m like, “Oh, he’s safe! He’s done this, he’s a professional. He’s got a suit on that helps keep him protected from the molten lava stuff.” Then, “boof!” And my son is like, “How did he escape?” I’m saying, “I don’t know that he could of.” I’m not kidding. And then they all realized, they said, “Dad, what happened?” I said, “I think he died.” That is the reason why I don’t think anybody watching this should form a non-profit related to volcanic rock exploration, and filming. Take this advice from a business coach.
Wes Carter: Sounds like good advice.
Clay: All right, thank you so much.
Wes Carter: All right, my pleasure.