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Starting Out: On a business level
This section covers basic information for establishing a corporation. You should speak to a lawyer or head shliach. This information is meant to facilitate the process.
Start-up checklist for establishing a nonprofit organization:
Click on selected topics for more information.
• File the certificate of incorporation
• Select individuals to serve on the board of directors
• Develop vision and mission statements
• Establish bylaws and board policies
• Obtain an employer identification number (EIN)
• Open a bank account and establish check signing procedures
• File for federal tax exemption
• Follow state and local nonprofit regulations
• Find office space and obtain office equipment
• Recruit staff and prepare a personnel manual
• Establish a payroll system and procure necessary insurance coverage
• Develop an overall fundraising plan
Besides federal regulations, there are many state rules. These laws vary. Speak to the head shliach or a lawyer for precise differences that may apply. Below are general guidelines you should be aware of.
You may also want to take a look at the “Smart Start” Series of books. There’s one for each state, and they cover everything you need to know about starting a new business in a particular state—things like permits, licenses, business taxes, insurance, employees, payroll and unemployment taxes, workers comp. etc.

Step 1 – Incorporating

Why incorporate?
Every moisad must be incorporated; for financial and legal purposes. This is done through the state. Forms are available online or by mail. These forms request information concerning the nature and structure of your organization. Incorporating is generally done through a lawyer (or accountant). Though, you can do it yourself as well.
Incorporating as a religious institution will probably give you less of a hassle with the IRS.
A corporation is “brought to life” when a person, the incorporator, files a form with their state known as the articles of incorporation. You can think of the articles of incorporation as the corporation’s birth certificate. (This document goes by a different name in some states; certificate of incorporation, certificate of organization, and charter are some of the most common.)
Since the corporation is a separate legal entity capable of being sued, it can protect its owners by absorbing the liability if something “goes wrong.” (This characteristic of the corporation keeps you from losing your home if someone sues your business).
Nevertheless, even if you are personally named in a lawsuit, your corporation can handle the lawsuit and still protect your personal property. The key here is to make sure that your corporation has proper insurance coverage. The corporate entity won’t replace insurance and good business practices.
It’s important to note here that this limitation only applies for debt incurred in the corporate name that you did not personally guarantee. That is, when you incurred the debt or signed the contract, you didn’t personally guarantee payment of the obligation in the event the corporation couldn’t make the payments. If you personally guaranteed payment of the obligation, the corporation can’t do anything to protect you. You’ll have to make the payments. →That’s why it is important to sign your name on a contract as an officer of the corporation. That is, sign like this, “ABC Corporation, by Jane Gray, President.

How to incorporate:

The Process outlined here is applicable to any state.
The steps are:
      1.  Choose a corporate name
      2.  Check the availability of your corporate name
      3.  File your paperwork
      4.  Take care of organizational matters
      5.  Prepare your corporate records
1. The name must show that you are a corporation.  It must contain either "incorporated" "corporation" "company" or an abbreviation of one of these words like "inc." "corp." or "co."
2. The corporate name must be different from corporate names being used in the state or any other name on file with the secretary of state. Therefore, you must add Chabad of ABC Inc.
If you use a corporate name already taken by another corporation, documents submitted with such a name used by another corporation will be rejected. So, before filing your articles of incorporation, you can check to see if another Chabad is already using the name. In most states you can find out if “your” corporate name is available by simply calling the secretary of state, or searching the name on their website.
3. File Your Paperwork        
The paperwork required to incorporate a business is a document called the “articles of incorporation”, also known as the articles of organization, certificate of incorporation, or charter in some states. It is filed with your secretary of state or similar business regulatory agency. In some states, the articles must be filed with another informational form.
Most states require the articles be typed so that it can be recorded (microfiched) clearly.
4. Prior to the incorporation process, you also will need to make a decision whether or not your nonprofit will be a membership organization. Members may have significant rights with respect to internal governance, such as the right to elect and remove directors, vote upon changes in the structure of the organization and amend bylaws.  

Completing the Articles of Incorporation
The articles are easy to complete if you know basic information like your name and address and the corporation’s name. The articles usually provide information about the following items.
• Name
Make sure the name meets state requirements and includes a corporate identifier like “Inc.” or Incorporated.
• Office
Some states require that you list an address for the principal office of the corporation. Your home address is okay to use.
• Duration
The duration of the corporation is simply how long it will exist. Most corporations will exist until they go out of business or until the sole owner dies. In this case, the life of the corporation is said to be perpetual, or never ending.
• Purpose
Some states require a purpose clause. A purpose clause simply states what the corporation’s principal business is going to be. Once upon a time, you had to specifically state what type of business you were going to operate, but most states now accept the “general purpose clause.” Using this clause, you can operate any type of business that you choose. This clause will also allow you to change the type of business your corporation transacts as you need.
• Registered agent
A corporation’s registered agent, sometimes called the resident agent, is the person appointed to accept legal documents on behalf of the corporation. If someone sues your corporation, the papers will be served on the registered agent at the “registered office.” Therefore, a registered agent must have a street address. You can be your own registered agent and use your home address.
• Incorporator
The incorporator is simply the person who files the articles of incorporation with the state. The incorporator really has no rights except appointing the initial corporate directors. You only need one person to be the incorporator. After the directors are appointed, the incorporator resigns.
5. Since you are required by law to keep meticulous records of the activities of your corporation, you will need to set up and maintain a corporate record book. Properly organized records are one of the first things the IRS will ask to see if you ever get audited.

Step 2 - Get a Federal Tax ID# (aka EIN)
Get a Federal Tax ID#. Every business needs one. It is the Social Security number for a business. You will need to be incorporated first.
To open one or more bank accounts in the name of the organization (and to file Form 990 with the IRS after each fiscal year), you will need to obtain an employer identification number (EIN), also called a “federal tax identification number”. Looking ahead, this step is necessary for withholding employee income tax once you begin to hire staff.
To get an EIN, you’ll need to complete the IRS Form SS-4. Obtaining an EIN usually takes no longer than 30 days and there is no filing fee.
If you have any questions, call the IRS at 1-800-829-1040. Or visit

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