To Incorporate or Not To : That is the Question - Essay Example

From the case, it is obvious that the group’s main intention is to share ideas, practices, and concerns about the current training standards and future growth of their institutions. Evidently, the ultimate goal of this group is the overall development of the United States’ education sector. Obviously, the group does not have to pay corporate income taxes if it incorporates as a non-profit organization. Most of the states provide additional tax benefits for NPOs if the generated profit is exclusively organized and operated for the benefit of the general public (NEO Law Group, 2011).

It is clear that the group cannot effectively finance their various programs and operations unless it maintains larger funds. Hence, the group can easily raise funds from members and other sources without any legal restriction if it is legally incorporated as a NPO. In addition, a member of an NPO can solicit for donations from the general public and other companies without any limitation. . Such a situation would adversely affect the operational efficiency of group. In addition, the operational costs of NPOs will be higher than those of for profit organizations.

Admittedly, the group must be incorporated as a non-profit educational organization as it aims to cater the educational needs of the country. In order to incorporate as a NPO, the group must meet several legal requirements. From the case context, it is clear that the group has already created a name and mission statement. As the next step, the group must form a board of directors in order to organize the day to day activities of the organization. They have to specifically determine the optimum number of director board members by considering the needs of the organization.

In addition, the group must take extensive recruitment efforts to establish an effective board of directors. After the formation of board of directors, the group has to file articles of incorporation, which are official statements on the establishment of an organization to the concerned state agency (BoardSource, 1999). These documents will make the organization the holder of future debts and liabilities and thereby limit the legal liabilities of both board and staff. It is advisable for the group to draft byelaws for the organization although they are not essential to file for 501(c) (3) status (BoardSource, 1999).

In the next phase, the organization must develop a budget, which indicates the financial expression of the operational framework designed to achieve the specified objectives of the organization. Subsequently, the group should develop an appropriate record keeping system and accounting system after taking into account the