Over time, the Non-Stock Corporation has pretty much become synonymous with the term Non-Profit. The common use of the Non-Stock Corporation as the vehicle to obtain tax-exempt or Non-Profit status from the IRS has led to an “interchange-ability” of the two terms, but not without its faults. The notion that the two are equal has led many individuals to believe that if you form a Non-Stock Corporation that you are a non-profit organization. Also, though not as common, we see individuals who assume that as long as the Corporation has no stock, that it is a Non-Stock Corporation and therefore eligible for tax exemption. These misconceptions can lead to wasted time and money…….so let’s clear the air.

A Non-Profit (notice I left out corporation) is most commonly an organization that has obtained tax exemption under section 501(c)(3) of the IRS code by filing Form 1023. To qualify, the organization must be a corporation, community chest, fund, or foundation (a trust is a fund or foundation and will qualify), organized and operated exclusively for one or more of the following purposes:

•    Religious
•    Charitable
•    Scientific
•    Testing for public safety
•    Literary
•    Educational
•    Fostering national or international amateur sports competition (but only if none of its activities involve providing athletic facilities or equipment; however, see Amateur Athletic Organizations, later in this post)
•    The prevention of cruelty to children or animals.

It just so happens that many states, including Delaware, have a type of entity whose articles are designed to facilitate the application for tax exemption. Can you guess what that entity is called? That’s right, it’s the Non-stock Corporation. Do not confuse this with a Stock Corporation that has no authorized stock. Is that even possible? Yes. Even though it makes no sense, Delaware does allow Stock Corporations to file articles without authorizing shares of stock. It is rare but we have seen individuals accidentally file corporations this way. This error can be corrected, but it will cost you precious time and money!

A Delaware Non-Stock Corporation has no capital stock and is required to disclose its “non-profit” intentions in its articles of incorporation at the time of filing. It is typically used, but not exclusively, by organizations which plan to apply for tax exemption under section 501(c)(3) of the IRS code. Other applications of the Non-Stock Corporation may include civic leagues, labor organizations, business leagues, recreational clubs or other organizations that unify a common social goal; these organizations may be eligible for tax exemption under a different section of the IRS code. For more information on Tax-Exempt Status for your Organization check out IRS Publication 557. To form a Delaware Non-Stock Corporation for your non-profit organization, call us at 800-345-2677.

Within the last few weeks, several friends and close acquaintances have had the misfortune of losing their jobs. All these guys happen to be in sales: software and automobiles. They are all really great guys and are all very good at making you comfortable with them; regular ‘Joe Six-pack’ kinda guys. As salesmen though, they came into my thoughts when I saw Norbert Aubuchon’s The Anatomy of Persuasion on the library bookshelf. I know that sales is what these guys do, not who they are, but I wondered if their previous successes in all matters might somehow be related to their sales personalities. The Anatomy of Persuasion convinces me that they are, and here’s why: These guys are all great communicators!

The Anatomy of Persuasion is a book based on, and used in conjunction with, Aubuchon’s ‘Anatomy of Persuasion’ seminars. It’s not gimmicky, though, and it isn’t a pitch to get you into the seminars. It easily stands alone and is very useful on its own. Each chapter is concise and offers clear directions on how to be a persuasive person. From the very beginning, Aubuchon stresses that the problem with most great ideas is that they aren’t clearly expressed and therefore never get implemented. Of course, the opposite is also true: some clearly lousy ideas do get implemented because someone had the power of persuasion to get it done. This dichotomy demonstrates that it is not necessarily whether something is a good idea or not, but how well it was presented: The persuasion, not the idea, is what matters.

The Anatomy of Persuasion’s steps and methods include learning how to critically analyze your proposal or product to better explain it to your audience, be it a customer, your supervisor, or management team. Aubuchon’s message is that proper communication is the basis for persuasion and strong knowledge and understanding of your product or proposal is at the root of that communication. It all seems simple when you think about it, but in daily operations we sometimes make things more complicated rather than more clearly defined and thus make our proposals less attractive. Simple, clear communication is the way forward.

My friends are practitioners of the clear and simple approach to communication, and they were successful in their fields, and I have no doubt that they will be employed again very soon. One has been selling Pontiacs since he bought a GTO Judge back in 1986, another started with Adobe in the late ’80s. Both have picked up MBAs along the way. They know their stuff and know how to talk about it. That’s how they get things done. The Anatomy of Persuasion is a great tool for anyone looking to improve their communication skills and motivate others to follow their desired course of action.

There are literally hundreds of different bureaucratic agencies within the Federal Government and most of them have three or four-letter abbreviations. Every entrepreneur knows the IRS and the USPS and most will be able to recite the full names for the FBI, NASA, INS, FDIC, DEA, NLRB and SEC. The question is: How many of you know what the OFAC agency regulates and what the SDN list they publish has to do with YOUR company?

OFAC, today’s featured four-letter word, otherwise known as the “Office of Foreign Assets Control”, is an agency that has been in existence since 1950, but has only hit the front pages since the attack on the twin towers of September 11, 2001.  Many entrepreneurs, small and medium sized business executives are not familiar with the organization or the list they publish known as the SDN list, today’s featured three-letter word, which stands for Specially Designated Nationals.

According to the Official OFAC website: “The Office of Foreign Assets Control (“OFAC”) of the US Department of the Treasury administers and enforces economic and trade sanctions based on US foreign policy and national security goals against targeted foreign countries and regimes, terrorists, international narcotics traffickers, those engaged in activities related to the proliferation of weapons of mass destruction, and other threats to the national security, foreign policy or economy of the United States.”

Civil penalties for working with restricted countries or individuals include fines that can be as low as $395.25 levied on an individual who allegedly purchased Cuban-origin cigars offered for sale on the internet (Cuba is a restricted country so purchasing anything from Cuba or selling anything to Cuba is an offense). They can be pretty hefty fines also, as Gate Gourmet, Inc. found out when it was hit with a $581,900 settlement for supplying catering services to Air Cubana Airlines over a three year period. In some cases, criminal violations could land top executives of offending companies in jail.

A list of all violators is published every month along with the penalty imposed; click below to view the various penalties levied upon individuals and companies, some of whom self reported, and others who were not aware that they or their company was breaking the law. Many of the top companies in the world made the list and paid the price, and also a lot of unsuspecting, and maybe naïve, entrepreneurs who stepped across the line due to ignorance of the law. Don’t be one of them.

http://www.treas.gov/offices/enforcement/ofac/civpen/index.shtml

No company, large or small, in global or internet commerce can afford to simply hide their head in the sand and pretend that this does not pertain to them. Every company should have a compliance program in place to make sure that the company is not inadvertently violating Federal laws.

There are several good OFAC compliance companies and software programs that can scan your database for a potential match to keep your company in compliance. You can also do it DIY by going to the OFAC website and downloading the available lists and checking them against your database of clients, customers and accounts. You’ve got to check new customers before fulfilling the order and it’s a good idea to check your whole database once a month. Also, each time you check your database it’s best to download the freshest copy of the Treasury Department’s list, as it constantly changes.

Be proactive and take the necessary steps to protect your business. If you want more information about OFAC compliance issues for your business click on the link below.

http://www.treas.gov/offices/enforcement/ofac/faq/answer.shtml#25