Forming a Legal Entity

Trust and belief are the driving pillars for the successful establishment of an Information Sharing and Analysis Organization (ISAO) to bridge the gap between the private and public sector. Developing partnerships and organized joint ventures with established non-profits, universities, or faith-based organizations operating within the ISAO space can accelerate goodwill as well as expand stronger networks within the community at large. The ISAO’s choice of operating structure (LLC, Non-Profit, C or S Corporation) may also assist in building trust between the various participants operating in their respective sector. Each operating structure offers advantages and disadvantages, the choice of operation depends on the organization’s mission, the structure of the executive board and possibly the state of formation. Consult with a certified accountant before deciding on your entity structure.

There are many resources to assist organizations selecting the proper corporate structure. However, understanding state law is extremely important because the entity will be held to the rules of the state of formation. In most states, the office of the Secretary of State (or a comparable organization) is responsible for administering and monitoring corporations formed in their state. As such an entity name search through the Secretary of State’s database should be conducted to determine if there are other businesses with the same name. The databases are usually accessed through your Secretary of State’s website.

Corporations structures can be broken down into C-corporations, S-Corporations, Limited Liability Companies (LLC) and Limited Partnerships (LPs). Some states have recently passed laws for forming a B-Corporation.  And all states have provisions for not-for-profit entities.  In most cases, c-Champions will be better served by forming a not-for-profit or a B-Corporation for the c-Group.  This is because the primary purpose of the c-Group is to build trust among the various participants.  An organizational structure that helps private individuals from those trust relationships has been found to be most effective.


SCORE is a nonprofit association dedicated to encouraging the formation, growth, and success of small business nationwide through counseling and mentor programs. SCORE is a free resource to guide and help new businesses through corporate structure to finding clients.

The Small Business Administration is a United States government agency that provides support to entrepreneurs and small businesses.

Step-by-Step Guide

The trustworthy concensus of nonprofit organizations leads to immediate credibility and therefore may increase the possibility of forming relationships and networking. The following section provides some simple guidance on forming a not-for-profit entity.

A Not-For-Profit Primer: Internal Revenue Code Section 501(c)(3)

To be organized exclusively for a charitable purpose, the organization must be a corporation (or unincorporated association), community chest, fund, or foundation. A charitable trust or foundation will qualify. However, an individual will not qualify. The organizing documents must limit the organization’s purposes to exempt purposes described in section 501(c)(3) and must not expressly empower it to engage, other than as an insubstantial part of its activities, in activities that are not in furtherance of one or more of those purposes. Lobbying Congress is one such prohibited activity. This requirement may be met if the purposes stated in the organizing documents are limited by reference to section 501(c)(3).

The Council of Nonprofits offers a rich resource of information on forming and operating nonprofit organizations.

Applying for an EIN

After forming your corporate entity (for-profit or not-for-profit) one of the next tasks is obtaining an Employer Identification Number (EIN) from the IRS. An EIN is a unique nine-digit number that identifies your business for tax purposes. It’s like a Social Security number but is meant for business related items only. The EIN can be used to open a business bank account, file your tax returns, and, in some instances, apply for business licenses. It’s helpful to apply for one as soon as you start planning your business. This will ensure there are no delays in getting the appropriate licenses or financing that you may need to operate.

The simplest way to apply for your EIN is online via the IRS EIN Assistant. As soon as your application is complete and validated, you’ll be issued an EIN. There is no charge for this service. If you already have an existing EIN and the ownership or structure of your business has changed you may need a new EIN.


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