An exempt organization is an entity which starts to service the society and religious affairs; such as religious, charitable, literary, artistic, scientific, education and worship purpose.

The Board of directors is appointed to administer the non profit business affairs to stop the manipulation of funds and the domination of power.

A nonprofit organization does not have the shareholders and members like corporations or limited liability companies whose primary goal is to earn profit, whereas a non profit organization's primary mission is service to the community without any distinction.

There are many types of nonprofit organizations, but the most common type is 501 (C) 3. It contains several great features such as exempt from a federal income tax and federal unemployment tax.

A charter is prepared by the board of directors of a nonprofit organization which is submitted to the secretary of state, county clerk's office of the DOE (Department of Education) which depends on that type of a nonprofit organization.

A charter of a non profit includes its mission, the name of the responsible persons, duties, obligations, principal place of business, payroll expense, description of a nonprofit and how the contributions and distributions will be managed.

Thereafter, it is registered with the Internal Revenue Service to get the tax exempt status.

Not always, the only organization that is registered with the secretary of state has a filing receipt to open a bank account, otherwise a charter is provided to a bank to open a bank account.

For Example; Nonprofit schools are generally registered with the department of education not with the secretary of state and DOE issues an approved charter instead of a filing receipt which is provided to a bank to open an account.

It is a two step process. Initially, it registers with the state such as with a county clerk's office, department of education or secretary of state. Secondly, it files with the Internal Revenue Service to obtain tax exempt status.

The Internal Revenue Service has listed the approved exempt organization list on IRS. Gov. An entity will not be an exempt organization until the ITS approves it.