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module two incorporation and dissolution of nonprofits in this module we will cover the business forms available to nonprofits reasons for nonprofits to incorporate steps for incorporation typical state law requirements to maintain incorporation and federal tax status and dissolution of nonprofits choosing a business form nonprofit corporations are distinct from traditional business corporations in their purpose which is not to maximize and distribute profits but for some designated public purpose this non distribution constraint is the common link among all nonprofits under state and federal law they are prohibited from distributing profits to private individuals if the nonprofit intends to file as an exempt organization a threshold matter prior to incorporation is for the nonprofit to choose a business form based on its purpose such as a charitable purpose as defined by Section 501 C 3 of the Internal Revenue Code there are a limited number of choices of business forms for nonprofit