Sometimes it's a little hard to keep all the terms straight when you are new to this process. I brought up the 501(c)(3), so let me make sure that's clear...
Applying for your 501(c)(3) status is a whole separate process done at the Federal level. It does cost a more hefty fee, either $150 or $500 depending on projected income level, plus a more substantial effort on initial paperwork. It can be pursued whether or not you plan to incorporate. My point was - if you plan to do both, then incorporate first.
Incorporating is a legal process that sets you up as a brand new entity. So if are going to do that, do it early in the chain of events. It could affect other things.
For example, your name might be Anytown PTO right now. If someone else in your state is already incorporated with that name, you may not be able to use it. If your state requires that you add "Inc." or "Corp." as a suffix (Texas does not), then your name might soon be Anytown PTO, Inc. So if you right at the beginning of organizing a PTO, you'd even want to wait on having your checks ordered until you verify what your name will be once you incorporate. (That's a minor point and rarely a concern.)
However - what is more important - if Anytown PTO (an unincorporated professional association) already got its 501(3) designation and now decides to incorporate, the 501(c)(3) does NOT transfer to the newly created corporate entity. It would have to file all over again. (That's what happened to us.)
So, as I said, you want to incorporate early in the process.
Just to give the Illinois prospective. Annually, we paid no taxes, we filed paperwork but paid nothing. Now up front there was some filing fees of about $500 to complete 501(c)3 and incorporate and it was $5 to change the name of officers this year.
I made three copies of our Tax number for companies that wanted it for donations, just one benefit. They are more willing to donate when they can deduct.
jonwilson makes a good point. You need to find out the impact/rules in YOUR state. In Texas, there are no additional taxes. As a non-profit corporation you have an obligation to keep certain information current and if that information changes, you need to file an update with a small fee ($10-$20). When we looked into it, it didn't look like much of our info would change except possibly our official "agent" or representative. That being the case we thought it would make more sense to use the principal's name rather than the PTO president who might change each year. (Our principal is a Board member and active part of the PTO.)
Because we had already filed for 501(c)(3) status and didn't want to have to redo that process, we opted not to incorporate. But that's the only reason we didn't.
CVmom,
Speaking from CT, incorporation isn't the way to go. Even as a non-profit, the annual taxes are outrageous. Your secretary of state office should point you in the right direction, if that is still the way you want to go. We filed, to the IRS, for non-profit status as an unincorporated association. They had no problems with it. I can email you a blank copy of the Articles of Association we used ,if you want.
As for insurance, that to varies by state. We have general and officer liability thru the National PTO Network (NPN). After comparing numerous companies, they were the best.
Incorporating (as a non-profit) is done at the state level. Typically the main reason for doing so is to reduce liability of the officers. It changes your group from being a collection of individuals to being a legal defined entity. Some also believe incorporating enhances credibility.
Find out what government agency handles this in your state. They should have information, forms, and often templates available. The fees tend to be pretty modest ($25-$50). You probably have to re-work your constitution/bylaws as you will now how Articles of Incorporation & Bylaws. And you'll want to see what you need to file each year and when as well as any rules that will now apply to your group.
Incorporating is a good idea, but some groups choose not to. Some reasons they don't include: They don't want to add any layers of formality and reporting. They already received their 501(c)(3) from the feds and incorporating would mean they had to reapply for that status under the new organization.
Here's a link to one site that gives an overview. PTOs are typically among the simplest, so its really pretty straightforward.
