Non-profits are an essential part of a community.

There’s nothing more fulfilling than serving your community through a non-profit organization. However, starting and sustaining one is not easy.

Given how difficult it is to set up a nonprofit, we’ve outlined all the key things you should know before getting started.

Ask Questions and Do Your Research

With more than one million charitable nonprofits in the United States (according to the council of nonprofits), it can be difficult for owners to attract, and maintain funding.

That’s why it’s important for you to really understand and define what the need is for your organization. Based on this research you will be able to determine whether there are other groups already engaged in the same type of work.  As well, it will help determine if there is even a need in the community for your non-profit. Proving there is a demand is essential for funding as it will show donors where their money is going.

When you’re doing your research, you should also determine what the ‘demand’ and the ‘market’ are for the services your nonprofit will provide. Based on this, you will be able to form a solid and detailed business plan. Including a review of what the costs will be, where funding will come from, and if your plan is right for the community.

Incorporations and State Forms

Once you have your business plan fully formed, you will need to begin the process of incorporation. But, these laws can get tricky to understand as they vary from state to state.

For most states, you will need to reserve and register the intended name of the nonprofit corporation. This is simply to ensure that no one else has the same name as yours. However, depending on the state, you may also be required to submit additional information that includes a certificate of disclosure and proof of corporation name.

Ultimately, we always encourage owners to consult with local experts, like us at A.P Accounting and Tax Services. We’re familiar with tax-exempt laws, and we understand how charitable organizations operate. And, we’ll work with you to ensure your nonprofit complies with all state and local requirements.

File for Federal Tax-Exempt Status

Another step for setting up your non-profit is to become a 501(c)(3) organization that is recognized by the IRS.

For the IRS to recognize a non-profit as tax-exempt, the organization must be designated as a trust, a corporation, or an association. Although unincorporated associations can gain tax-exempt status, not having a corporation form could expose anyone volunteering for the organization to legal liabilities.

For more information on filing, consider checking out the StayExempt website, formed by the IRS. It gives a breakdown of all the forms and regulations owners should stay on top of.

Reporting and Compliance

Once you’ve received your determination letter from the IRS, you may be required to complete additional filings to receive tax-exempt status. But, this is only for certain state and local governments.

Some of the paperwork you may be required to fill out are registrations for fundraising and lobbying. You may also be required to get a license to provide goods and services.

And, you should also be mindful of what type of employee you will hire as it may be necessary to get a license and to report the employment to officials.

Finally, it will also be your responsibility to annually file a report with the government (Form 990) and re-register yearly (if it is required by your state) to keep your status the same.

If you’d be interested in learning more about what services we provide and how it would benefit you, give us a call at 407-328-5001.

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