We’ve finally made it to our final installment on nonprofit formation. This week, we’re going over the final three steps to creating a nonprofit organization. We’ll discuss filing for state tax exemptions, registering to fundraise where required, and hiring an accountant specializing in nonprofit tax. It’s time to dig into our final article on nonprofit formation!
7. File for state tax exemptions.
After you receive your IRS determination letter- a document that states you meet the minimum legal requirements for special tax treatment- you will be granted your state tax-exempt status immediately, or you must submit an application for this status. Whether or not you send in, an application depends on which state you are in, as do the specific tax exemptions. Some states exempt your nonprofit from corporate income, sales, use, and other taxes levied on nonprofits, while other states only offer some of these exemptions.
You should look into tax exemption in each state your nonprofit will operate in as well as note which ones need applications, keeping in mind that it must be renewed every 1 to 5 years. Keeping track of all of this can be a hassle, which is why we suggest having a lawyer with experience in non-profits help guide you through the legal processes, so you know exactly what you’re getting into.
8. Register to fundraise where required.
After obtaining your determination letter, you need to register to fundraise in the state you incorporated your nonprofit in and other states you may be operating in. For the most part, you must actively seek an exemption from registration before you ask for donations in the states that need registration. There are other prerequisites to keep in mind, such as having a registered agent service. This is crucial to creating a nonprofit, as it allows you to fundraise across the states.
Fundraising, also known as a charitable solicitation, is when you ask for charitable funds. You can request these donations via mail, email, grant applications, events, and more. Thanks to the internet, you’re able to fundraise from anywhere by utilizing a “donate” button on your nonprofit’s website!
9. Hire an accountant who specializes in nonprofit tax.
Finally, you will want to hire an accountant who specializes in nonprofit tax. This accountant will not only help you manage your nonprofit’s funds, but guide you through the processes you’ll have to keep up with as you fundraise, invest, and push for financial success in your nonprofit. They will also ensure you’re up to date on the IRS’s expectations and requirements, so you do not accidentally slip up or do anything improperly as you continue to push for a successful future with your nonprofit organization.
Well, there you have it! The final three steps to forming a nonprofit organization. Now that you have all of this information under your belt, you’re ready to push onward and create your very own nonprofit. With your board of directors, your nonprofit attorney, and your nonprofit accountant by your side to help light your way, you will surely aim for success!
Do you need an attorney to help navigate nonprofit law? Contact Epstein Law today! > > https://www.epsteinlawllc.com/contact