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Important Tips for Setting Up a Non-Profit Organization


So you have an idea and want to create an organization that changes the world — or at least your community. But first, there are steps that must be taken to lay the groundwork for your endeavor. Take the time to do your research and get the proper licenses and permits so your non-profit can thrive. Here are some tips from Payment Executive to get you started.


Get Your Name and Number in Order


Select a name for your non-profit that is easy to remember and conveys the mission succinctly. Once you have a name, it’s time to get an EIN, or Employer Identification Number, which will be needed to pay any taxes (or clarify why you don’t have to pay them), hire employees, and open a bank account. You can register for an EIN online through the IRS.


Planning and Research


You need a vision statement and a business plan for your organization. The vision statement will explain what the mission of the non-profit is, and why you want to create it. The business plan describes how you will go about achieving your goals. Both these documents are needed to attract funding, supporters, and employees, as well as to support the process of getting various permits and licenses you need to keep your business legal.


Enjoy Benefits by Incorporating Your Nonprofit


Incorporating your nonprofit requires a bit of paperwork, but it offers the benefits of paying less tax or no tax, protecting board members from liability, and making it easier to apply for grants. Incorporation is done at the state level, so you’ll need to find the regulations and procedures for your state. Before registering, however, you’ll need a name for the business, a board of directors, and a registered agent. You are also going to need to write the bylaws for your nonprofit, explaining the rules under which it will operate.


Apply for Tax-Exempt Status


The U.S. tax code allows for Federal tax-exempt status for nonprofit organizations under Section 501(c)(3). You will need to fill out Form 1023, which is 28 pages; with the required supporting documentation, it may become quite lengthy. Before you fill out this form, be sure you have completed the bylaws, formed the board of directors, held your first meeting, and filed to incorporate your organization. In some states, obtaining a Federal tax-exempt status automatically secures a tax-exempt status in regard to state taxes. In others, you must file with the state. Find out which is applicable by checking with the state department of revenue.


Reporting Requirements


Once your nonprofit has been granted federal and/or state tax-exempt status, you won’t pay federal tax, but you will still need to report to the IRS on the financial status of the organization. Reporting requirements vary by state.


Daily Management


Once your nonprofit is established, the daily management of it is important. Record keeping on all expenditures, payments, donations, hiring, and official status is critical. You’ll also want to keep the bylaws and board of directors current, as well as regularly assess whether the company is meeting its goals, and what policies and procedures need to be adjusted to stay true to the mission, and market the organization.


Logistics


Some aspects of your nonprofit operation will be determined and tweaked as you go. Your team may find that the plans for delivering goods or services are not working efficiently to meet the needs of the population you are attempting to serve. You may need more volunteers or better training for volunteers. Even a nonprofit requires money to operate. The ways in which a nonprofit can earn money are limited. Donations, grants, and fundraising are legitimate ways to raise funds, and of course, documentation of all must be kept.


If you have the passion and persistence to establish your own nonprofit organization, you’ve already taken the first step toward helping others in your community. Although there are some substantial administrative tasks involved in the creation of a nonprofit, the benefits of being able to operate tax-free, apply for grants, and depend on the help of volunteers will offset a lot of the trouble. Take your time, and rely on tax professionals and other experts in the field to guide you as you go about establishing and incorporating your nonprofit.


Payment Executive offers global payments expertise in various segments of payments, crypto/blockchain, financial services, banking, e-commerce, lending, remittance, cross border payments, tax, compliance and FinTech. Call 334-539-8060.


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