4 Important Tips to Consider When Starting Nonprofit Organizations

In today’s day and age, nonprofit organizations have become avenues of real change in the world. Whether it be for religion, charitable contributions, or foundations for fighting disease, today’s nonprofits tackle issues that others can’t or won’t do, to bring about real change in the world and make a significant difference.

Nonprofit organizations provide for local, national, or international communities taking on issues that help make the world a better place. Nonprofits get to provide services or sources of funding that can make a difference in people’s lives, whether it be education, cancer research, religious growth, world hunger, or disaster relief.

How to Form a Nonprofit Organization

Requirements for starting and incorporating a nonprofit organization vary by state.  However, the general steps described below are similar for all wanting to form and incorporate their own.

Steps for forming a nonprofit organization:

1. Determine if organizing as a nonprofit accomplishes your goals. There are many types of nonprofit organizations and selecting the appropriate one for your cause is important.  The most common nonprofit is a 501(c)(3), which encompasses religious, educational, charitable, etc.  Refer to “Organization Reference Chart” in IRS Publication 557 (page 67) for further information.
2. Incorporation of your nonprofit is not mandatory, however, it does add credibility to your organization and limits liability of the organization’s officers and directors.
3. Apply for tax-exempt status with the Internal Revenue Service (IRS) by filing Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code.
4. Annual compliance entails a tax-exempt non-profit organization to file IRS Form 990 “Return of Organization Exempt from Income Tax”. Refer to Form 990 Instructions for “Organizations Not Required To File Form 990 or 990-EZ” (page 3).

Do You Know the Tax Implications for Nonprofit Organizations?

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