Count your financial blessings-this week’s affiliate is awesome for the money they save countless companies. Far too many small businesses pay far too much come tax season. We welcome Kent Seton, the founder of the Center for Nonprofit Creation, to share some tax savvy tips:
The Center for Nonprofit Creation has over 13 years of experience providing services to tax exempt organizations. The Center for Non Profit Creation is now the exclusive provider of customers for MyCorporation to help its clients get 501(c)(3) tax exempt status from the IRS and to comply with charitable solicitation requirements. But don’t forget that even after you obtain tax exempt status, there are laws that every charity should know about soliciting charitable contributions:
1. Your organization must be approved and registered by the IRS as a 501c3 organization in order to receive charitable funds. To do this, you must complete IRS Form 1023 – it typically takes 2-6 months to get approved.
2. In every state in which your organization actively solicit funds, you must comply with that state’s laws concerning charitable solicitations. This may mean registering with the state’s Attorney General and/or applying for tax exempt status with the state’s tax board. But remember that for most states, before you can even take these steps, you have to qualify to do business in that state with the Secretary of State (this is just like filing the Articles of Incorporation, but your organization will be filing as a “foreign” (i.e., out of state) organization).
3. More than 40 states require your organization to register with their Attorney General PRIOR to soliciting funds. This generally requires your organization to qualify to do business with the Secretary of State and then file an application with the state’s Attorney General. Remember to do this ASAP as many states charge extra for filing after you start soliciting charitable funds.
4. A state that requires your organization to register with its Attorney General may also require your organization to file annual renewals regarding your charitable activities. Such renewals vary by state, so do not forget to check with the state’s Attorney General to ensure you know any and all such requirements, and the filing deadlines associated therewith, up front!
5. In many states, charities must complete and file a report with the Attorney General PRIOR to conducting a raffle. Make sure you know your state’s requirements long before you are planning on holding a raffle as the filing times vary in each state and holding a raffle without registering could get your organization in big trouble.
6. Many states have their own taxes. Thus, you may be required to seek exemption from state business taxes in addition to the federal tax exemption. And if your organization is planning on engaging in sales, you should check whether your state requires a separate application for sales tax exemption too!
7. Many municipalities require that you get a permit PRIOR to engaging in any fundraising campaign. For example, in the City of Los Angeles, you must register with the L.A. Police Commission prior to engaging in a campaign or fundraising event. Make sure to check with your local agencies prior to an event to ensure you are in compliance with local laws.
8. You must provide each donor with a charitable receipt detailing information such as the amount and date of the donation, your organization’s EIN and full legal name, and the nature of the gift, among other things. But remember that your organization should never give tax or legal advice and reminding your donors of that in writing is always a good idea!
Our trusted partner, Center For Nonprofit Creation, can help you with the Secretary of State, Attorney General and state tax board filings mentioned above. Please call them at 310-557-0804 or visit their website at www.npcreation.com.
Interested in becoming an affiliate with MyCorporation or finding out more information about the Center for Nonprofit Creation? Contact Cindi Sokoloff, Affiliate Manager at MyCorporation at (818) 746-2264 ext 320
The information contained herein is not legal advice, please consult a legal professional for more information. Nothing herein shall be construed as constituting an attorney-client relationship.