Essential Tips for Starting a Non-Profit Organization

You are excited to get started with your non-profit organization, and you are looking forward to making a positive impact with your community and the world. However, you need guidance to help you along the way.

Although there is a lot that must go into creating a successful non-profit, it is not so overwhelming that the average person cannot do it. There are some steps that you will need to take when you are in the initial stages of your non-profit start up. The following tips, if implemented correctly, will be the tools you need to have a successful non-profit.

Research

When you are considering starting a non-profit, it is important that you conduct some research. You will need to learn as much as you can about the cause you want to support. This will give you insight into knowing the organizations that already exist that are doing the work you are interested in doing. You will know the areas that still need assistance, as well as organizations that you can work with. By continuing to research, you will ensure your organization stays focused on its original mission.

Tax-Exempt Status

It is important to file for tax-exempt status when you want to operate a non-profit. Unfortunately, many non-profits choose to skip over this step because filing for this status can be expensive. They often realize that they need to complete a 501 c3 lookup 

When your organization has tax-exempt status, your donors will be able to receive tax-deductible receipts for any donations they make to your organization. This status is necessary to receive donations from corporations, and you will need it if you plan to apply for grant money for financial assistance.

Do not put unnecessary pressure on yourself. You do not want to find yourself in a position with a major donation pending and you do not have a 501 c3.

Create Your Non-profit Entity

Creating the legal organization for your non-profit can be accomplished in several ways. As previously discussed, the most common way is to establish your business as an independent 501 c3 is through the Internal Revenue Service. This is often a long process, and it requires the incorporation of your company in the state you wish to operate in. You will then need to file for a tax-exempt status using form 1024 from the IRS.

A faster way to do this is to create a non-profit organization through a fiscal sponsorship. This is when an organization that already has 501 c3 exempt status agrees to accept the structure of your non-profit within its organization. This will allow you to begin your non-profit projects while under another organization’s tax exempt status. Fiscal sponsorships are fast, inexpensive and simple. Make sure the organization you choose is reputable and is in good standing with the IRS and other non-profits.

You should have fun when you are helping other people. Always make sure that the people you are helping and the people who volunteer have fun also. That will make your endeavor even more worthwhile.

 

 

 

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Accounting 101: What Will the IRS Do If Your Small Business Files Late

Not every small business has the luxury of having an employee with a bachelors of accounting, but it would be good if they did. Taxes are one of the most difficult to understand aspects of running a business and, believe it or not, one small error can translate to huge losses. Perhaps your bookkeeper plays it down, but the point is, taxes are not joke. You must file and pay on time. What will the IRS do if you file late? You might not like the answer!

Failure-to-File Penalty

It doesn’t take a bachelors degree in accounting to know that the IRS can, and usually will, impose a penalty for filing late. What you may not know is that failure to file on time typically carries a larger penalty than failure to pay on time. Many business owners find that a bit odd. Why would Uncle Sam give you a stronger penalty for being late filing than late paying? The answer to that isn’t clear. It’s just the way it is.

What Kind of Penalties Are Imposed for Filing Late?

Every business will be penalized individually, based on the taxes owed for that period. This is because penalties aren’t set in dollar amounts but rather as a percentage of taxes due. Here is where it gets a bit sticky. The usual amount of a penalty for failure-to-file is five percent of unpaid taxes. That’s why every business will be assessed a different amount. However, if you’ve filed late and have as yet not made final calculations, there is no way of knowing what you will be assessed. Also, you will be assessed that five percent penalty for every month your return is late.

Failure-to-Pay Penalties

On top of failure-to-file penalties imposed by Uncle Sam, you will also incur failure-to-pay penalties because, obviously, your return will be late. This penalty is equal to one-half of one percent of the total taxes you owe. However, there are ways to avoid the failure-to-pay penalty if you understand what’s expected of you.

Timely Requests for Extensions

Most often, small businesses file taxes in much the same way as individual payers. This is often because they operate from their homes and have formed an S Corporation. If you are new to filing a small business return and need that extra time to sort through deductions and itemizations you can claim, simply request a filing extension. If you can pay a pre-specified percentage of what is due and ask for an extension timely enough, you may not be penalized.

Unfortunately for most small businesses, business and individual taxes are calculated differently. If you are not up on corporate taxation, you just might be filing or paying late. Rather than being assessed a penalty, why not hire an accountant to help you meet the requirements of the IRS. Whether you choose to get a degree in accounting yourself or hire someone well-versed in tax law, the one thing you can be assure of is that the IRS will impose a penalty for late filing of business returns.

 

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