Starting a Nonprofit Organization

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Make Sure to Check with Your Home State for Specific Requirements to Form Your Nonprofit Organization

Some items you will need to make sure you prepare when starting a nonprofit organization.  You should consider several phases in organization your documentation on support to form your company:

1) Planning & Organizing Phase

2) Obtain Tax-Exemption Determination

3) Register for Charitable Solicitation with your home state.

4) File with Your State after 501(c)(3) Determination received from the IRS.

5) Maintain your nonprofit status and Apply for State Tax Exemptions.

In the Planning & Organizing Phase create a mission statement for the organization, develop a fundraising plan and begin drafting the bylaws of your nonprofit.  Think about reputable people in the community who believes in the mission of your nonprofit and make selections of your board of directors and elect the organization officers.  File your Articles of Incorporation with your state, for Maryland, you would file with the State Department of Assessments & Taxation (SDAT). If you will be using a trade name, you should file with SDAT at the same time you file your articles.  File a request with the IRS to obtain a Federal Employer Identification Number (EIN), this can be done online, by phone, mail or fax.  Have your organizational meeting with the board of directors.

You will need to obtain Tax-Exemption Determination from the Internal Revenue Services by filing Form 1023.  Your next step is to register for Charitable Solicitation with your home state. In Maryland this would be the Charitable Solicitation Form (COR-92). You will also need to file a combined registration application with Your State after 501(c)(3) Determination received from the IRS, so that you can obtain a sales tax exemption.

Once your nonprofit is up and in operation, be sure to maintain your nonprofit status by filing your annual tax forms with the state and the IRS.  For Maryland you are required to file MD Form No.1 a Personal Property Tax Return annually as well as Form COF-85 with the Charitable Organizations Division.  You will also need to file annual informational returns with the IRS Forms 990-N, 990-EZ or 990 based on the annual gross receipts of the organization.  If applicable, apply for State Property Tax Exemptions and obtain required state and/or local licenses and permits.

For more information and insight email us at [email protected] or contact us at (301) 974-4568.

Diana McCalpin is an accountant who manages a Certified Public Accounting Practice in Laurel, Maryland which performs audit, accounting and tax services to customers. She loves to share information with clients to help them grow their businesses and be profitable.

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