Below are some of the most common issues relating to the operation of a nonprofit corporation.
Keep corporate affairs separate from personal affairs
It's important to keep the affairs of your nonprofit corporation separate from the personal affairs of the directors and officers.
This means setting up a separate bank account, maintaining separate records and keeping separate books for accounting purposes.
- Carry out all corporate meetings as required
Like a regular corporation, a nonprofit corporation's directors need to hold periodic meetings. Meetings can take place in person or on the phone. Either way, keep a written record of the items discussed and actions approved. Alternatively, you can get all the directors (or a majority of the stockholders) to sign a statement approving corporate actions.
- Process all nonprofit tax forms and licenses in a timely manner
Even if your nonprofit corporation is exempt from federal and state income taxes your nonprofit still may be required to file an information tax return. Federal income is reported on IRS Form 990 and must be filed by April 15 if your corporation's fiscal year ends on December 31. If you operate certain public charities where your gross receipts are less than $25,000 per year, you may be exempt from filing a return. The IRS will inform you if you qualify for this exemption.
- Obtain your nonprofit's Employer Identification Number (EIN) and licenses
Every nonprofit corporation must obtain a federal tax identification number, which is somewhat analogous to an individual's Social Security Number. Some states also require a separate state tax number. In addition, county and city business licenses may be required. Please check with your city and county to see if you need any licenses.
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