Formation and Compliance

You have to learn the rules of the game. And then you have to play better than anyone else.

Albert Einstein

In a perfect world, forming a nonprofit organization would be as simple as coming up with an idea to make a positive difference and acting. However, the distinct formation processes in place by the government are there to ensure that nonprofits receive distinct liability protections and tax advantages. This ensures that nonprofit directors and officers are not personally liable for the organization’s debts and liabilities, the organization continues even if a director leaves or passes away, and that nonprofits may be eligible for public and private grants.
In addition to specific IRS formation requirements, different states may require specific filing instructions for state-level tax exemption. Proper formation ensures that your nonprofit receives tax-exempt status, tax-deductible donations, possible exemption from certain property taxes and reduced postage rates. But then this question inevitably arises: After I form my nonprofit, how do I remain in compliance?

Compliance is of the utmost importance to a nonprofit organization. Failure to do so will result in the loss of the granted 501(c) tax-exempt status and will effectively end an organization’s attempt at achieving their mission. It takes appropriate and careful consideration to maintain your nonprofit status and should remain a top priority after formation.
Once your organization is in line with government guidelines, it's time to properly set up your organization's own governing board.
How to Start a Nonprofit

  • State incorporation and related
  • Federal 501(c)(3) tax exemption

Regulatory Compliance Filing Requirements/

  • State
  • State tax exemption (501(c)(3) equivalent)
  • Charitable solicitations registration/renewal
  • Sales tax exemption
  • Federal
  • Form 990/990-EZ/990-PF/990-T
Compliance Topics/Issues/Developments

  • Conflict of interest
  • Incurment
  • Intellectual property
  • Unrelated business income
  • Joint ventures
  • Program-specific
  • Housing
  • Donor-advised
  • Churches/religious orgs
  • Nonprofit distinctions
  • Public charity
  • Private foundation
  • Private operating foundation
  • Supporting organization
  • Other 501(c) types
  • Public benefit
  • Labor/Agriculture
  • Business leagues
  • Social/Recreational