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Starting a Nonprofit Organization – State Reports and Filings

Previous articles in this series have discussed nonprofit start-up tasks of incorporating with the state, obtaining a federal employee identification number, opening bank accounts, and applying for federal tax-exempt status. Beyond these vital tasks of starting a non-profit organization, there may be several additional details to address at the state level.

Each state has its own unique requirements, which makes it impossible for this article to address every filing and report which may be required in a specific jurisdiction. Consult with an attorney licensed to practice law in your state if you need help in determining state requirements.

Many states require any incorporated entity, including a nonprofit corporation, to file periodic information updates with the Secretary of State or other agency. Failure to file these updates in a timely manner can leave the entity in a non-compliant or suspended status with the state, which can have a variety of negative consequences over time.

The requirements for information updates vary greatly from state to state. Some states require annual filings while others require updates less frequently, or only when vital information changes.  

Usually, the form required to satisfy information update requirements can be found on the Secretary of State’s website. The information required is usually minimal, such as the name and address of the Registered Agent, or of the board members. Most states do not require any financial information to be filed. The updates can often be filed online.

Even if an organization discovers that is in a non-compliant status for failure to file information returns, this can usually be remedied without any negative consequences by filing the appropriate forms.

If the state agency has accurate contact information for your nonprofit, then the entity should receive notifications in advance of when information filings are due. Some states will even provide these notices by email if the organization has an accurate email address on file with the appropriate agency.

Some states require their nonprofit organizations to apply with the state for tax-exempt status, a step beyond the requirement to file Form 1023 with the federal government. Often the state form requests similar information as the federal Form 1023. In fact, some states will accept a copy of the organization’s federal exempt recognition letter in lieu of completing the state application form.

Further, many states require nonprofit organizations to register with the appropriate agency if the organization will solicit charitable contributions from the public within that state. Once again, it is necessary to check with the specific state for details because the requirements vary so greatly from state to state.

Another issue arises when the organization first initiates payroll payments. It may be necessary to complete an application with a state agency to enable state payroll tax withholdings to commence. Often this step will require the nonprofit to establish unemployment insurance payments, or in some cases opt-out of those payments and elect to reimburse the state for any future unemployment claims.

Contact Clergy Financial Resources to help you with the next steps.

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Maple Grove, MN 55369

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Fax: 1 (888) 876.5101

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Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.

This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.

For more information or if you need additional assistance, please use the contact information below.

Clergy Financial Resources
11214 86th Avenue N.
Maple Grove, MN 55369

Tel: (763) 425-8778 
Fax: (888) 876-5101
Email: clientservices@clergyfinancial.com

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