Step 5 | Heavy Lifting: Ongoing Reporting and Compliance

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Once you have received your determination letter from the IRS, the real work begins. Many states and local governments will require you to complete additional filings to receive recognition as tax-exempt from those institutions. Be sure to check with local legal counsel to ensure you are compliant with local initial filing requirements. You may also want to review the IRS resources at StayExempt.org for information on how to maintain your tax-exempt status.

State and Local Government Filings

  1. Before starting operations, review state and local laws to ensure compliance on topics including, but not limited to:
    • Registering (if necessary) before starting any fundraising 
    • Registering (if necessary) before engaging in any lobbying
    • Securing (if necessary) permits and licenses required because of:
      • Goods or services provided (e.g., health care);
      • Types of clients served (e.g., fingerprinting of employees dealing with children); 
      • Types of employees hired (e.g., educators or health care providers); and 
      • Location (e.g., zoning in certain areas)
  2. Completing state tax exemption requirements (usually must wait until IRS acts)
  3. Registering (if necessary) for unemployment insurance and reporting to officials
  4. Registering (if necessary) to secure any additional tax exemptions (e.g., property tax, sales tax collections, exemptions from paying sales tax)

Heavy Lifting

  1. Initial internal issues
  2. Regular activities
    • Tax withholdings
    • Board meetings
  3. Quarterly - e.g., reporting taxes withheld (federal/state/potentially local)
  4. Annually
    • File annual report with state government
    • File Form 990 information return with IRS (and any similar form required by the state)
    • Re-register any required items (e.g., charitable solicitation)

If you haven't already done so, now is the time to join your state association of nonprofits. Here are ten reasons why! Good luck with your new nonprofit and thank you for making a difference in your community.

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