Recordkeeping Part I – Organizational Records

 

OrganizationalRecords

 When speaking about requirements for recordkeeping, nonprofits do differ from profit businesses. Each nonprofit organization should keep:

 

1. Organizational/Permanent Records

2. Financial Records.

In this article, we focus on the organizational/permanent records.

 

Organizational/Permanent Records: this includes all the paperwork that the organization should keep from the day of establishing the organization.

 

Read more: Recordkeeping Part I – Organizational Records

Recordkeeping Part II – Financial Records

 

FinancialRecordsNonprofits should always maintain good financial records. Nonprofit organizations need financial statements for the following reasons:

 -         To prepare their annual tax returns with the IRS (form 990s);

-         To report the financials to their members;

-         To apply for grants;

-         To write a Business/Strategic Plan;

-         To evaluate the organization’s accomplishments; etc.

 

Based on the financial statements, the organization’s Board of Directors make educated decision on which tax return their organization is eligible to file with the IRS – f990-N, f990-EZ or f990s. The main financial statements are Profit & Loss Statement and a Balance Sheet. Most accounting softwares generate the financial statements for the reported period.

 

Read more: Recordkeeping Part II – Financial Records

Recordkeeping Part III - Policies

 

OrganizationPolicies

 Once you’ve become a nonprofit organization it is highly recommended that your Board of Directors adopt policies, in order to successfully manage the nonprofit activities. The Board of Directors’ decision on which policies to adopt should be based on the organization’s structure, size and type. Furthermore, nonprofit organizations that fail on adopting such policies have a greater chance of being audited by the IRS. 

 

 

Some of the policies that your nonprofit organization may adopt include:

Read more: Recordkeeping Part III - Policies

Operating in Different States

 

 50statesNonprofit organizations can operate nationwide, even though they are legally registered in one specific state as a domestic entity. Generally, charities      incorporate in the state either where their headquarters are located in or where the majority of their activities take place. As your 501c3 organization grows  and evolves, a need to operate in more than one state might often arise.

Read more: Operating in Different States

How to Change Board Members/Officers

 

BoardmembersChange

Every Corporation is operated by the Board of Directors according to its bylaws. Some states require one person to serve on the Board, some states – as  many as five. The Board members and shareholders must follow the rules set forth in bylaws in order to change directors/officers.

 

 Below is a list of 7 steps to take when changing Board members/Officers:

Read more: How to Change Board Members/Officers

Why Set Up a 501c3 Organization?

 

ThumbsUp 501c3 setup

 Nonprofit organizations exist to serve the unmet needs of people, animals or the environment. Nonprofit organizations fall under section 501(c)(3) of the IRS tax code, qualifying them for income tax exemption under federal law.

 

One of the major benefits of being tax-exempt under IRC Section 501(c)(3) is the ability to accept contributions and donations that are tax-deductible to the donor. Additional benefits include, but are not limited to:

Read more: Why Set Up a 501c3 Organization?

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