{"id":16522,"date":"2019-07-16T08:00:55","date_gmt":"2019-07-16T13:00:55","guid":{"rendered":"https:\/\/taxprocenter.proconnect.intuit.com\/?p=16522"},"modified":"2019-07-25T12:29:05","modified_gmt":"2019-07-25T17:29:05","slug":"how-to-set-up-a-nonprofit-organization","status":"publish","type":"post","link":"https:\/\/accountants.intuit.com\/taxprocenter\/tax-law-and-news\/how-to-set-up-a-nonprofit-organization\/","title":{"rendered":"How to Set Up a Nonprofit Organization"},"content":{"rendered":"

As tax professionals, it’s critical to recognize nonprofit accounting as a prime opportunity to provide valuable advisory<\/a> and tax services, yet one of the first areas you\u2019ll focus on is setting up the organization \u2013 and that\u2019s no easy task. While their missions are often honorable and noteworthy, nonprofits often struggle with initial setup and ongoing compliance as it pertains to taxes, accounting and reporting. In addition, the specific requirements for nonprofits vary by state. Here\u2019s a summary of the general setup process, as well as universal compliance concerns.<\/p>\n

Selecting the Type of Nonprofit<\/b><\/p>\n

The first step is to determine the type of nonprofit and select the members of the governing board. According to the IRS, there are more than 29 types of nonprofit organizations<\/a>, and although I won’t cover all of the various types of nonprofits in this article, I’ll mention a few for clarity’s sake.<\/p>\n

Correctly categorizing your client’s nonprofit organization will allow for easier compliance with regulatory agencies. 501(c)(3) organizations are most common, given that they can be either private or public, and provide services that are educational, charitable or just more community-oriented. However, based on the needs of a given community, there are many other types. For example, in agricultural communities or organizations targeting this area or audience, a 501(c)(5) would be the most appropriate because it is intended for agricultural organizations. If your client wanted to open up a local social club focusing on chess or fishing, you’d likely organize as a 501(c)(7).<\/p>\n

Selecting the Board of Directors<\/b><\/p>\n

If you’re involved in helping or advising your clients on how to set up a governing board for their nonprofit, it may be helpful to keep a couple of things in mind.<\/p>\n