Monthly Archives: April 2016

What are Nonprofit Corporate Registration and Qualification to Do Business?

At Simple Charity Registration we frequently get questions regarding corporate or business registration in states by charities who find it confusing and frustrating that they might have another required form of state registration on top of the charitable solicitation registration our site services. We decided to provide an overview of the topic.

What are Corporate Registration and Qualification to Do Business?

Many people refer to registering a corporation in a state as corporate or business registration. That is the process which “domestic corporations,” or those originating in the state and operating within the laws of the state, need to go through. For foreign corporations, those originating in another state, that sounds fairly unnecessary. The real term and purpose for foreign corporations, however, is “qualifying to do business” in a state. Very self-explanatory. It would seem reasonable that a state would need to know about a business making money from its residents.

How Do States Define Qualification to Do Business?

Generally, states have developed their business rules on the Model Business Corporation Act which differentiates between those domestic and foreign corporations we just discussed. Since business entities must follow the rules of the states in which they are created, domestic corporations have requirements to register their organizing documents, governing documents and keep them updated annually along with financial reporting. As with most of these rules, this increases the accountability and transparency of businesses operating within the state.

Foreign corporations are subject to separate rules since they are already regulated by their home state. As such, states only want detailed reporting if the foreign corporation “transacts business” in their state. While no state gives an absolute definition of transacting business, the Model Business Corporation Act lists several examples of activities that are not included. Among these are third party business functions such as banking or legal activity, interstate commerce (vs. intrastate commerce), one-time transactions that are completed within 30 days and not reproduced by other similar transactions, and sales where the oversight of the sale is done out of state.

To be sure, an organization that performs services in a state, has an office or other presence in a state, or has employees in a state does come under the definition of transacting business in that state and would need to qualify.

Take-away for Today

All states have some sort of corporate registration and qualification to do business. Some are more stringent than others and all need to be taken seriously because there are large penalties for non-compliance. To stay in compliance, do your homework and consult attorneys if needed. It all matters.

In the coming days we will go deeper into some of the questions that result from these processes to give you some background as you look into whether you need to qualify to do business in states other than your own.

The Elephant in the Room: Preparing For Your State Charity Solicitation Registrations & Renewals (continued)

Eating the Elephant: The Next Bites?

After you have gathered up all the basic information for your charity registration it’s time for the fun stuff!!  That is if you are a SimpleCharityRegistration.com customer because you are going to choose all the states that you are doing business in or will be in the near future using the Compliance Wizard.  Then key in the information that you gathered into the Basic Information sections and your forms will begin to populate on the left side navigator.  How fun is that!!

State Specific Questions:

On the left side navigation bar you will notice some State Specific Question groups populating along with the state forms these questions only pertain to the states that you have chosen to do business in and may require some more thought.  Also, some states require more in-depth information and will require other documents.  They are found in the following tabs:

  • Legal Information
  • Resident Agent Information
  • Related Party/Organizations Information
  • Bank Information

And the last bites?

Now that that you have all the information keyed into your account we can start generating all those forms that you need in a snap.  Just click the state that you want to complete and print your organizations forms.

Check your forms and assemble your state registration packages.

The next state will be even easier because now all the information is there just waiting for you to pick which one will be next!!  The best part is next year all your information will all be there waiting for you to come back and get started!!

Now send in those completed registration packages and wait for your approvals!!

Viola!!  One Elephant Complete!!

If you don’t have a SimpleCharityRegistration.com account sign up to get started, your first state is free!! Well at least our fees are free!! You will have to check the state resources and notes on our site for the state fees.

 

The Elephant in the Room: Preparing For Your State Charity Solicitation Registrations & Renewals

I am absolutely neurotic about being prepared.  I won’t even start a task unless I know “How to do it” and “What the outcome will be when I am done”.  Heaven forbid if something unexpected happens while in the middle of that task because I will just throw my hands up in the air and scream “That’s it!! I can’t do this!!  It’s too much!!  So this is how I am going to help you eat an elephant one bite at a time.  My mom loves to tell me that when I start freaking out about something being too difficult.

Be Prepared:

The following list will help you chew through your charity registration process one bite at a time:

  • EIN Number – Federal Tax Identification Number
  • Business Structure – Articles of Incorporation or Organization
  • Tax Exempt Status – Copy of your 1023 or Exemption Letter from the IRS
  • Purpose and Activities – Mission Statement
  • Copy of your most recent tax return or budget (if this is your organizations first year)
  • List of Board of Directors, Executives and Key Personnel
    • Addresses, Phone Numbers, Email Addresses, Salaries
  • List of Chapters, Branches and Other Offices
    • Contacts, Addresses, Phone Numbers, Email Addresses
  • List of Paid Fundraisers (Paid Solicitors, Fundraising Counsel, Commercial Co-ventures)
    • Contacts, Addresses, Phone Numbers, Email Addresses

Now Begin!!

Sign into your SimpleCharityRegistration.com account and get started!!  If you don’t have an account sign up to get started, your first state is free!! Well at least our fees are free you will have to check the state resources and notes for theirs!!

Read Part 2: The Elephant in the Room: Preparing for Your State Charity Registrations

What is the difference between a nonprofit and being tax exempt?

I was at a seminar in DC the other day trying to get a handle on how they have their process set up for filing your charity registration and I heard a woman complaining about “taxation without representation” and why if she was tax exempt did she have to register her nonprofit  with the states or DC.  Obviously I stayed out of this argument because I did not want to step on any toes but what they should have told the woman was that they are in fact two totally different issues.

What is the difference between a nonprofit and being tax exempt?

Tax exemption on the federal level is a designation given by the IRS that just says “Hey if you are providing a community service and not paying a profit to yourself or investors then you shouldn’t have to pay taxes on the monies that you have brought in” and with that “After you provide us with the proper documentation we will allow your donors the ability to take the monies that they give you as a deduction on their income taxes”.

A nonprofit is how you are designating how your business will be structured on the state level which could include: Unincorporated Association, Nonprofit Corporation, Charitable Trust or in some cases an LLC.

Why do I have to register my nonprofit if I am tax exempt? 

The simple answer is that you are letting the state know that you will be doing business within its boundaries and how you will be conducting that business.  Registering your nonprofit with the correct state authorities can be a two step process.  First it is registering with the state that you will be conducting business either as a domestic or foreign entity and how it is structured.  Secondly, you are registering with the proper agency that you will be asking their citizens for donations/contributions to fund your organization and what services you will be providing for those funds you will be collecting.

These two processes also give the citizens of that state a trusted local authority to confirm if your organization and the money that you are asking them for is being used as you say it will be because the paperwork that you file with the state about your organization as a nonprofit will be available for them to review.

How do I Register or Renew my Nonprofits Organization’s State Charity Solicitation Forms if Our Financials Aren’t Ready?

If your organization is like most nonprofits, you are anxiously waiting to see whether you will have your IRS reporting ready on time or if you will be filing an extension from the IRS. This also means you are paying attention to all the different state charity registration deadlines to figure out how to get them done on time.

Here are a few things that you check on and update to avoid last-minute registration headaches:

  1. Lists of directors, officers, executives — did you have changes to personnel, title, salary, benefits, roles? Are all the state-specific questions answered? Remember, different parts of your organization may need to be involved in compiling info.
  2. Lists and registration of professional fundraisers — many states want you to document changes to fundraisers, compensation, states solicited in, the fundraisers’ registration, etc. You may need to confirm these things with the fundraisers.
  3. Organizational information such as changes to address, branches, tax exempt status, etc.
  4. Deadlines  — keep track of when renewals are due to the various states.
  5. Anticipate extension needs/get extensions in, including extensions for your IRS filings.
  6. Related party/related organization info — find out if you have any new or amended relationships since you last filed in a state.
  7. Legal questions — you may need to poll your employees, directors, etc. for their personal answers to the many state-specific legal questions.

Simple Charity Registration can help you with all of that and help you to prepare extension requests and forms before your financials are done so that you are armed and ready once you have them.

With this information set to go, you will cut down on the time and more importantly, stress to be in compliance this year.

What’s the Difference Between the First and Second IRS Form 8868 Extensions for Nonprofit Organizations?

First Extension Request

The first extension request for the IRS Form 990, 990-EZ or the 990-PF is granted “automatically.”   This means you don’t have to give a reason for needing the extension nor will it require a signature.  If the Form 8868 Application for Extension of Time to File an Exempt Organization Return is completed properly and filed on time which would be May 15th for the calendar year filer the extension will automatically be granted and your Form 990 due date is automatically extended to August 15th.   This extension request in many cases can be forwarded along with the state charity registration extension requirements to the proper state charity registration office for an extension of time in submitting your renewal or annual financial requirements.

Second Extension Request

The second 3-month extension request is not “automatic” and your organization may only request a second 3- month extension if the first extension was properly filed and accepted by filing the Form 8868. When requesting an additional three month extension a detailed explanation is required and be signed by an authorized prepared.  Also, your organization should file it well before the extended due date in the case your request for the extension of time is rejected by the IRS.  If approved, the second extension will then be November 15th.  No further extensions are allowed and if either of these dates falls on a weekend or federal holiday the due date will become the following day.

Sign into your account or create an account with SimpleCharityRegistration.com to see if any of these extensions apply to the state where your organizations charity registration is due.

State Charity Registration Renewals and Annual Financials: Do You Need an Extension?

Many state charity registration renewals and annual financial forms are due at the same time as your Annual Exempt Organization Return: IRS Form 990, 990-EZ or the 990-PF. If you are a calendar year filer that means that your registration renewals or annual financial forms must be filed by the 15th day of the 5th month after the end of your organization’s accounting period. What does that mean to you? They are due May 15th and that date is quickly approaching. Like many other exempt organizations your financials may not be ready yet but the good news is that your organization can ask for an extension. In fact your organization may request up to two extensions for time to file your Form 990, 990-EZ or the 990-PF.

Use this link to the Application for Extension of Time to File an Exempt Organization Return Form 8868 and file the request for an automatic 3-month extension of time electronically or by mail.
Your organization can also to apply for an additional 3-month extension with cause if needed before the extended due date expires. If you plan to file the 990-N the due date cannot be extended (but there is no penalty for submitting it late unless it’s the third (and only) year).

Simply login into your account at SimpleCharityRegistration.com and review the states where you have indicated that you are currently soliciting funds and will require renewals on the State Checklist page and check the extension question in the State Registration Groups. The extension forms and instructions will then populate in the left side navigation bar.

If you don’t have an account with us just create an account and use the Compliance Wizard to determine which states you need to be registered in and which states that you can apply for an extension of time to file your charity registration renewal or annual financials.