A Checklist For Non-Profits

 

 

1. Reserve a name with New York’s Secretary of State, Division of Corporation. Go to www.dos.state.ny.us/corp/nfpcorp.html#aron.

2. Select individuals to serve on your Board of Directors.

3. Designate officers to serve on the Board.

4. Develop a mission statement.

5. Develop a non-profit operating plan, which is like a business plan for non-profit organizations, and includes a description of the organization’s location, staffing, activities, funding, fundraising plan and budget.

6. Establish Board committees (e.g.,, Executive committee; finance committee; fundraising committee, volunteer committee; etc.).

7. Create by-laws.

8. Retain a bookkeeper to create accounting records and financial reports.

9. Retain an accountant for annual audit and mandatory government filings.

   For an operating non-profit:

• Organizations with gross revenues greater than $250,000 must undergo a financial audit by an independent CPA. Those with revenues between $100,000 and $350,000 must file a CPA’s report. Those with revenues below $100,000 are not required to retain a CPA, but must be prepared to retain a CPA, and must submit a financial report certified by its Board with its CHAR 500 to the NYS Attorney General’s office.

10.  Incorporate or form a trust to protect its founders and principals from    personal liability: www.dos.state.nys.us or www.dos.state.ny.us/corp/corpwww.html.

11.  Hold its first corporate meeting and elect corporate directors and officers and adopt corporate by-laws and initiate minutes of all meetings.

12.  Apply to the IRS for an employer identification number (EIN): www.irs.gov/business/small/article/0,,id=98350,00.html

13.  Establish a bank account and establish check signing procedures - see item 14 below.

14. Designate which officer(s) have the authority to sign checks.

15. Apply for IRS 501(c)(3) tax exempt status (IRS Form 1023) and receive IRS Determination Letter or advanced ruling letter; www.irs.gov. All organizations that have gross receipts of $5,000 or more must receive an IRS Determination Letter.

• Organizations with gross receipts of greater than $25,000 (on a three year average) must file IRS Form 990 annually. Those with gross annual revenues of less than $100,000 may file Form 990 EZ. Beginning in 2007, those with receipts of less than $25,000 will be required to complete an online filing with the IRS. Organizations having $1,000 or more in income from activities unrelated to their tax exempt purpose (UBIT) must file Form 990 T. IRS forms and instructions are at www.irs.gov.

16. File for state and local tax exemptions: from New York State corporate tax (Form CT-247); New York State and local taxes (Form ST-119.2) and the New York City General Corporation Tax: www.tax.state.ny.us. A variety of other exemptions are also available, if applicable, including exemptions from state and local property tax and certain New York City water and sewer charges. If the organization owns real estate, it should apply for property tax exemption by filing the Exemption From Real Estate Taxation for Property Owned by Non-Profit Organizations form available at www.nyc.gov/html/dof.

17. Register with the Charities Bureau of the Attorney General’s Office (Form CHAR 410): www.oag.state.ny.us/charities/charities/html.

• Annually, thereafter the organization must file Form CHAR 500 with the AG’s office. Publication CHAR 023 provides a summary of registration and filing requirements. Forms and instructions for the Charities Bureau of the New York State Attorney General are at www.oag.state.nys.us/charities/forms/charindex.html.

18. Obtain an Employer Registration Number (ERN) from New York State for reporting unemployment insurance, withholding and wage data/ Download Form NYS-100 from www.tax.state.ny.us.

19. Establish financial management, auditing and internal control systems.

20.  Set up chart of accounts to record financial transactions.

21. Establish a general ledger and bookkeeping system (either manual of computerized) to account for cash receipts and cash disbursements, assets and liabilities.

22. Compose job descriptions for all staffing needs, professionals and non-profits.

23. Hire staff and set compensation levels.

24. Prepare personnel manual.

25.  Establish a payroll system (manual or automated), including: (a) Withholding requirements (federal, state, and city); (b) Requirements for payment of funds withheld (federal, state and city); (C) Reporting requirements for funds withheld (federal, state and city). You may wish to  engage a payroll service firm to execute this item.

26. Determine whether individuals performing services for it are employees or independent contractors.

27. Establish a system for preparing and filing Form W-02s for employees and 1099s on behalf of independent contractors.

• W-2s and 1099s: Employers or their payroll service must provide W-2s for each employee, and 1099s for independent contractors paid $600 or more in a calendar year. IRS Form 1096 correlates to 1099 information, and Foom W-3, Transmittal of Wage and Tax Statements, covers W-2 data, IRS forms are at www.irs.gov.

• If you have payroll, you must remit Federal and FICA (employer and employee) withholding payments, and NYS/NYC withholdings. The filing frequency is based on the size of your payroll. A reputable payroll service provider can provide this service and will assume the liability for failure to pay withholdings.

28. Establish a mandatory system for maintaining records for each employee which include (1) names and social security numbers, (2) w-4 and I-9 forms, and (3) for each payroll period the: (a) beginning and ending dates, (b) the days (week, etc.) and (c) all payments made to the employee, including bonuses and vacations.

- I-9s: Employees must complete and submit Form I-9, Employment Eligibility Verification, within 3 days of employment to their employers. I-9s  

are not filed with the US government. Employers are required to retain I-9s for up to 3 years. Go to US Citizenship & Immigration: www.uscis.gov.

29. Establish a system to meet mandatory insurance requirements: (1) Workers Compensation, (2) Unemployment insurance, (3) Short-term Disability, (4) Auto Liability (if applicable), and (5) (Others).

- New York State law requires employers to provided short term disability and workers compensation coverage to employees. Many organizations obtain these coverages through the New York State Insurance Fund, although there are alternatives. The State Insurance Fund is at www.nysif.com.

• Unemployment Insurance payments are based on gross payroll and are remitted quarterly to the NYS Unemployment Insurance Division. Non-profits are exempt from Federal Unemployment Tax. The NYS Unemployment Insurance division is at www.labor.state.ny.us/ui/ui_index.shtm.

30. Procure necessary insurance coverage: general liability, property, professional responsibility (if applicable), sexual abuse, (if applicable) and non-owned auto liability (if applicable).

31. Determine whether Directors  & Officers (D &O) liability insurance is needed. Also needed will be Board of Directors liability insurance, refer to the referenced American Bar Association books reference as other resources. See Directors and Officers Liability Insurance: Do all non-profit organizations need Directors and Officers Liability Insurance? At www.npccny.org/infi/oi2.htm for guidance.

32. Establish a system for providing receipts for donation to comply with IRS substantiation requirements. Download IRS Publication 1771, Charitable Contribution Substantiation and Disclosure Requirements, at www.irs.gov/pub/irs-pdf/p1771.pdf.

33. If the organization is getting donations and giving something in return, the organization should create a “quid pro quo” disclosure statement informing donors that the amount of the contribution that is tax deductible is limited to the difference between the amount of the contribution and the value of the goods or services received in exchange (which should be estimated in a document given to the donor).

34. Procure health benefits for employees. Examples will be: Health and Dental, Workman’s Compensation (mandatory), Workers Disability.

35. Establish a retirement plan for employees.

36. Rent or purchase office space.

37. Lease a postage meter and apply for a non-profit permit number in order to mail at the reduced non-profit bulk rate.

38. Lease or buy computer equipment that is capable of e-mail and accessing the internet access.

39. Lease or purchase office equipment: copy machine, fax machine, desks, chairs, file cabinets, conference room tables and chairs, coffee maker vehicles, tools, materials, etc.

ADDITIONAL RESOURCES:

           

Forming a Not-for-Profit Corporation in New York State: www.dos.state.ny.us/corp/nfpguide.html

The IRS has information, guidance, and forms at: www.irs.gov/charities/charitable/article/0,,id=122670,00.html.

Idealist Tips on Starting a Non-Profit: www.idea.ist.org/tools/starting-org.html.

From Vision to Reality: A Guide to Launching a Successful Non-Profit Organization (&30) from Community Resource Exchange at www.crenyc.org.

12 Tutorials from the Foundation Center:

http://fdncenter.org/getstarted/tutorials/establish.

Resources From The American Bar Association:

The ABCs of Non-Profits

      Lisa A. Runquist

Guidebook for Directors of Non-Profit Corporations     Second Edition

     Committee on Non-Profit Corporations

Excerpted from: The things You Gotta’ Do to Start a Non-Profit Organization by the Non-Profit Coordinating Committee of New York

SCORE Chapter 217, Greater Binghamton SCORE

PO Box 995, Binghamton, NY 13902

607-772-8860

www.greaterbinghamtonscore.org