How To Form A Business

Why Form A Business Entity?  The main reason to form a business is to earn profit.  Whether you operate as your own business or as a company or corporation or any other formal legal entity, the same reason applies - earn money.  However, the law offers various protections when forming a business.  The informed business owner should be familiar with the legal issues.   There are many legal issues to form a business.  If you are operating a business venture in your own name then you are legally at risk.  When you form a formal legal business entity, there are advantages [...]

How To Form A Business2020-04-19T12:35:38-07:00

What Are The Alternatives To A Nonprofit?

ALTERNATIVES TO A NONPROFIT CORPORATION If the existence of the venture is for a short duration, the nonprofit organization may not be the best structure.  Nonprofits are good for long-term ventures. Alternatives include: (1) Operating as an informal organization under the legal umbrella of an existing charity, also known as fiscal sponsorship; or (2) Forming an unincorporated nonprofit association.   FISCAL SPONSORSHIP An alternative maybe to obtain fiscal sponsorship, in which the “sponsee” can join an existing organization and operate under its tax-exempt status.  This provides a small project the opportunity to be tax exempt through the sponsor’s IRS status and [...]

What Are The Alternatives To A Nonprofit?2020-03-27T12:40:04-07:00

Can Nonprofits Hire Employees?

EMPLOYEES OF NONPROFITS Many nonprofits hire employees as staff to provide programs, conduct fundraising, maintain accounting, file taxes, and other services.  The nonprofit has the same legal obligations to its employees as any private business corporation, such as prohibitions against discrimination and harassment.  The nonprofit corporation is also obligated to report employee’s income and make withholder payments to the Federal and State governments, and is responsible for State unemployment insurance taxes, workers’ compensation insurance, State disability insurance, payment of the employer’s portion of Federal social security (FICA), Federal unemployment tax (FUTA), and Medicare.  The nonprofit must also comply with standard [...]

Can Nonprofits Hire Employees?2020-03-27T12:44:22-07:00

How Do Nonprofits Make Money?

NONPROFIT FUNDRAISING How do nonprofits make money? Nonprofits conduct fundraising activities. In order for donors to deduct their charitable contributions, the IRS guidelines require that the taxpayer donor show that the amount claimed as a deductible gift to charity is more than the fair market value of any benefit received.  Moreover, it is important that the nonprofit corporation complies with disclosure, substantiation, and reporting requirements for the contributions it receives. The nonprofit must also comply with all State and local charitable solicitation laws and ordinances.  For example, the Federal government requires the nonprofit to give a receipt to the donor [...]

How Do Nonprofits Make Money?2020-03-20T23:20:13-07:00

Nonprofit Public Benefit Corporation

WHAT ARE MEMBERS OF THE NONPROFIT PUBLIC BENEFIT CORPORATION? Membership for a Nonprofit Public Benefit Corporation is optional.  The reasons for providing membership in a nonprofit include: (1) Attract funds through membership, or (2) Establish support in the community.  However, many administrative burdens are associated with forming a membership organization and it is more common for a nonprofit to not have members.   If the nonprofit includes membership, the Bylaws must address the controlling provisions for membership such as qualifications, method of selection, expulsion, dues and fees, notice and frequency of meetings, the number required for a quorum to make decisions, [...]

Nonprofit Public Benefit Corporation2020-03-20T22:42:39-07:00

How Does A Nonprofit Organization Maintain Tax Exempt Status?

TAX EXEMPT STATUS Annual financial reports must be submitted to the IRS and the California Franchise Tax Board to maintain a nonprofit organization's tax exempt status.  The board of directors should review the corporation’s annual IRS and State filings before submitted.  Often, the nonprofit will retain an independent accountant to conduct a review of the organization’s financial statements and issue a report to the board of directors, which is a less expensive alternative to obtaining a complete audit.  The nonprofit should hire a professional accountant to help implement a fiscal management system, addressing issues such as dual-signature requirement on bank [...]

How Does A Nonprofit Organization Maintain Tax Exempt Status?2020-03-13T22:31:50-07:00