​High-Level Tips for Setting Up a Small Nonprofit

​High-Level Tips for Setting Up a Small Nonprofit

09/13/2022 Tags: Announcements


Creating any new business or organization has a lot of moving parts, and setting up a nonprofit is no different.

Depending on the size and complexity of the nonprofit you’re considering, it might make more sense to have an existing organization manage it for you. For example, we frequently recommend that our clients work with organizations like Black Hills Area Community Foundation to handle the details the creating a nonprofit.

If you do decide to set up your own nonprofit, below are some high-level tips to help you out. Note that most of these are specific to creating a nonprofit in South Dakota. If you need help with another state, let us know.

  1. Get an Employer Identification Number — or EIN — from the IRS.
  2. Draft articles of incorporation and bylaws for a South Dakota nonprofit corporation. Make sure that the documents specify that in the event of dissolution, the corporation’s assets would revert to another 501(c)3 that serves a similar mission to the one you’re setting up.
  3. Set up a bank account. Get a credit card, debit card, and check stock to make purchasing simpler and avoid needing to reimburse individuals. To establish a bank account, you will likely need the EIN documentation, the articles of incorporation and bylaws, a certificate from the Secretary of State, and organization minutes that designate officers and those who have account access.
  4. Consider signing up for QuickBooks. It can be a great tool to help you track expenses and costs. If you need training on QuickBooks Desktop or QuickBooks Online, let us know.
  5. After the state recognizes you as a nonprofit corporation, you can apply for exempt status with the IRS. Typically, if your nonprofit’s purpose is broad enough, your organization will qualify as a 501(c)3. That gives you the highest level of deductibility of donations.

There is a simplified application process called Form 1023-EZ. If gross receipts for the most recent two years are below $50,000 — and you expect them to continue to be less than $50,000 — you qualify.

Although you’ll need to do most of the work on the 1023EZ, we can review the application and let you know about any possible issues that may get the application denied.

  1. You will have an annual filing requirement with the IRS. However, if your receipts are less than $50,000 for the year, it’s a simple filing you can do online.

If you have questions about whether setting up a nonprofit is right for you, please let us know.



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