Nonprofits are eligible for a variety of tax benefits or exemptions, both federally and in Ohio. However, determining whether you qualify for these tax exemptions, how to receive nonprofit status, or even whether you should form a large nonprofit organization or create a more traditional organization is difficult.
The tax attorneys at KJK have extensive experience in corporate and nonprofit spheres and can provide guidance for tax-exempt organizations, from founding to navigating the IRS for nonprofits.
Lawyers for Tax-Exempt Organizations
While many nonprofits may try to save money by doing their own accounting, nonprofit taxes are complex, and a mistake could result in fines or unexpected taxes.
The KJK team can counsel you when applying for your tax-exempt status, help you understand the tax implications of creating a nonprofit and guide you through the process of creating one.
Tax Implications of Forming a Large Nonprofit or Tax-Exempt Organization
If you have a 501(c)3 or a legally recognized nonprofit organization, you can benefit from various tax exemptions. Federally and in Ohio, this status exempts you from paying corporate taxes, which can save your nonprofit a significant amount of money.
In Ohio, registered 501(c)3 organizations do not have to pay sales tax on purchases, which is another significant benefit of forming a nonprofit if your organization meets the requirements.
Being a nonprofit also makes any donations made to your organization tax deductible, which could increase your donations. Additionally, this status makes you eligible for a wider variety of grants, both public and private.
Other benefits of being a nonprofit organization include lower postage costs and limited liability protection for the board members regarding the nonprofit’s actions. You may also receive cheaper or free publicity from media outlets that wish to support nonprofits.
Consult With Our Team:
Work with KJK to form your Nonprofit
Before forming your nonprofit organization, consult with the experienced tax attorneys at KJK. We can help you determine whether you would benefit from forming a nonprofit and if you qualify.
There are multiple organizations eligible for nonprofit status. These include political organizations, religious groups, private foundations, educational groups, scientific organizations, charitable groups and other nonprofit groups that don’t fit these categories.
KJK can help you determine which type of nonprofit your organization belongs to and guide you through the application process. First, you must create an Ohio-based nonprofit corporation and then file for your status and tax exemptions with the IRS.
How KJK Helps You Apply for Nonprofit Tax-Exempt Status
- You must apply for your tax-exempt status through both the federal IRS and the Ohio state government. KJK can help complete the IRS form, which involves providing financial details both past and present, and plans for your organization, past, present and future.
- While some organizations, like churches and synagogues, automatically qualify for the tax-exempt status, filing a form with the IRS gives you proof, which you can use to apply for grants or receive free publicity.
- Our team sits down with your board and reviews your finances, ensuring you fill the application out completely and factually.
- Once you successfully apply at the federal and state levels, KJK can also provide guidance on keeping your 501(c)3 status, which involves regular financial reporting. Additionally, you must refrain from partaking in political activities to keep your status.
- The IRS reserves the right to audit your nonprofit to ensure you have complied with all the requirements and can revoke your status if they find you have violated their regulations.
Recent Changes in Ohio and Federal Law
Laws change frequently, and your nonprofit must stay abreast of any changes that could threaten your status or alter your requirements.
Congress recently passed new legislation that increased the tax deductible limit for both singles and married couples. KJK can help you inform your donors about this change, which could increase your donations this year. Additionally, the Further Consolidated Appropriations Act of 2020 changed the excise tax on nonprofits to a flat-rate of 1.39%, making it so organizations no longer need to worry about their distributions.
The same bill also repealed the unpopular Qualified Transportation Fringe Benefits, which increased costs for nonprofits across the country. Because this repeal is backdated, if you were affected by this tax in 2017, 2018 or 2019, you can file a 990T to request a tax refund.
However, the IRS has also announced that 2021 brings an increased focus on compliance for nonprofits, with changing guidelines throughout the year. This new focus makes working with our KJK team essential for maintaining your status as a nonprofit. Our team knows how to understand new announcements from the IRS quickly and can help you ensure you remain compliant.
Ohio has also made some changes to its nonprofit laws. In 2017, the state legislature added a $200 fine for any late annual reports, making it essential that nonprofits stay ahead of deadlines.
The KJK team can ensure you never miss a deadline or a change to laws that affect your nonprofit, protecting your status and your funds.
important to know:
11 Steps to form a nonprofit
To form your nonprofit corporation, you need to follow these steps:
- Appoint a board of directors
- Create a name
- Choose a registered agent (someone who lives in Ohio, who can accept legal documents on the nonprofit’s behalf)
- File your Articles of Organization with Ohio
- Create bylaws for your nonprofit organization
- Meet with your newly appointed board of directors
- Register for an EIN (Employer Identification Number)
- Get any necessary licenses
- To register for the federal IRS tax exemption, file a 1023 form
- Register for Ohio tax exemptions
- Comply with relevant state reporting guidelines
KJK can help you each step of the way, from guiding you when creating a name and logo to filing your forms and ensuring you stay compliant through the years.
We’re Here for you:
Contact Us to Discuss Your Tax Exempt Organization
Laws concerning nonprofits and tax exempt organizations often change, so it’s important to stay up to date. Contact the team at KJK today to schedule your initial appointment.