To maintain your 501(c)(3) Nonprofit Public Charity in good standing in California, follow this advice.
8 Ways to Keep Your Nonprofit Legal
In order to keep your 501(c)(3) nonprofit company in California, you must:
Apply for a state tax exemption.
Tax-exempt organisations must file annual federal returns.
Keep a Registered Agent on file.
Submit periodic reports
Request permissions and licences
Register your charitable organisation with the Employment Development Department.
Follow the Public Inspection Rules.
1. Apply for a state tax exemption.
A. Exemption from State Income Tax
After receiving your 501(c) decision letter from the IRS, you may submit Form 3500A for state income/franchise tax exemptions.
Transaction Privilege Tax B.
The majority of organisations in California will be obliged to pay sales tax. Review this paper issued by the California Department of Tax and Fee Administration to learn more about sales tax and exemptions (CDTFA). If your organisation is eligible for an exemption, you may obtain the necessary paperwork on the CDTFA’s website.
2. Tax-exempt Organizations’ Annual Federal Returns
A. Federal Annual Returns
The IRS requires most tax-exempt charitable organisations to submit an annual return (Check the IRS website for a list of exceptions).
An organization’s yearly gross receipts dictate which form should be utilised to submit the annual federal return.
The IRS defines ‘gross receipt’ as “the total sums the organisation received from all sources throughout its yearly accounting period, before deducting any expenditures or expenses.”
For gross revenues of $50,000 or more, file Form 990-N.
$200,000 in gross income and $500,000 in total assets —- File 990-EZ
If your gross revenues exceed $200,000 or your total assets exceed $500,000, you must file a 990 form.
If you have any concerns, please contact the IRS at
(800) 829-3676 (Form related questions)
(800) 829-1040 (general information)
FAQ
Q: When is the 990 form due?
A: Form 990 is due on the 15th day of the 5th month after the end of the organization’s fiscal year.
For example, if the fiscal year closes on December 31st, the form 990 is due on May 15th.
NOTE: If an organisation fails to complete Form 990 for three years in a row, it will lose its tax-exempt status.
B. Unrelated Business Profits
If an organisation earns more than $1,000 from a trade or company that is unrelated to the organization’s declared purpose, it must submit Form 990-T to pay taxes on that revenue.
If your organisation anticipates to pay $500 or more in unrelated business income taxes for the year, you must pay a quarterly estimated tax on the unrelated business income using Form 990-W.
3. Keep a Registered Agent.
Any organisation that has incorporated must have a registered agent with a California office location. If you change your registered agent or their office address, you must submit a Statement of Information (SI-100) form with the Secretary of State so that your Articles of Incorporation may be changed.
Your company may be terminated if you fail to inform the Secretary of State of this change.
4. Submit Periodic Reports
All charities in California must file a Statement of Interest form (SI-100) with the California Secretary of State within 90 days after incorporation. Following the first Statement of Interest form, nonprofits must submit another form every two years, as well as notify the Secretary of State of any changes to their organisation.
Failure to submit the required reports may result in the termination of your company.
5. Obtain Permits and Licenses
Depending on the nature of your organisation, you may need to seek a permission or licence to function lawfully in California. The website of the Governor’s Office of Business and Economic Development may assist you in determining if your company requires any permissions or licences.
6. Registration of Charities
If your group will be collecting contributions, there are three things you should bear in mind:
Nonprofits that want to accept charitable gifts must register with the Attorney General’s Registry of Charitable Trusts within 30 days after their initial donation. The registration cost is $25, and Form CT-1 must be completed. This registration must be renewed annually.
If you want to participate in particular sorts of fundraising activities (telemarketing, raffles, bingo, etc.), you must follow the Attorney General’s instructions. If you are qualified to organise a raffle, you must also register it in advance.
Professional solicitors are obliged to register with the Attorney General, although volunteer solicitors are not.
7. Register with the California Department of Employment Development.
If your organisation will have any form of workers, you must register with the California Employment Development Department.
Registration is simple and may be done online. You may also find your local workforce commission’s contact information online.
8. Obey Public Inspection Rules
To comply with federal requirements governing 501(c)(3) organisations, you must make the following papers available to any member of the public who wants them:
Annual returns for your organisation may be filed up to three years after the due date (including the following Forms: 990-PF, 990-EZ, 990-T, and 990)
Any supporting documentation and attachments for the 990 forms listed above. For Schedule B, however, you simply need to indicate the kind of the gift and the amount given.
Official IRS documentation demonstrating that your group is tax-exempt.
Your organization’s exemption application and any supporting documentation filed with it (including Form 1023).
Your company is NOT required to share the following papers or information with the general public:
Any part of Schedule B of Form 990/990-EZ that identifies donors.
Anything deemed an adverse judgement, including past rejections of tax-exempt status.
Any extra information that the IRS is entitled to withhold, such as trade secrets, patents, and so forth.