Non-Profit Series: 9. Additional Applications and Accounts for Non-Profits

Written by Sagan L. Carman-Downer

Once you have made the decision to start a non-profit organization and completed the steps to officially form an entity (filing Articles of Incorporation, for example), there are additional steps that may be necessary. This article will explain some of those additional steps.

Apply for Federal Employer Identification Number

One of the next steps will be applying for an Employer Identification Number (EIN or federal tax id). This is a unique number assigned to the organization by the IRS. An EIN will be used for things like opening bank accounts and identifying the organization for tax purposes. The organization will complete a form called an SS-4, which can now be completed online through the IRS website. If completed online, the organization can receive the EIN immediately after the application is submitted.

Set Up EFTPS Account

Your organization may also need to set up an account with the Electronic Federal Tax Payment System. This is a system for the organization to deposit tax money withheld from any employees the organization may have. This will include money withheld from employees’ paychecks for FICA taxes and income taxes. The organization should automatically receive instructions in the mail for setting up this account after they have received their EIN.

Apply for State Identification Number

Even if you have received an EIN through the IRS, you may still be required to obtain an additional tax identification number through the state where your organization is located. Many states require the organization to apply for this additional identification number for state tax purposes. This is likely necessary if you will have employees that the organization will be required to withhold state income tax for, or if you will be required to collect a sales tax or other state tax. This can typically be done by submitting an application for an identification number through the state’s department of revenue.

Additional State Requirements

There may be additional requirements that vary by state. For example, in Nebraska, the organization may have to purchase a workers’ compensation insurance policy. This is an insurance policy that provides benefits to employees who are injured during their employment. Unless the organization meets certain exceptions, they may have to provide this type of insurance for its employees or officers. Another example in Nebraska, is the requirement that the organization complete an application through the Department of Labor for unemployment insurance. If the organization will have employees, they may be required to complete this to provide unemployment benefits to employees.

This list provides information on some of the next steps that the non-profit organization will need to take once they have officially formed an entity. There may be additional requirements depending on the state in which the organization is located, and the type and size of the organization. To ensure that you have completed the necessary steps, submitted the necessary applications, and created the necessary accounts, it is best to speak with an attorney in your state.

Non-Profit Series: 8. Tax-deductible Contributions

Written by Sagan L. Carman-Downer

The previous article in this series explained that one of the benefits of a non-profit organization obtaining 501(c)(3) status, is that contributions made by others are tax deductible. This means that the person or business that donates (the donor), can deduct that amount from their taxable income, which may help lower their tax burden. The non-profit that is receiving the donation (the donee), and the donor, must comply with certain federal rules regarding disclosures and recordkeeping. This article will explain some of those requirements for cash contributions. It’s important to note that the requirements discussed in this article are for cash contributions, and will differ if the contribution is in the form of goods or services.

Requirements of Donor

To take the tax deduction, the donor is required to keep a record of the contribution. For a cash contributions (which includes cash, checks, electronics funds transfers, debit cards, credit cards, and payroll deductions), the donor must keep one of the following: a bank record (canceled check, bank statement or credit card statement); a receipt from the donee; or a payroll deduction record. Simply keeping track in a check register will not be enough, one of the above records must be retained in order to deduct the contribution from the donor’s taxable income.

If the donor makes a cash contribution of $250 or more, they must also get an acknowledgment from the donee. This acknowledgment is explained in more detail below.

Requirements of Donee

If the donee receives a contribution of more than $75 from one individual or business, they must provide a disclosure statement to the donor. The disclosure must be written, must note the value of the contribution, and must inform the donee that the contribution is tax-deductible. If the donee does not provide this disclosure statement, the IRS may impose a fine on them.

As mentioned above, if the donee receives a cash contribution of $250 or more, they must provide an acknowledgment to the donor. The acknowledgment must meet the following requirements:

·         It must be written;

·         It must include the amount of cash contributed;

·         It must indicate whether the donor received goods or services for the contribution (including the value of the goods or services); and

·         It must be received by the donee before their tax return for that year is due.

This article provides a general guideline of the disclosure and record keeping requirements for cash contributions to non-profit organizations that have qualified for tax-exempt status under 501(c)(3). There may be additional requirements for larger cash contributions, and the requirements for contributions of goods or services will differ significantly. There are also additional rules on whether the donor can deduct these contributions, and if they can, how much can be deducted. The extent to which contribution is deductible will depend on each individual’s circumstances, so it would be best to speak with an attorney or other tax professional to discuss your specific situation.

Meet the Staff (Part 2)

At Fye Law Office, we have some great staff. And we want our clients, potential clients, and friends to have the opportunity to learn a little bit about them, and to hear some advice and thoughts from them. Today, you get to meet Kristi, one of the legal secretaries in our office.

Tell us a little bit about yourself.
    My husband’s name is Brad and he works for KAAPA Ethanol at the Minden location.  I have 2 children, Amie and Spencer.  Amie is married to Kyle and has 4 children, JJ, Quincy, Halle, and Maddex.  She is a para at the Holdrege Elementary School, and Kyle works for Husker Irrigation.  Spencer is a Program Director for the YMCA at an elementary and a middle school in Lincoln.  I have 3 step-children, Chelsea, who is the manager of a Caribou Coffee in Omaha, Grant, who is in the uniformed division of the Secret Service protecting Embassy Row in Washington D.C. and is getting married this summer, and Bryce who is an assistant manager of a Hy-Vee in Lincoln.   I live on a farm near Axtell, but I am originally from the Holdrege area.

How long have you worked for Fye Law Office?
     A year and 5 months.

What is your work experience/education/training prior to coming to work for Fye Law Office?
     I worked for several years as a bookkeeper for a couple of local farmers and then took a position at CPI at their Funk location as a grain merchandiser and scale operator for 4 years before deciding to try something new and went to work for a friend of mine at her family’s car dealership in Holdrege.  When the dealership sold, the opportunity to work for Fye Law Office was available and I decided to yet again try something new!  I had absolutely no law background and Tana took a chance with me!

What advice do you have to potential clients who are meeting with an attorney for the first time?
     Be as upfront and honest as you can. Attorneys can only deal with the information they are given and it is better for them to find out right away then to have something pop-up in court and not be prepared to deal with the information.

 What advice do you have to clients in working more effectively with their attorneys?
     A couple of the main things would be to make sure your attorney has an updated address and phone number and if possible set up your voicemail so messages can be left.  Another thing would be to not wait until the day or two before court to try and talk to your attorney.  Their schedules fill rather quickly.

Do you have any memorable experiences since working at Fye Law Office that you'd like to share?
     Without getting into much detail, I’ve had a client tell me they were going to sue me, which scared the crap out of me!!  Other than that, probably just things that clients seem to think they need to share with us!

What do you like about working in a law office?
    We have such a variety of cases that we work with and some of them can be very interesting.  Our office is pretty laid back and we all get along so well!

What is your favorite type of case or matter to work on? Why?
    I haven’t worked on many, but probably the adoptions.  It’s just so rewarding to see these kids adopted by loving families and to finally have some stability in their lives.


Thanks to Kristi for sharing a little bit about herself, as well as her thoughts with all of you.