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As a new nonprofit founder, ensuring compliance with federal, state, and local regulations is critical for maintaining your tax-exempt status and protecting your organization. Here's a brief overview of some essential compliance areas for independent 501(c)(3) organizations. This page provides high level guidance on major areas of compliance that you need to be aware of as start a nonprofit. If you need a guide in the process, contact Sutro Li.
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Independent 501(c)(3) organizations are generally not required to have an annual audit unless they meet certain financial thresholds. However, if your organization’s gross revenue exceeds $500,000, you may be required to have an independent audit. Even if you’re not required, an audit can help ensure financial transparency and build credibility with donors.
The IRS requires most 501(c)(3) organizations to file an annual Form 990 (or a simplified version, 990-EZ or 990-N) to maintain tax-exempt status. This form provides transparency into your financials, governance, and activities. The filing deadline is typically 4.5 months after the end of your fiscal year, and failure to file can result in penalties or loss of tax-exempt status. A 6 month extension is available if applied for by the 4.5 month filing deadline.
In addition to federal requirements, you may need to file annual reports with your state’s attorney general or nonprofit regulatory agency. Each state has its own rules and timelines for nonprofit filings. Some states also require charities to register before soliciting donations. Be sure to check your state’s specific requirements to avoid penalties.