Nonprofit Compliance Checklist for Iowa

By Jim Thomas

Nonprofit organizations — organizations whose purpose is not to make a profit — are essential members of many communities. As the Iowa Governor's Nonprofit Task Force explains, nonprofits in Iowa "range across the broad spectrum of daily life and include religion, health, social services, education, culture, community development, housing and human rights ... they are vital factors in making Iowa a great place to work and live." Setting up an Iowa nonprofit is not difficult, but you must heed the state regulations regarding formation of your organization. You also must comply with IRS regulation of nonprofits. By following a step-by-step process, and checking off what you need to do at each step, you can ensure you are in compliance with both state and federal law.

File Articles of Incorporation

Iowa code section 504.202 requires you to file articles of incorporation for a nonprofit organization with the office of the secretary of state. The articles must contain all of the elements required by Iowa law. These include a corporate name that is distinguishable from all other names of Iowa corporations, the lawful purpose of your organization, a registered office and agent, the status of members in regard to their voting rights within the organization, and provisions that the IRS requires for federal tax exemption. When all of these elements are stated in the articles of incorporation, submit the articles to the secretary of state's business services office in Des Moines. You will receive a certificate of acknowledgement of your nonprofit organization in return.

Hold an Organizational Meeting

After acknowledgement from the state, hold a meeting to elect directors and officers, adopt bylaws and begin the work of your nonprofit. Although you don't have to file it with the state, Iowa law requires the initial set of bylaws to be adopted by the board of directors. Bylaws should cover the size of the board and how it is to be elected, meeting times, committees, responsibilities of the officers, the fiscal year of the nonprofit and the process of amending the bylaws.

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Obtain Nonprofit IRS Status

To obtain nonprofit status, apply to the IRS by submitting IRS form 1023, which is available on the IRS website. The form requires a statement of the proposed activities of your organization and estimates for a three-year budget. After you receive recognition of your federal nonprofit status from the IRS, you are automatically exempt from Iowa corporate income taxes as well. However, your nonprofit may have to pay sales tax, depending on its activities. Consult the Iowa Department of Revenue to determine whether or not state sales taxes apply to your organization.

Comply With Reporting Requirements

Your nonprofit must file a biennial report and informational updates to the Iowa secretary of state's office. If you fail to do so, you risk the dissolution of your nonprofit. The IRS requires annual reporting in the form of file 990. If your nonprofit has collected income unrelated to the organization's approved activities, federal form 990T must be filed with the IRS and state form 1120 must be filed with the Iowa Department of Revenue and Finance.

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Wisconsin Non-Profit Laws

A nonprofit is an organization formed to serve the public good, such as for a charitable, scientific, religious or educational purpose. The goal of a nonprofit is not to create profits for investors. The Wisconsin nonprofit laws provide guidelines for forming and operating a nonprofit in the state. Nonprofits generally follow the requirements of non-stock corporations, but have strict restrictions on profit distributions. All nonprofits should be careful to follow the legal requirements of their states, and may face fines or dissolution if not in compliance.

Legal Obligations for Hiring an Executive Director of a Nonprofit

Hiring an executive director is an important step for any expanding nonprofit. In addition to practical considerations in finding a good match for your organization, you must also consider the role and duties of the board of directors in selecting an executive director. Additionally, both the federal and state government provide rules on compensation of nonprofit employees.

Delaware Nonprofit Filing Requirements

A nonprofit organization issues no shares and distributes no dividends. Because of its nonprofit status, it is eligible for significant state and federal tax benefits, as are its donors. To start a nonprofit organization in Delaware, you must file the appropriate formation documents with the Delaware secretary of state, file for nonprofit status with the IRS and periodically submit certain documents to Delaware and the IRS. Most nonprofit organizations choose to organize as corporations.

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