Ready to start the multi-state nonprofit registration process?
Generally, nonprofit organizations file their incorporation paperwork in the state where they are located or where their primary activities occur. However, as your startup 501c3 develops and evolves, you may decide it’s time to expand and pursue a multi-state nonprofit registration. While this expansion can help your nonprofit grow and increase the number of services or individuals you’re helping, there are a few points to consider as you begin the registration process.
Can a Nonprofit Operate in Different States? Yes, it Can!
Five Tips for Surviving the Multi-State Nonprofit Registration Process:
1. Pay Attention to Federal Requirements
Regardless of how many states your nonprofit expands into, the federal compliance standards do not change. All tax-exempt nonprofits are required to file an IRS Form 990 every year. Not doing this can result in substantial fines and, ultimately, the IRS revoking a not-for-profit’s tax-exempt status. There are three types of Form 990, and the one required will depend on the amount of gross receipts your organization generated and the sources of those funds. In addition, the filing deadline for the Form 990 will depend on the end date of your nonprofit’s fiscal year. The fiscal year-end date is typically June 30 or December 31, but each nonprofit can set its own calendar.
2. Maintain State Compliance
While you already do annual reporting and filings in your home state, as part of your organization’s multi-state nonprofit registration, you will need to stay in compliance with each state’s specific requirements. You must follow the regulations for tax filings and annual reports for each new state you register in to conduct business. In addition, state filing requirements may also ask nonprofits to report income paid to their employees, provide proof of required licenses, and account for fundraising from residents living within the state. State filing requirements often vary. Some states require the reporting annually, others semi-annually, and still others are one-time-only depending on the activity. When managing a multi-state organization, working with a tax professional is advised as state filing requirements and deadlines are often complex and time-consuming.
3. Is Full Registration Necessary?
While a nonprofit can operate in different states, complete multi-state nonprofit registration may not be necessary, depending on your plans. For example, if your nonprofit organizes an event in a nearby state, it doesn’t automatically mean you’re operating in that state. In addition, for occasional outreach events, your organization may prefer to investigate the requirements for soliciting charitable donations. In some states, this process is as simple as registering with the state where you’re holding the event.
4. Understanding the Certificate of Authority
Nonprofits can operate in different states in order to expand their mission-defined services or activities outside of their incorporated state. For example, suppose your nonprofit’s mission is to provide healthcare services to veterans with post-traumatic stress disorder in Pennsylvania, and then you decide to expand into Ohio and New York. In that case, your nonprofit is operating in three distinct states. Therefore, your nonprofit needs to additionally file a Certificate of Authority in the states of Ohio and New York to legally perform its services there. While each state in the multi-state nonprofit registration process may have different filing requirements and guidelines, this process is required for every state.
5. Comply with Fundraising Regulations
While you can operate a nonprofit in different states, your strategic plan may indicate that it’s preferable to start slowly by first expanding your fundraising outside of the state where you’re incorporated. In this case, investigating the requirement for charitable solicitation registration in other states is the best course of action. As your organization grows, your list of regular donors will grow as well. But if a regular donor moves to another state, you may need to file a charitable solicitation request in the state where the donor lives.
Questions About Your Organization’s Multi-State Nonprofit Registration? We Can Help!
While it’s exciting to know that your nonprofit can operate in different states, the reality is that there’s no one simple solution to filing all the documents required in every state. Understanding each state’s requirements is critical for maintaining compliance, and that’s where our educational resources can help! Regardless of your organization’s size or sector, get in touch to learn more about partnering with BryteBridge Nonprofit Solutions. We can help ensure that your nonprofit startup completes each multi-state nonprofit registration quickly and correctly!