Nonprofit Tax Tips

Once you know your organization is registered, there are a few more basics Perlman says every nonprofit should take note of to ensure no tax hassles:

• Make sure you pay tax on unrelated income tax.
• Be careful when receiving money from a for-profit company — how the gift is acknowledged by the charity can affect whether it's a donation to the charity or unrelated income, which requires the charity to pay tax on the funds received.
• Acknowledge receipt of money. The law is that any donation of $250 or more must be acknowledged. It's never a bad idea to acknowledge every gift, but it's absolutely necessary for those over $250. Perlman suggests investing in software to track and automatically receipt donors, and make sure your organization is careful and understands both the software and the law.

Another area Perlman says nonprofits must be careful is with cause-marketing campaigns. For instance, if a business makes a statement to the consumer that for each purchase of the company's hamburger that 10 cents will be donated by the business to a charity, the company is a commercial co-venturer required to register in a few states. If the company makes a statement that the purchaser is making a donation by buying a hamburger, the company may be considered to be a professional solicitor, a designation which will trigger additional compliance requirements.