Listing Incorporators: To my knowledge, this doesn't "matter". Meaning, that legally, longterm, I'm not sure it matters. Some might like their name included for posterity (as I have and to produce the "initial filing" documents from time to time, especially for banks), but lacking that desire, I would go with the legal minimum.

One other thing... once you are established, each year (at least in Nevada), along with the annual business license renewal, we're asked for an updated "annual list" of officers of the corporation (arrives in the same envelope). On this list I HIGHLY recommend going with no fewer than 2, but otherwise the legal minimum for your state. In Nevada it is 3. The reason: if you ever need to open or close a bank account, or make any major changes to your business status, EVERYONE currently listed on your list of officers is required to sign (or in some cases 'be present in the bank') in order to proceed. You don't want that to be one person. At the same time you don't want to have every member of the board required to go to the bank to sign paperwork. The state/feds think of those listed on that "list" as the "owners". We're non-profits so that doesn't mean the same as it does elsewhere, but as far as a bank is concerned, it does, and it requires everyone listed to open and close accounts. ACBS lists the President, Secretary-Treasurer, and the Executive Director. (It could of course be 3 board members, but including the Director allows him/her to work with the bank and the state/fed.)

- Emily Rodrigues, ACBS

(Please always double check this information. I am not an attorney or accountant, and rules may change. If you have new/better information, please comment at the bottom of this page, and I'll happily update this page.)

Did you know there is a new Chapter & SIG Award? Learn more here about how to apply and what qualifies - New Chapter & SIG Award/ Grant

Some chapters collect dues and host events and therefore these chapters will need a bank (checking) account.

How to set up a checking account?

In the US, the first thing you need is a Federal Tax ID number. Then, if your state requires it, you must register with your state. (Usually the Secretary of State's office, or business entity office.) You should call the bank first and ask which documents you will need to set up the account. You'll need to take your original letter from the IRS, verifying your tax status to your bank, along with your bylaws, articles of incorporation, etc. The bank will make copies of these documents for their records.

At least one of the people who will be a signer on the account must go to the bank to set up the account. Your original incorporation documents will include your initial board. Some banks require that you be either the president or the treasurer, in order to be the signer. Otherwise you might need a letter from the full board, signed by the board, attesting to the fact that you are authorized to be a signer.

You should contact multiple banks to see what they offer for non-profits. Some have a very high balance needed in order to avoid monthly service charges, others do not. Make sure the bank is convenient for your chapter.

In Germany, I would not suggest selecting a bank that is only in Berlin, but one that is national as your Board member composition will be constantly changing.

At least 2 people as signers on the account for security and convenience. You do not need to have checks that require 2 signatures. With all signers having online access to the account, you can see all transactions.

Do you need a physical address to set one up?

You can not use a PO Box or registered agent address for your bank account. It must be a physical address.

Who is in charge of keeping the physical checks, writing the checks, and balancing the checkbook?

Typically it is the treasurer or secretary, and they send a copy of the current reporting (as elaborate or as simple as you like), to the President, or the entire board on a monthly basis. ACBS has staff reconcile all accounts monthly, and those reports are sent to the President and Secretary-Treasurer monthly for their information and review. This could be a simple screenshot of a free accounting program, or an Excel spreadsheet tracking your information. If you only have financial activities a few months of the year, the need to forward reports less often might be fine. This can be determined by the individual chapter.

How many chapter leaders should be listed on the checking account?

At least two chapter leaders need to be on the checking account.

Need for money

The amount of money a Chapter/Sig needs depends on how large your group membership is, what sorts of activities you want the chapter to engage in, and the skill sets of your Board and Membership.  

A small group that focuses primarily on activities like peer consultation groups and networking may not need any money at all. This is particularly apt to be the case if Board members and member volunteers are able to contribute time to managing membership rosters, listservs, etc.

Raising Money

If your group wants to host workshops or trainings, then some money will be needed. Some groups collect funds via membership dues. Several groups have started out by having Board members “front” the money for venue reservations and other up front expenses.

For those who want to host a revenue-generating event, consider requesting a “seed loan” from The Chapter & Sig Committee.

Getting a tax ID number or Employer Identification Number (EIN) is easy and can be done online at:

https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Apply-for-an-Employer-Identification-Number-(EIN)-Online

IMPORTANT: If you believe your organization qualifies or will qualify for tax exempt status, consider forming your organization before or soon after you apply for an EIN. Nearly all organizations exempt under IRC 501(a) are subject to automatic revocation of their tax-exempt status if they fail to file a required annual information return or notice for three consecutive years. When you apply for an EIN, the IRS presumes you're legally formed and the clock starts running on this three-year period.

There are different options for managing Chapter/SIG funds:

 
Treasurer: Every Board should have a Treasurer.  This individual is generally responsible for managing chapter funds and tax-related activities.  Treasurers may work in concert with other Board members or committee members to manage these responsibilities.   

SIGs and unincorporated Chapters likely can't have bank accounts or tax ID numbers so any funds must be held by a private individual on behalf of the group.  For this reason accounting, tracking, and double checking is important for transparency and security of funds.

Volunteer Accountant:  Even with a Treasurer in place, it can be worthwhile to reach out to membership and ask for volunteer accounting help.          

Paid Accountant: Should accounting responsibilities become overwhelming for the Treasurer, it may make sense to hire an accountant for advice or assistance in managing funds and/or taxes.  

Do we need an accountant or attorney?

There is not absolute need for either and attorney or an accountant.   Getting an tax ID number/EIN, setting up a bank account, and incorporating can all be done by with professional assistance. That said, organizing and managing Chapter/Sig finances can seem a daunting task, and some may feel more comfortable getting professional advice and/or support.

Do we need to Incorporate?
There is no requirement for Chapters or Sigs to incorporate, but it is encouraged for Chapters.  Once a group has revenue from dues or other sources (e.g., workshops, fundraisers, donations) then the matter of paying taxes becomes relevant.  

What options for incorporation do we have in the USA?
Most groups that incorporate become 501(c)6 non-profit corporations.  501(c)6’s are business leagues or associations that are organized and operated primarily to promote the common business interests of its members.  501(c)6 groups do not have to pay taxes, but they do need to report annually to the IRS.  To learn how to apply, go to https://contextualscience.org/chapter_us_irs_status

Outside of the USA?
Please consult a local tax/business professional to learn your national rules.

Alternative to Incorporating

Should your group chose to collect revenue and not to incorporate, then you can:

• appoint a Board member or other trusted member to create a PayPal account for your group
• collect money through the account and “hold” the money for the chapter
• pay taxes on it using existing monies (the individual would do this as part of their annual tax return, and pay the appropriate taxes out of the Chapter funds)
• note that any "profit" at the end of the year would actually work like "income" for that person, as far as their tax return is concerned

Note from SF Bay Area chapter: At least in California, it is possible to organize as an "unincorporated nonprofit association", thus we can be tax exempt (Federal 501(c)(3)) and avoid the complications and expense of incorporation. However, incorporation protects individual board members, so we opted to purchase Directors and Officers Insurance.
 

SIGs don't typically need insurance, but at a certain stage Chapters may deem it necessary.

General Liability insurance for your business typically will cover events that you do, but you must check with your insurance provider, ACBS endorses no particualr insurance carrier, and encourages each chapter to do its own due diligence.  

If your general liability policy doesn't cover events (or if you do not have a general liability policy) you can purchase event insurance to cover any events that you do. There is also "event cancellation insurance" that can protect you in case your event must be cancelled for some reason.One other insurance you may want (and ACBS has) is "D&O insurance", or "Directors & Officer's Insurance".  

This insurance protects your Directors and Board Members (Officers) from personal liability, if the organization is sued. If you have any regular, paid employees, you may need worker's compensation and other insurances.

One option for getting a quote on D & O insurance in the USA is here:  https://www.affinitynonprofits.com/

They can provide both general liability and D&O coverage, cost and coverage can vary but the San Fran Bay Area Chatper offered this information.  "We at the San Francisco Bay Area Chapter are wondering what has been others chapters' experience with Liability and D&O insurance. We are incorporated as a nonprofit and have been collecting dues and running workshop income and expenses through our books for less than 2 years. Activities are chapter meetings (mostly educational); social events; and trainings. The one quote we got so far was $1050 for Liability and $600 for D&O coverage".

SF Bay Area Chapter ended up with insurance through
Nonprofits Insurance Alliance
www.insurancefornonprofits.org

For premiums slightly less than mentioned earlier.
 

Money donated to most Chapters and SIGs is NOT tax deductible as a charitable contributions, according to U.S.A. tax law.  (Laws may vary in other countries.)

For example, ACBS is a non-profit, tax designation 501(c)6.

Charitible non-profits (or those grandfathered in), are 501(c)3, and contributions to them would be tax deductible (as a charitable contribution... as a donation to the Red Cross would be).

Membership dues paid to ACBS or a Chapter, according to US tax law, are not tax deductible, but may be deductible to the individual as a business expense.

501(c)6 groups may accept donations (without the expectation that they will be tax deductible), but the US IRS has very specific requirements that these donations may only be solicited if you make it very clear that they are not tax deductible.  (This statement must be on its own line/paragraph, must be in font as large as the request for donations, etc.)

Again, tax law outside of the USA may vary.

To be the Registered Agent (and you designate one when you incorporate) means that they would be mailed the annual "time to renew your state business license" forms (which they could forward to the current chapter leadership), as well as any "official government documentation". Things like a court summons, etc., would also be mailed to the "Registered Agent" on file with the state. Tax returns, etc. aren't mailed out anymore, so that doesn't go there.The registered agent is fairly easy to change, but it's ideal to have it be someone that wouldn't mind doing it long term. Someone established in your state. (Note, the registered agent isn't legally responsible for anything, they're just the address on file, so to speak.) 

If you were ever to have a W-2 employee that you paid, and needed to file federal and state quarterly taxes, those can be mailed anywhere (you could even put your accountant's address on those if that is what they agreed to).

Because ACBS no longer has an office in the state in which we're incorporated (Nevada), but we must have a "resident agent" in that state (unless we want to reincorporate in a different state), we actually hired a company. (There are companies in every state that will do this for you.) It's $100-$150 per year for us, and they just forward anything addressed to us, and we can update our address with them whenever we want. To date, as we haven't had any court related issues, they receive one piece of mail for us per year (our reminder to renew our state business license, along with our form to update our list of officers) and forward that to us. If someone in your chapter is willing to do this longterm, you could save yourselves some money, and not need to change the address frequently.

We wanted to add some information about Spanish Chapter financial management.

Queríamos ofrecer la información relacionada con el manejo económico de la división española por si puede servir a otras divisiones o Sigs. La fiscalidad de las asociaciones no es un tema fácil. Hay que tener en cuenta que la normativa que regula los impuestos cambia con frecuencia, es compleja y es importante actualizar los conocimientos.

1. Do you as a chapter/sig handle money? ¿Cómo división o grupo de especial interés (Sig) manejáis dinero?

ACPCC es una división española de la ACBS y al presentar los estatutos como la asociación sin ánimo de lucro, debemos de obtener el CIF y para facilitar todas las cuestiones económicas relacionadas con su apertura, pagar los gastos de gestión relacionados con la inscripción de la asociación etc.

2. Do you need to get a tax ID number? ¿Necesitas el número CIF como una división?

El primer paso sería registrarse en la Inscripción en el Registro de Asociaciones donde la asociación presenta los estatutos firmados por los socios fundadores.

El siguiente paso es la obtención del CIF y la declaración censal.

La Agencia Tributaria dispone de un censo en el que tienen que estar registradas todas la entidades, personas y profesionales cuyas actividades tienen o pueden tener trascendencia fiscal. A estas entidades o personas, la Agencia Tributaría le asigna un
Código de Identificación Fiscal o NIF que permitirá identificarlas.

Debemos obtener un Código de Identificación Fiscal que nos permita:

• Abrir una cuenta en una entidad financiera.
• Girar cuotas a los asociados.
• Adquirir bienes.

Para poder obtenerlo la Agencia Tributaria exige de la asociación que ésta rellene un impreso en que se detallan aspectos relativos a su composición y funcionamiento de manera que la Agencia pueda:

• Identificarla.
• Conocer la naturaleza de sus actividades y, por tanto, las obligaciones fiscales que debe cumplir.
• Controlar si cumple con sus obligaciones fiscales.

3. Do you need to incorporate? ¿Necesitáis incorporaros?

En el momento en el cual el grupo considera organizar eventos que requieran manejo económico, sería casi imprescindible que se incorporen.

4. Can a registered agent handle financial arrangements? ¿Puede un agente registrado llevar las cuestiones económicas?

Parece que no es posible en España.

5. If you make any money, when do we have to start paying taxes? ¿Si la asociación gana dinero, cuando necesitas pagar impuestos?

Lee el punto 6 para considerar que exención puedas obtener y cuando necesitarás pagar los impuestos.

6. How do you pay taxes on money raised? ¿Qué impuestos hay que pagar y cómo?

Estos son los impuestos básicos:

• IAE: Impuesto sobre actividades económicas.

Las asociaciones gozan de exención en este impuesto durante los dos primeros años de actividad y, posteriormente, siempre que el importe neto de la cifra de negocios no supere el millón de euros. No obstante, es la asociación la que comunica esta situación de exención al dar de alta la actividad económica (mediante el modelo 036).

• IVA: Impuesto sobre el valor añadido.

Este impuesto se aplica sobre el coste de los productos o servicios y lo paga el usuario final, la persona que acaba comprando el producto o recibiendo el servicio.

Antes de proceder a hacer el ingreso en Hacienda, el empresario, calculará la diferencia entre el IVA que ha soportado (en las compras necesarias para su negocio) y el IVA que ha recaudado en sus ventas.

Si la diferencia es positiva deberá ingresarla en Hacienda y si es negativa podrá solicitar su devolución.

La asociación debería de considerar si poder desgravar el IVA ( en caso de necesitar comprar varias cosas) calcula pagarla ( en cuotas de socios, tasas de cuotas de congresos). En caso en el cual no compensará, la ong debería solicitar la exención.

Primer trimestre: entre el 1 y el 20 de abril.
Segundo trimestre: entre el 1 y el 20 de julio.
Tercer trimestre: entre el 1 y el 20 de octubre.
Cuarto trimestre: entre el 1 y el 30 de enero del año siguiente.
Resumen anual: entre el 1 y el 30 de enero del año siguiente.

Modelos:
Liquidaciones Trimestrales: Modelo 300.
Declaración Resumen Anual: Modelo 390.

Más información sobre IVA:
http://www.asociaciones.org/index.php?option=com_content&view=article&id=493&Itemid=58

• IS: Impuesto de sociedades.

Es un impuesto que grava los beneficios de las entidades jurídicas, ya sean empresas o asociaciones.

Todas las entidades tendrán que presentar impuesto de sociedades aunque anteriormente se acogían a la exención.

Modelos y plazo de presentación
Declaración anual: 1 al 25 de julio (modelo 201)
Declaraciones trimestrales: (modelo 202)
1 al 20 abril
1 al 20 octubre
1 al 20 diciembre

Más información sobre IS: http://www.asociaciones.org/index.php?option=com_content&view=article&id=494&Itemid=58

• IRPF: Impuesto sobre la renta de las personas físicas

El IRPF afectará a nuestra asociación sólo si satisface rentas a personas físicas y deberá entonces retener parte de las mismas e ingresarlas en Hacienda.

Trimestralmente, coincidiendo con los 20 primeros días del mes siguiente a la finalización del trimestre natural, es decir, entre el 1 y el 20 de Abril, Julio, Octubre, enero. Deberán presentar el Modelo 110 e ingresar las retenciones practicadas, directamente en las oficinas de Hacienda o a través de nuestro banco.

7. Is the money donated to your chapter tax deductible? Puedo deducir cuando dono dinero a la división ACPCC?

No es posible desgravar el impuesto por donar a la ACPCC.

Solamente es posible según se establece en artículo 2 de la Ley 49/2002, de 23 de diciembre para:

Las fundaciones.

Las asociaciones declaradas de utilidad pública.

Las organizaciones no gubernamentales de desarrollo a que se refiere la Ley 23/1998, de 7 de julio, de Cooperación Internacional para el Desarrollo, siempre que tengan alguna de las formas jurídicas a que se refieren los párrafos anteriores.

Las delegaciones de fundaciones extranjeras inscritas en el Registro de Fundaciones.

Más información:
www.hacesfalta.org
www.solucionesong.org
www.ongexcelente.org
www.asociaciones.org

Even though an organization may be recognized as tax exempt, it still may be liable for tax on its unrelated business income. For most organizations, unrelated business income is income from a trade or business, regularly carried on, that is not substantially related to the charitable, educational, or other purpose that is the basis of the organization's exemption.

(If you didn't understand what that meant above, it means things like t-shirt sales, coffee mugs, bulk rate insurance royalties, recurring advertising sales (not one time ads for your annual event), things that don't really have to do with your tax exempt purpose.)

An exempt organization that has $1,000 or more of gross income from unrelated business activities must file Form 990-T. An organization must pay estimated tax if it expects its tax for the year to be $500 or more. A word of caution: if your nonprofit earns more than 20% of its income from unrelated business activities it could potentially lose tax-exempt status.

The obligation to file Form 990-T is in addition to the obligation to file the annual information return, Form 990, 990-EZ or 990-PF. Each organization must file a separate Form 990-T, except title holding corporations and organizations receiving their earnings that file a consolidated return under Internal Revenue Code section 1501.
 

I found some really helpful information about how to complete a 990-N postcard.  (See pages 13-15 of the attachment that I found on "ohiolegion.com".)  This document is mostly geared toward 501(c)3 entities, and nearly all chapters will be 501(c)6 entities, but the basics still apply.  It includes a sample copy of the completed form. (It's so simple, you'll be shocked.  It doesn't actually ask for financial details except "Gross receipts are normally $50,000 or less" and then you are presented with a checkbox.)

If you make more money than that:

If you have unrelated business income, you may still need to file form 990-T regardless of which tax return you have filed above.

- posted May 7, 2020

Please note, ACBS is not a tax authority and can not give tax or legal advice.  All information posted here is for reference only and any tax decisions should be confirmed with a licensed accountant or attorney.