The question of whether filing for a 501c3 nonprofit status for tax exemption is a DIY job is a huge one for many people thinking of filing. On one hand, it will save money to do it yourself; while on the other hand, you are dealing with the IRS. Choosing whether you should file for 501c3 status for your organization yourself depends on several things, including the time you have available, what type of nonprofit you are and how your organization practices.
Time
There is no question that with the enormous amount of paperwork and different processes to file for 501c3 status - incorporating, drafting by-laws, creating a board of directors, and so on - there must be a huge time requirement for doing all of this yourself. If you do not have the time or energy for this kind of process, it is important that you stop now and allow a professional to help. Otherwise, you could end up with not enough motivation to finish the job and then make a fatal error in paperwork that could deny you the tax exemption status you want.
Types of Nonprofits
The type of nonprofit you intend to beco
me is another major consideration for this DIY project of filing for exempt status. If you intend to become a nonprofit that specializes in any legal or medical field whatsoever, absolutely do not undertake this process yourself. There are so many added laws involved with these types of nonprofits that it is virtually impossible for you to be able to handle it yourself without being a specialist in the field. Other types of nonprofits have fewer laws attached and are more conducive to a do-it-yourself approach.
Organization Practices
The different practices in which your organization participates may also dictate whether you should do the process yourself for filing for tax exemption. For example, any organization that participates in a lot of political lobbying or help with elections may want to leave it up to a professional to avoid a scenario in which the organization is unwittingly breaking a law and loses the tax exemption. A professional can catch these things ahead of time. On the other hand, nonprofits that do not participate in these things may be more able to handle a DIY process by an owner or board member, as there may be a smaller chance of such a breach of law for them.
Time
There is no question that with the enormous amount of paperwork and different processes to file for 501c3 status - incorporating, drafting by-laws, creating a board of directors, and so on - there must be a huge time requirement for doing all of this yourself. If you do not have the time or energy for this kind of process, it is important that you stop now and allow a professional to help. Otherwise, you could end up with not enough motivation to finish the job and then make a fatal error in paperwork that could deny you the tax exemption status you want.
Types of Nonprofits
The type of nonprofit you intend to beco
Organization Practices
The different practices in which your organization participates may also dictate whether you should do the process yourself for filing for tax exemption. For example, any organization that participates in a lot of political lobbying or help with elections may want to leave it up to a professional to avoid a scenario in which the organization is unwittingly breaking a law and loses the tax exemption. A professional can catch these things ahead of time. On the other hand, nonprofits that do not participate in these things may be more able to handle a DIY process by an owner or board member, as there may be a smaller chance of such a breach of law for them.
Tin Lam
Nonprofit Legal Center offers tips and resources for you to learn more about starting a 501c3 and setting up a 501c3 organizations.
View all articles by Tin Lam