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3 easy steps to make your local association a professional business association Incorporate? EIN? Income Tax Umbrella? HELP!!!!

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Presentation on theme: "3 easy steps to make your local association a professional business association Incorporate? EIN? Income Tax Umbrella? HELP!!!!"— Presentation transcript:

1 3 easy steps to make your local association a professional business association Incorporate? EIN? Income Tax Umbrella? HELP!!!!

2 Three Easy Steps: 1. Incorporate 2. EIN 3. Income Tax Umbrella

3 1. Incorporate To obtain an official charter or articles of incorporation from the Florida Dept. of State for an organization. What Does it Mean?

4 1. Incorporate Your local Association is a separate entity. One of the most important reasons to incorporate is that incorporating protects your local officer’s personal assets from any association liabilities such as creditors or lawsuits. In other words, if your local Association is not incorporated, the LOCAL OFFICERS are PERSONALLY RESPONSIBLE for all liabilities of your local Association. Why?

5 1. Incorporate To become incorporated, simply file Articles of Incorporation with the Florida Department of State, Division of Corporations. A partially completed prototype Articles of Incorporation is available at the FSNA office. If your chapter decides to incorporate, just call Kathy at FSNA and she will send them to you. How Do You Apply?

6 1. Incorporate It costs about $70 to file for incorporation. How Much does it Cost?

7 1. Incorporate After your chapter becomes incorporated, your chapter will have to file a Not-For-Profit Corporation Annual Report with the Florida Department of State, every year. To avoid a penalty, the report must be processed by the FL. Dept. of State by May 1 Note-not completed by May 1. What are the Annual Filing Requirements?

8 1. Incorporate You will NOT receive a notice that your Annual Report is due. The Annual Report form is on the Fl. Dept. of State web site. Go to You will need your State document number that was sent to you with the stamped articles of incorporation. What are the Annual Filing Requirements?

9 1. Incorporate If paying by check, print out the form. Complete the form and mail it with the check to the address on the form. It will take 3 weeks to process your check. To avoid a penalty, be sure to mail it by the first week in April. If paying by credit card, complete the form on-line and follow instructions for payment. Your report will be processed in 2-3 days. To avoid a penalty, complete on-line by April 26. What are the Annual Filing Requirements?

10 1. Incorporate Always keep a copy for your Association’s records! What are the Annual Filing Requirements?

11 1. Incorporate The report asks for a listing of your local officers. No financial information is requested. What Questions are on the Annual Report?

12 1. Incorporate After you become incorporated, it costs about $65 per year to be paid with the Annual Report. What is the Annual Fee?

13 1. Incorporate No, but again, if your local Association is not incorporated, the LOCAL OFFICERS are PERSONALLY LIABLE! Does Our Chapter Have to Incorporate?

14 2. EIN What Does it Mean? EIN (Employer Identification Number) An EIN is a unique number that identifies your local Association to the IRS.

15 2. EIN 1. You must have an EIN to apply for the FSNA Federal Income Tax Exemption Umbrella. This will be explained in step The EIN is the number you should give the bank to set up your local Association's bank account. Why?

16 2. EIN To file for an EIN, you must complete the SS-4 form and submit it to the IRS. The form asks for address and contact information. No financial information is requested. Contact Kathy at the FSNA office for the partially completed form and instructions. How Do You Apply?

17 2. EIN There is no cost to file the SS-4 form. How Much does it Cost?

18 2. EIN There are no annual filing requirements or fees after you have received your EIN. Are there Annual Filing Requirements and/or Fees?

19 3. FSNA Federal Income Tax Exempt Umbrella Federal tax exemption means that an organization does not pay corporate federal income tax from activities that are related to the purpose for which the organization was granted exempt status. Income tax is federal tax that all organizations pay on the net profit of the organization. Just as most individuals pay income tax on their personal earnings, so must most organizations pay taxes on the organization’s earnings. What Does it Mean?

20 3. FSNA Federal Income Tax Exempt Umbrella If your Association is not federal income tax exempt then your Association is required to pay taxes on all income received by the Association. If the income is not reported, the local officers are potentially liable for payment of income taxes, penalties, and interest. Why?

21 3. FSNA Federal Income Tax Exempt Umbrella Your tax exempt status is awarded when you get under the FSNA federal income tax exempt umbrella. Your tax status becomes federal income tax exempt under section 501 (c)6. Why? Many organizations require proof of tax exempt status in order to have fundraising events.

22 3. FSNA Federal Income Tax Exempt Umbrella After you receive your chapter’s EIN, contact Kathy at FSNA. Kathy will submit your request to the IRS and will notify you when your chapter is added. How Do You Apply?

23 3. FSNA Federal Income Tax Exempt Umbrella There is no cost to get under the FSNA Federal Income Tax Exempt Umbrella. How Much does it Cost?

24 3. FSNA Federal Income Tax Exempt Umbrella All federal income tax exempt local Associations whose gross receipts (the $ received by your Association) are less than $50,000 are now required to e-file a 990N. To clarify, if your local Association has gross receipts greater than $50,000, you would be required to file a 990 which is much more complicated. What Are the Annual Filing Requirements?

25 3. FSNA Federal Income Tax Exempt Umbrella The 990N must be e-filed each year by the 15 th day of the fifth month after the close of the local chapter’s tax period. In other words, your Association’s tax period should end on July 31, so the e-filing is due by December 15. What are the Annual Filing Requirements? Be safe! E-file in August! Always keep a copy for your Association’s records!

26 3. FSNA Federal Income Tax Exempt Umbrella Address and contact information is requested. No financial information is requested. What Questions are on the 990N E-card?

27 3. FSNA Federal Income Tax Exempt Umbrella No, there are no fees to e-file the 990N. Is there an annual fee to e-file the 990N?

28 Breaking it Down 1. Incorporate2. EIN3. FSNA Umbrella Initial FormArticles of Incorporation SS-4FSNA Submits Initial CostAbout $70$.00 Issuing DepartmentFL Dept. of State, Division of Corporations U. S. Dept. of Treasury, IRS Annual ReportingNot-For-Profit Annual Report No Annual Reporting 990N Annual Reporting CostAbout $65No Annual Fees Penalty if not filedLate fees, penalties, loss of Incorporation N/ALate fees, penalties, loss of federal income tax exemption.

29 Additional Information Does the local Association HAVE to incorporate in order to be under the FSNA Federal Income Tax Exemption Umbrella? No, but your Association does need an EIN to be under the FSNA Federal Income Tax Umbrella.

30 Additional Information What is the absolute minimum requirement that all local Associations need to operate? At the very least, every Association needs Bylaws. A Bylaws prototype is available. Contact Kathy Clark at the FSNA office.

31 Additional Information Sales Tax vs. Income Tax Income Tax- federal tax that all organizations pay on the net profit of the organization. Just as most individuals pay income tax on their personal earnings, so must most organizations pay taxes on the organization’s earnings. Your Association should be under the FSNA Income Tax Umbrella in order to be income tax exempt. Sales Tax- tax paid on purchases made by the Association. Local Associations do not meet the requirements to be sales tax exempt. They should pay sales tax on all purchases made by the Association.

32 Additional Information EIN vs. TIN TIN- (Tax Identification Number) A TIN is a tax exempt number that is assigned by the Florida Department of State. The TIN identifies organizations as exempt for state sales tax. FSNA and local Associations do not meet the requirements to be sales tax exempt and therefore, will not receive a TIN. EIN- (Employer Identification Number) a unique number that identifies your local Association to the IRS. EIN has nothing to do with tax status. Tax status as a 501(c)6 is awarded when your chapter is under the FSNA Federal Income Tax Umbrella.

33 Additional Information Always keep copies!! The FSNA office should be sent copies of: 1. Your chapter’s Articles of Incorporation 2. Letter confirming incorporation from Florida Dept. of State, and 3. SS-4 form including the new EIN

34 Additional Information Make sure all future officers are aware of the filing requirements. Make sure future officers know where the paperwork is filed. Make sure address and contact information is updated and officers know where to get the Association’s mail.

35 Additional Information If your local Association is not incorporated, but already has an EIN, and is under the FSNA Federal Income Tax Exempt Umbrella, what steps do you need to take if your chapter decides to incorporate? 1. Become incorporated 2. Get a new EIN as an incorporation 3.Re-file under the FSNA Federal Income Tax Umbrella as an incorporation

36 Additional Information How can we check the status of our local Association? Kathy has all the documentation. You can check with her during the break, or call her at the FSNA office.

37 Additional Information How can I contact Kathy at the FSNA office? Call toll free:

38 Questions and Answers What are the 3 steps to make your local Association a professional business association? 1.Incorporate 2.EIN 3.FSNA Federal Income Tax Exempt Umbrella

39 Questions and Answers What is the main reason to incorporate? Incorporating protects your local officer’s personal assets from any association liabilities such as creditors or lawsuits.

40 Questions and Answers What are the annual filing requirements to keep the incorporation? After your chapter becomes incorporated, the local chapter will have to file a Not-For- Profit Corporation Annual Report with the Florida Department of State, every year.

41 Questions and Answers What fees do incorporations pay to the Florida Dept. of State? To become incorporated - about $70. After becoming incorporated - about $65 per year, sent with the Not-For-Profit Annual report.

42 Questions and Answers What are the 2 reasons to apply for an EIN? 1.You must have an EIN to apply for the FSNA Federal Income Tax Exemption Umbrella. 2. The EIN is the number you should give the bank to set up your local Association’s bank account.

43 Questions and Answers Yes or No. If a local Association is not under the FSNA Federal Income Tax Exemption Umbrella, does it need to pay Federal Income Taxes on its profits? Yes, furthermore, if the income is not reported, the local officers are potentially liable for payment of income taxes, penalties, and interest.

44 Questions and Answers What questions do you have? Toll Free Phone: (888)


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