CORPORATE RECORDS
The laws on what types of records must be kept are slightly different in each state. You should review your state statute and make a list of what records are required and keep them all together with the list. The following are some typical rules.
- Articles and Bylaws. Copies of the articles of organization, bylaws, and any revisions thereto must be kept on hand by the corporation
- Minutes. A corporation must keep minutes of the proceedings of its board of directors, members (if any), and any committees. The minutes should be in writing. Some states allow minutes to be kept in forms other than writing provided they can be converted into written form within a reasonable time. This would mean that they could be kept in a computer or possibly on a videotape. However, it is always best to keep a duplicate copy or at least one written copy.
- Finances . A nonprofit corporation must keep accurate financial records, especially if it is engaged in charitable solicitations. These records usually include records of all receipts and disbursements as well as tax returns and any other financial reports which are filed.
- Members . If the corporation has members, it must usually keep accurate records of the names and addresses of the members. Some states require them to be in alphabetical order.
MEETINGS
The corporation must hold an annual meeting of the board of directors. If there are formal members, there must be a meeting of them as well. Usually, the members elect directors and the directors elect officers. Minutes of these meetings must be kept with the corporate records. You can use them as master copies to photocopy each year. All that needs to be changed is the date, unless you actually change officers or directors or need to take some other corporate action.
ANNUAL REPORTS
Most states require that every corporation must file an annual report. Some states want them only every two years. Fortunately, this is a simple, often one-page, form which is sent to the corporation by the Secretary of State and may merely need to be signed and dated.
TAX RETURNS
Annual returns. Most nonprofit corporations are required to file a form 990 tax return each year. If the income is below $100,000 and assets below $250,000, then form 990EZ can be filed. If the income is less than $25,000 or the corporation is a church, school, or related organization, it may be exempt from filing. Check the instructions for the latest Form 990 to see if you qualify as exempt.
EMPLOYMENT REQUIREMENTS
If you will be paying wages to anyone, even just yourself, you will need to comply with all of the employer reporting and withholding laws of both your state and the federal government. Explaining every requirement is beyond the scope of this site, but the following is a summary of most of the requirements.
- New hire reporting. To improve the enforcement of child support payments, all employers must report the hiring of each new employee to an agency in the state.
- Employment eligibility . To combat the hiring of illegal immigrants, employers must complete the Department of Justice form 1-9 for each employee.
- Federal tax withholding . Social security and income taxes must be withheld from employees' wages and deposited to an authorized bank quarterly, monthly, or more often depending on the amount. The initial step is to obtain a form W-4 from each employee upon hiring. (This same form can also be used to fulfill the new hire reporting law discussed previously.)
- State withholding . In states that have income taxes, there is usually a withholding and reporting requirement similar to the federal one.
- Local withholding . In cities that have income taxes, there is usually a withholding and reporting requirement similar to the federal one.
- Unemployment compensation . There are taxes on employee wages (which employers must pay) which must be paid to the state and federal governments regularly. Also, employers are required to submit reports both quarterly and annually.
- Workers' compensation . Depending on the number of employees and the type of work, the state may require that workers' compensation insurance be obtained by the employer.
