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When can a nonprofit open a bank account? #startanonprofit



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hey everyone what's going on this is

attorney Audrey Chism with Chism law

firm we helped establish individuals

start nonprofits that impact the world

alright here's another question that I

received from you all which is

when can you open up a bank account when

can your nonprofit open up a bank

account alright let's talk about it so

you can open up a bank account typically

bigots are gonna require two things

alright the first is they're going to

want to know that your nonprofit has

what are called Articles of

Incorporation okay so that's the first

thing you need are your nonprofit

articles and then the second thing

you're gonna need is a tax ID number

okay and the tax ID number is kind of

like the social security number for your

nonprofit it basically lets the

government know that your nonprofit is a

completely separate entity from you okay

so that way when the government is

reporting you know all that money and

donations and income that your nonprofit

is getting it doesn't associate all that

money with you personally because then

that would mean that you personally have

to pay taxes on that money and we don't

want that to happen right so those are

the main two things that you would need

your articles filed and your tax ID

number but wait there's something else

that you definitely need to know okay

even though you can't go ahead and open

up your bank account with those two

things for your nonprofit and start

accepting donations we always encourage

our clients to wait if you can meaning

we want you to wait until you get your

actual 501c3 tax-exempt status from the

IRS do you have to wait no of course you

can you know start it earlier than that

but the reason we encourage our clients

to wait is because just in case you

don't ever move forward and do that and

you choose not to apply to get your

tax-exempt status etc or maybe you did

it on your own or something and it

doesn't work out if that's the case the

money that you have in that account

you could be held personally liable to

pay taxes on that money so that means

that if you you know open up that

GoFundMe account and set up that bank

account and you know you raise two

hundred and fifty thousand dollars in

there and then you're like ah you know

what I'll get the tax exempt status

later I'm just not gonna apply or or

maybe you you know applied yourself and

you didn't know what you were doing or

or trusted someone else to do it like

you know some of our clients have done

before they come to us and then that

situation doesn't work out you know what

then you could be responsible for having

a paid

on that income because instead of it

being treated as a tax-exempt nonprofit

organization it may be treated by the

IRS it's just a regular corporation okay

which means you don't money you know

taxes on all that money alright so we

don't want that to happen so instead we

always advise at our clients you know go

ahead and wait until all the paperwork

is done everything is filed and approved

so then that way you're accepting that

money knowing that those donations will

be tax-exempt but the good news is is if

you've already started doing that you

can still reach out to us we're still

able to help you out because whenever we

file our applications for clients we

always request something that's called

retroactive exemptions so that's

something that we request from the IRS

which is requesting that they make sure

that all the early donations are still

exempt even once we get that approval

you know after it takes a few months all

right so either way you know we can talk

more about it and I'd love to talk more

about about it with you so just give us

a call at the number on your screen on

my team we'd love to hear about your

goals we'd love to hear about what

you're trying to do to impact the world

and how we can help you do it and make

sure everything is done the right way

all right so give us a call the numbers

on the screen or you can you know

schedule a free consultation with us and

our website our free nonprofit

consultation once again we believe in

you we want you to make an impact we've

helped a lot of people do this and we

know we can help you as well all right

thanks again for your time - leaving the

world better and brighter than we found

it have a great day

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