Create a Manual Bill Format for Nonprofit Organizations Effortlessly

Manual bill format for Nonprofit

hey everybody so today we're going to talk about how to create a nonprofit organization step 5 [Music] [Music] with my budget I hope new and small nonprofits get up and running and today it's gonna be a longer video because I wanted to break down step by step how to start your nonprofit organization so if you google how to start a non-profit you're gonna find a lot of information but sometimes it can be difficult to find everything in one place and then you know when you want to start and you're excited you want people to tell you just tell me what to do just tell me step by step so I've created a nonprofit checklist the link is in the description box below and it does that it gives you step by step how to create a non-profit what to consider what paperwork to file all of that but I wanted to create a video to accompany the checklist because sometimes looking at paper it's just not enough and you know some of us are not you know if you just give somebody a piece of paper it's just not good enough sometimes you need to hear somebody walk through the process with you so you can feel confident about doing this one thing that I will say is that if you have a lot of questions or you have a complicated tax situation you should consider talking to a lawyer and a tax professional before you get started because having a non-profit does have implications for you personally if you're the founder and for the people who serve on your board and you should understand what you're getting yourself into so if you have a lot of questions I completely recommend that you talk to a professional first before you go down this road also a nonprofit may not get you what you need you may be able to accomplish what you're trying to do with the for-profit business so just consider that and it would be helpful to talk to a lawyer or professional before you do that that being said I know plenty of people who have started their own nonprofits they've done the paperwork themselves and it can be a really easy process so I don't want to discourage you that you can't do it but if you do have a lot of questions and you don't feel comfortable you should talk to a professional I've done nonprofit paperwork for folks and again you can do it yourself it's just a matter of how comfortable you feel but this this video is just my experience and what I believe you should consider and starting your nonprofit and going through all the steps for doing that okay so I like to break down this by phases so I'm going to talk about the steps within the different phases or the different sections of all the things you need to consider when starting your nonprofit so the first thing I'm going to talk about is idea and development that phase so some people when they start their nonprofit they go right for the paperwork they just look up at their state what they need to fill out and it can be really easy and they just go forward they figure out who and their family or who in their circle of friends could be on their board they just write their names on the paper and then they go through and they're accepted and they get their status and they're like yes we can get started I actually don't recommend doing that I recommend kind of working with peace some people would think it's backwards but it's not really backwards I recommend you work on your idea first I recommend that you think about what it is you're trying to do and what is the positive impact you're trying to have and make sure that that is a that idea is solid before you move forward with engaging people talking to the state and going to the federal government to get your status sometimes people create nonprofits with an idea that's not necessarily a need in the community so you have to figure out do people even want the service you're providing do people even need it because there has to be a demand and you also have to consider that there may be people in your community who are doing the same exact thing as you and it can be a really crowded space now some people will say if it's crowded don't do it you don't need to start a non-profit you know get a fiscal sponsor and do it under the umbrella of someone else I actually don't necessarily agree with that I think that if you find that the market is saturated and the service is already being provided there's surely a niche or there's surely a population as being underserved or being ignored and so your job is to figure out who that is and speak to those people because there are certainly around the country people in populations of people who are not getting what they need so I don't believe in that oh there's a nonprofit that's well established that's already doing that just get under them know they may have a different approach to the work they may have a different style they may be a model that they use it's not appropriate for a population you want to work with and you may know that population to say no that's not going to work this is going to work I believe in this so if that's you if you have a niche if there is a need then I would say yes keep moving forward but just make sure you're clear on what is the true impact on what I'm trying to do what is the positive outcome because you're gonna have to convince people to get behind you and if it's not a compelling enough idea you're gonna have a hard way to go so you have to get people on your board who are just as passionate and committed so it has to be some kind of great ideas that people can get behind and then you want people to donate you want people to give their time for your organization and again if you have not figured out a compelling ask or gone through the steps to figure out why is this important why is this needed it's gonna be hard to get people to want to donate to you so spend some time working on your idea and figuring out what it is you actually want to do and just make sure you carve out a unique space because you being unique in the space it's just what's gonna get you where you need to go the other thing you need to consider in the idea and development phase is getting your board together then not putting the paperwork together and then figuring out who's gonna be your board put your board together first simply because you're gonna have to put your board members on network so you want to make sure that you have a solid group of people before you move forward and you want kind of a group consensus about is this a good idea how should we move forward you as a non-profit founders should never feel like you're doing this alone so you need to start from the beginning of understanding who you want around you in your circle who's going to be that tight-knit circle to help launch y'all to success right so think about the skill sets you want on the board the personalities you want on the board the life experience you want on the board and start looking for people start recruiting for people who fit that criteria so you can outfit a strong group of people who can make sure you're successful in the description box below I'm gonna link my board recruitment tool box it includes materials that can help you figure out how to recruit and how to find people but the big sec away from this is that you need to find your board first you need to come up with a solid group first then you start filling out paperwork because then the next step is you guys need to come together and figure out what's the vision of your nonprofit what's the mission of your nonprofit and it will be so much better it would be so much a much richer statement or richer conversation when you do it as a group instead of you as a nonprofit founder 11 o'clock at night record all your idea bring people in to the process so it can be something that has a lot of perspective a lot of depth and a lot of input from people who have different experiences than you it would be that much better and be that much greater the other thing you need to do once you have a solid board of directors you then need to start working on your bylaws so you have your vision and you have your mission then you work on your bylaws so the bylaws are just the organizing document of your organization it just dictates the laws and the policies around how your board is going to operate so it'll talk about you know how many people in the board and one of the term limits how do people roll off of the board how to dissolve the organization how often should the board meet those kinds of things are going to be in your bylaws and those are things you're going to look to when you get into tight situations or if somebody's being disruptive on the board or you need help trying to figure out what the next step is having good solid set of bylaws will help get you through those tough times in each state there are laws that govern how nonprofits operate so I really recommend instead of you googling just any random bylaws that you look for sample bylaws from your state so that it can reference the right state laws your nonprofit Association should have some sample bylaws or should be able to help you with this in your state but also you're going to typically go to your Secretary of State in your in your state to find out how to start your nonprofit and they may also be able to help you with some sample bylaws and they probably have some information about what needs to be in there so some states will dictate how many people have to be on the board what are the officers on the board and all of that so make sure you look for the information for your particular state once you have your board of directors make sure you pick officers for your board so make sure you have a president a secretary and treasurer whatever and again your state laws are going to dictate what the offices should be and then you may feel like you need other officers but that stuff is going to be covered in your bylaws and then once you have that straight elect officers for the board so you can have a strong structure in place as you go forward the next thing you need to think about is your name so based on what you tossed around for your vision and for your mission think about like if you had some if you were 10 years down the road and you want a good representation of who you are what name represents you as an organization so take the time to figure out what you want as your name what do you want to represent yourself remember when you're thinking about your logo remember when you're thinking about communications is it easy to say is it easy to reference is there a website already taking your name are there other organizations who already have your name so these are some of the things you need you need to think about when you're trying to figure out what the name is of your organization one thing you can do is check with your state to make sure that the name isn't already taken and then you should also check the federal trademarking database and all these links are in my checklist but make sure someone else hasn't trademarked the name because you don't want to create all these materials and stationery and pins with your name and your logo and then come to find out someone wants to fill you because you're using their name so make sure you you're using a unique name but something that's easy to reference when you want to help people when you want to tell people hey go to my website blah blah blah make sure it's something easy for that okay so you may also want to consider trademarking your name it's always good to control your brand it's always good to you know make sure that no one's using it irresponsibly and trademarking can't protect you in times when people want to come in and use your name for other purposes so that's something you need to consider if you are conducting business under a different name you may need to do a doing business as a DBA so just go through all the things you need to go through at your state to register your name and to do trademarking if necessary so that all that stuff is clear before you move forward with your paperwork the next phase is the execution phase and this is the phase where I'm gonna go through the paperwork and what it takes to actually establish you as an organization so the first thing you need to do is as a board vote on the fact that you were going to incorporate as an actual business some people don't realize that in order to become a non-profit you have to incorporate as a business in the state you don't go to the federal government first the states regulate how businesses are created so you're going to be subject to state law and state regulations in either the business where you're a resident or the or the state the state where you're a resident or the state where you're trying to do business so you're going to be subject to those laws so consider that and when you're trying to figure out what state to incorporate in you're usually going to go to the Secretary of State in that respective state to create your business structure and in most circumstances you're going to need to incorporate as a nonprofit organization it may be called something there in my state is called a non-stock corporation so if you need help make sure you call your secretary of state so they can guide you through that every state is different every forum name is different state-by-state the fees are different state-by-state so just remember that when you're starting your nonprofit they're not all created equal what happens in Georgia is different than what happens in Connecticut so make sure you do your research first then you establish contact information in location and email address for your business so that you can have something to reference in the documents that you're creating the next thing I suggest and I'm not gonna have the time to talk through all of this but you're gonna really have to create some kind of strategic plan to figure out what staff you need what are the activities you're gonna do over the next year what is your budget and how are you gonna make up that budget and it's important to do that first because the decisions that you make and this partner in this phase of your nonprofit has implications for the types of forms that you're going to fill out with the IRS and for the types of business you're gonna do at the state level so it's important to have some kind of plan in place this is what we're going to accomplish this year these are our goals for the year this is how we're gonna do it this is how much money we need to do it and this is how we're going to raise money to do that that has implications for a lot of things so it's important to do that first before you go through with your paperwork so as I said before make sure you establish an operating budget people get really intimidated by a budget but it's not that serious it's it really is asking yourself based on what we want to accomplish this year what is it gonna take how much is it gonna cost how much in staffing how much in materials insurance all kinds of things like that so just write down with a piece of paper it can be really really simple this is what we think it's going to cost to do our programming this year and to do it well so don't don't skirt yourself okay if that even makes it so don't like shortchange yourself don't say oh I don't think we can do that so I'm not gonna I'm not gonna put that in the budget whatever it takes or whatever you think it's going to take too do what you your trying to do in the year reflect that in the budget and then think critically about okay if we really want to do this this is what its gonna take to raise that money so unless you have the goal to do what you really want to do you're not going to meet the goals so make sure you're realistic about what it is you're trying to do the next thing you should think about is how are you going to track expenses right so how are you gonna track what's going out and what's coming in so there are two different kinds of accounting methods that you need to consider once you are a non-profit of a certain size you have to use a certain method but when you're starting small you can do it just it depends it can be your choice so the two different accounting methods are cash and accrual accrual so I'm not an accounting professional I have some links in my checklist to help you figure out the difference between the two but the basic difference is cash is you're just accounting the cash that you use at the time you get it or at the time it goes out accrual means that you may be expecting some money to come in or you may be expecting money to go out so you're doing your accounting based on what's expected not necessarily what exist right now that's the best way I can explain it but there are some resources online for you to check that out and again I have links in the checklist so once you decide how you're gonna do your accounting and most small and new nonprofits start with cash okay they start with a cash accounting method but when you get to a certain size you're gonna have to switch to accrual because it's a more realistic understanding of where you are financially if I'm looking at your finances and it looks like you have money in the bank but I don't realize that oh you have a bill out for you know a hundred thousand dollars that's not a realistic understanding of where you are it could be the next day that then $100,000 comes out and it completely changes everything so accrual just means you have a more realistic and more accurate understanding of where you are financially you're going to have to decide what your accounting system is whether it's going to be a spreadsheet or whether you're going to use QuickBooks or something like zero or fresh books so just make a decision early on and commit to it so you don't get too messy down the road so if you are a nonprofit with 501c3 status you can get a discounted rate for QuickBooks at Tec soup org so check that out but again you have to have your status and we're not there in the checklist yet so just they consider that as you go down the road make sure you have a system for bookkeeping make sure you have a policy in place for how you're going to collect money who's responsible for collecting money what those records should look like think about that earlier one because once you get started those things matter and you're gonna need to know that and you're gonna have to explain that to your funders and to your donors they're gonna want to know you're being responsible okay so the next phase is forms federal and state forms and all the administrative stuff you need to know you need to consider when you are filing for your nonprofit so first get an e aí in an employer identification number at the IRS website so the link is in my checklist it's a simple process but you have to incorporate first before you get the ein and then tell the IRS what kind of business you are what's your structure in order to get your EIN just remember once you get your our AI in that stays your number forever so if after the fact you get tax exempt status so you get your 501c3 status that becomes your 501c3 number see how easy that is so get your EIN on the IRS website and it's online it's quick it's easy then what you're gonna do is establish a bank account make sure you're clear one who's signatory on the account who's authorized to write checks whose name is going to be on the bank account and remember this is important and you're already prepared because you have your board in place and you've made decisions about who the treasurer is who the president is and more than likely they're gonna be in the two people who are gonna be on your bank account all right so then you can move forward with your 501c3 status so notice how this is a little bit down the line you got to get your tax exempt status later you have to do it after you incorporate as a non-profit after you get your EIN and all of that so then you can do that using form 10:23 now there are two types of forms there's the long form and then there's the easy form the long form is more expensive and more extensive in the kite type of information that they want the easy form is an easier quicker process and it's less money the easy form is for smaller nonprofits who are new who are just getting started and who don't expect to bring in a lot of money and don't have complicated structures that's who the easy form is for so the IRS has an eligibility worksheet that you can use to figure out if you are eligible for the easy form and if you are that's much quicker the 10:23 form is a long form that actually mirrors your tax form that you have to fill out every year as a non-profit so it's a good exercise to do the long form so you can prepare yourself and prepare your systems to collect information the way the IRS wants it report it so it's still good to go through the long form and figure out and try to answer the questions so you can be prepared as an organization but the easy form is an easy simple process that you can use to get your tax exempt status and just remember 501 C 3 is not the only tax exempt status with the federal government there are a lot of different 501 there's a 501 C 4 I think it's about a 1 C 7 things up to like 27 different types of 501 C's the most popular is 501 C 3 because most funders give to those types of organizations but just remember that's not the only tax exempt status so check it out and see if there are other types of statuses that may benefit you more okay after you do the tax exempt status with the federal government maybe exempt from some kind of state tax so you may want to check out your Secretary of State and figure out are there is there paperwork that you need to fill out or are there forms you can fill out to be exempt from any kind of state tax okay so the next phase is about fundraising so there's a couple of things you need to do to make sure you're on the up-and-up with your fundraising activities so first your state may require that you put a disclosure statement on your tax receipts or on your donor letters or on your website and this disclosure statement will just say if you want to find more about our financial records please contact us or here's a link to our tax forms you can check with the Secretary of State to find out more information about us it just depends on the language that your state requires and your state will spell it out for you so again there's a link in my checklist that shows a website that will list all the different state requirements that you need for your disclosure form the other thing you need to think about is charitable solicitation okay so if you have never heard of this you need to get up on this immediately in order to raise money in any state you have to be approved to raise money and the reason why that's important is because states want to protect their residents from scammers so you have to register with the Secretary of State if you're soliciting for money from an individual or from an organization in the state so that means if you're in like my state Maryland and you're raising money in DC or you're raising money in Virginia you have to go to DC and apply for charitable solicitation and you have to go to Virginia to apply for charitable solicitation and that's important because that has financial implications because there are fees associated with that okay so you just need to think about as you fundraise which is why I said earlier think about what your fundraising plan is and how you're going to raise money because you need to figure out okay we need to put money aside to apply for this in these states where we know we're going to be far now the game changer in all of this is your website so some states consider a donate button on your website as you soliciting in their state even if a person doesn't necessarily donate to you just the fact that that you have the the button on your website and people can donate to you may be a cause for applying for charitable solicitation in the state so I recommend you read up on this and of course I have a link for you to read up on this and figure out which states have these requirements and I know as a new and as a small nonprofit some of this stuff is like Tiffany are you serious we barely have money to operate and now we're talking about giving money and we're not even fundraising yet and we can't have a donate button I know it can be confusing and some of us you just have to weigh the risk of delaying you know reaching meeting some regulatory requirement or the likelihood that somebody would actually give to you you just need the way those things as a group which is again why it's important to have a board to make these decisions together to make sure you guys are doing the best for your organization the next thing which is timely after the conversation we just had is about insurance so make sure you have the right insurance that you need to protect you as a founder your staff and also to protect your board so there's going to be general liability if you operate out of a space you're going to need property insurance you definitely are going to need what's called D&O which stands for directors and officers to protect the board of directors and the officers of the organization from any kind of liability you may need some kind of umbrella policy if you serve children you're absolutely gonna need some kind of insurance so at that point you need to consider what are your coverages that you need and you need to just explore a broker who can help you figure out what what the applicable coverages are for the type of activities you want to do the next thing you should think about and this is not fluffy stuff I really believe this is important because how you represent yourself isn't organ matters you need to think about your branding and your communication what ways are you going to communicate to your community about the fact that you exist about the work that you do so that means you're going to need a logo you're going to need consistent branding in terms of colors and fonts in the style of your communications and how you present yourself to the public you're going to need a website you're going to need social media presence so you need to start identifying the the branding things that are most important you need to come up with your style are you a traditional organization are you more a grassroots organization what are you and make sure that your branding reflects that so what that when people see you and people see your materials they have a good sense of who you are I absolutely recommend you have a website I absolutely recommend you have social media at a bare minimum you need a Facebook page because guess what people go on Facebook to show that you're credible people go on Google to see if you're credible if you're asking for money and you have no presence online I'm just not going to give to you so make sure you have some kind of presence so people can see that you're a viable and actually a real organization make sure you have some kind of communication strategy about how often you're going to communicate make sure you are talking to your public make sure there's some kind of activity to show people that you actually exist this is going to be important when it comes to your funders because funders do check you out when there's new Google you they do look on Facebook so just make sure you have a consistent presence online but also out physically in the community the next thing you need to think about our outcomes and evaluation of your programs and the performance of your programs so if you want people to support you people are more comfortable doing that if they if they see you have some kind of impact if they see that you have positive outcomes if you served a lot of people if you've done some kind of good so you have to have a mechanism in place to show that so how are you documenting or how are you measuring how you're doing some kind of good in your community because what you're going to do is then take that spend that put that on your website put that in your grant materials put that on your donor solicitations and say hey we serve as many people hey we helped this many children people want to see and hear about good outcomes people want to see and hear good stories so you need to have a system in place for collecting that information so establish some kind of data collection as soon as you interact with the client collect some baseline information about who they are what their needs are all of this stuff is going to feed into the stuff you're going to need to do in your first year so have some kind of data base about the people you're serving make sure you're not collecting too much information but at least basic information about who they are maybe communities they're from whether their most common needs are or what barriers they're encountering so that you can track over time how that improves and you can track over time how your organization has contributed to that so in order to do that you have to be clear on what your outcomes are what is it that you're trying to impact so if we go back to the sowing example if you think that sowing has a good impact on young people in what ways does it help with social interactions does it help with stress management you need to think bigger about what is the positive impact not well it's just going to help them have a better life or is going to help them feel better about themselves you have to start putting that in language in terms of outcomes so that people can latch onto that and say oh okay so sowing helps their overall self-esteem and self-awareness and that contributes to them in doing well in school and having a good life those are the kinds of things you need to be thinking about and that's the language you need to use as a non-profit to show your impact so some of the things you can do to prepare for evaluation and having positive outcomes make sure you have a logic model in place that shows the progression of your organization that shows what you provide to your community to your clients and how that impacts them in terms of short-term outcomes and long-term outcomes and make sure you have that as a visual document so you can show your funders what you do what is you as an organization what's the positive impact you have as an organization the other thing you should have is some kind of outcomes monitoring plan so what's your plan for measuring outcomes are you measuring them every six months are you measuring them every month and as a part of that you need to have a set of outcomes that you're looking at so make sure you have a plan to to know what you want to impact to know what you're looking at and how often and how you want to report that out to the public also like I said have some kind of database to track data so make sure you have some kind of spreadsheet or some kind of system that you're using to make sure that you're tracking performance data the last section of the checklist I want to talk about is staffing requirements and if you're new and you're small this is something you're not gonna be thinking about too later on down the road because you probably won't be in a position to hire anybody until a couple of years in but I'd still wanted to talk about it and put it in the checklist because there are some things you can do now to prepare yourself for getting staff later okay so the first thing you should do is make sure that whatever requirements with the state to pay staff in terms of having an employee number or an unemployment insurance number whatever that is to make sure you investigate that with your state with your tax authority in your state and also the Secretary of State to make sure you have everything in place the other thing I recommend is create descriptions for staff and the reason why this is important even in the beginning because sometimes we get so caught up in nonprofits because we do everything and then we say all I need is a grant writer or all I need is this kind of person when it may be that you need something else and by writing down exactly the job descriptions and thinking critically about okay what are the different types of work what are the different roles and positions I need by doing that and writing that down it can help you think more clearly it may help you realize you actually need something different than what what you thought you needed it may help you realize oh these roles can be combined this can be one person or this is too much from one role and we need to make this two so I recommend that you write down and create jobs job descriptions even in the beginning to help you sort out the help that you really really need the other thing you should think about is whether or not you're going to hire employees or independent contractors now there are differences between what constitutes an employee and an independent contractor and the IRS has been cracking down on this lately so just be clear on the type of staff that you want if you're hiring an independent contractor which means you're not plant paying any payroll taxes for them you're not collecting that information for them then that means they are truly independent so they have to set their own hours they said you know the pays for their own work that means they are truly an independent contractor if that's not the case then more than likely they're designated as an employee and you need to have them set up for taking out payroll tax and all of that so just be clear when you're thinking about your staffing roles what kind of role it is in terms of whether or not it's an employee or an independent contractor as you think about your staffing roles think about the pay for that person so think about how much you want to pay them what is going to take a lot of people have that question well I'm a founder and I want to transition to become the executive director but I don't know how much money to ask for or what actually beginning so you should do a market analysis and see what other EDS are getting in the area around you but also be considerate of the phase that you're in so if you're in year two of your nonprofit and your budget is only seventy-five thousand please don't say oh I'm gonna get paid 125 is it you do because that EB over there is getting 125 just be realistic and understand the phase that you're in and talk to your board about how that may need to be phased in and create a plan to fundraise to get the level you want to be but sometimes you have to realize you're not there yet so just think about when you're thinking about the roles at Unity organization also think about the levels of competency compensation that you're gonna give to be able to get that out of someone also make sure that you have a Human Resources manual that specifies things like time off holidays benefits professional development all that kind of stuff is important to retaining staff so you can start working on that even before you're hiring staffs you can be prepared to have that in place so you hire staff the other thing you need to think about if you're hiring employees is putting a payroll system in place so that you're not the ones you know writing checks or going through all of that hire someone to take care of paying the taxes to the federal government into the state in terms of unemployment and Medicaid and all that kind of stuff make sure you have a system or a payroll company who can do that for you okay so the other stuff is really about administration and things you need to take care of in terms of your paperwork I'm just gonna run through this quickly and again all of this does depend on what state you're in some of this is federal paperwork some of this may have an impact the state level but these are just some things I'm gonna call out that you should be considering when you are hiring staff so have a system in place for filing w-2s your payroll company will typically be able to do that for you but also if you're hiring independent contractors make sure you have a system for tracking their hours and be able being able to report their hours at the end of the year by submitting their 1099 make sure you get all the upfront paperwork in terms of their w9s and getting their information and their social security numbers so you can file at the end of the year some payroll systems will do the w-2s and the 1099 so just consider that when you're looking for a payroll contractor the other thing is I just kind of referenced it make sure you have upfront data collection procedures in place for people you're hiring so if you need to collect their emergency information you need to collect their identifying information you need to give them an i-9 to confirm citizenship you need to give them either the w-4 or the w9 to confirm what type of employee or or what kind of staff they are in terms of employee or independent contractor these are things that are important to get upfront because at the end of the here you're gonna be scrambling I'm talking from firsthand experience here you're going to be scrambling to get that information in order to file on their behalf to report the income that you gave them the last thing I'll say for this in terms of staffing is that you know this is long down the road but this is still important consider the different insurances you need when reference to having employees so you may need workman's comp or you need sexual abuse liability if you're working with kids so I talked about insurance earlier but these are insurances that are directly related to hiring staff that you won't need until you hire staff so just consider what your different coverages may need to be now that you have staff in place also consider health benefits and retirement benefits when you're thinking about staff you also need to think about how to retain them because it can be really expensive to hire staff and so on board them so it's to your advantage to hire and keep staff to keep them happy to keep them motivated and benefits can do that so you will need to consider how to pay health benefits and how to help with retirement benefits so just keep that in mind that may not be needed at the startup phase but hey you may be in a place where you can hire right now so these are things that you need to consider as you're starting your nonprofit so that's it that's the checklist I wanted to go through step by step I thought it was important for you to hear the background of why you should do these steps and why you should do them in this order I hope it was helpful if it was please let me know in the comment box below or if there's something that you want me to explain more or a different kind of video that you want please feel free to comment and I'll be happy to do that as always if you have questions for me reach out to me at .and I will see you in the next video [Music]