Rules To Opening A Bank Account For Non Profit Organizations
Non profit organizations need to open bank accounts in order to achieve their charitable goals. As a nonprofit business owner looking for the best bank to open an account at, your head is spinning with rules, regulations, and policies. You may have developed your organization around environmental protection and want to jump into charity work. However, you still need to focus on your finances, despite how difficult they are to understand. Fortunately, you can comprehend the rules you need to follow without spending hours doing research. Below, you will find the most crucial bank account for non profit organization rules to follow.
File With The IRS
To open a bank account for non profit organizations, you need to file with the IRS. Although non profits are not taxed, associations still need to work within the system. With that being said, banks require non profits to be filed prior to opening an account. You need to file annual returns with the IRS. More so, you are required to inform them of your organization’s income. Thus, the bookkeeping element of a non profit is just as critical as it is for a for-profit company.
Here’s more information on filing with the IRS, and getting a tax ID:
- Requirements for Nonprofit 501c3 Filings
- Checklist For Starting A Nonprofit
- Start A Nonprofit Business Successfully
- How To Obtain A Nonprofit Tax ID Number
- Start A Nonprofit To Give Back
Like a for-profit business, purchase accounting software to ensure your financing processes are efficient. Your bookkeeper will be able to use your bank statements to gain insight into your financial situation and accurately file with the IRS. Follow this rule to open a bank account for non profit organizations.
Maintain A Copy Of Bylaws
Another requirement for opening a bank account for non profit organizations is a copy of bylaws. To complete this form, determine the purpose of your non profit association. Then, include your contact information along with that of any other significant leaders within the organization. Most banks desire the president, vice president, treasurer, and secretary to be on each non profit’s copy of bylaws.
- Nonprofit Business Plan And Traditional Plans
- Writing Bylaws For Nonprofit Organizations
- Nonprofit Liability Insurance Coverage
- Create A Corporate Resolution For Bank Account
To open a bank account for your charitable business, follow this rule in accordance to your bank’s specifications.
Enforce A Two Signature Policy
Corporate bank accounts may not require dual signatures on major checks. For example, two authorized signers needing to endorse checks over a specific amount, such as $100. However, enforce two signature practices to secure yourself against unauthorized transactions. Try to ensure that the person handling the money isn’t the same person who signs the checks. As a result, multiple people can verify values and deposits. Certainly, when opening a bank account for your non profit, enforce a two signature policy.
Provide Officer Information
In addition, provide officer information in order to meet with rules and regulations when open a bank account for non profit organizations. Share a list of all of your non profits officers with your bank. Include each officer’s government-issued identification as well as photo IDs. Most banks also require each officer’s social security number. Some demand another document that proves identity as well. If this is the case with your bank, request insight as to which documents are acceptable as additional proof. Although requirements vary slightly depending on the bank, every bank maintains a rule of documenting officer information for non profits.
If you are planning on fundraising, keep officer information secure:
- How To Get Funding For A Nonprofit
- Non Profit Fundraising Rules And Regulations
- Fundraising For Nonprofit Organizations Ideas
- Virtual Non-Profit Fundraising Ideas
- How To Make Money Running A Non-Profit
Report Cash Payments
To maintain a bank account for non profit organizations, follow the rule of reporting cash payments. The IRS demands each bank to report any deposit made by a non profit organization that exceeds $10,000. Furthermore, banks are required to report multiple transactions that add up to $10,000 if those transactions seem to be related. Keep this in mind when you host large charity events to make money for your non profit. If you receive a check for more than the reportable amount, you are at risk of IRS investigation. To ensure that you do not suffer under such an investigation, track your finances accurately.
For more advanced nonprofit bank rules, you may need additional help:
- A Certified Nonprofit Consultant Can Help Business
- Setting Up Online Donations For Nonprofits
- Key Nonprofit Corporation Management Strategies
Understand the report cash payments rule that banks must follow and initiate transactions accordingly.
Meet Minimum Balances
Lastly, you need to follow the bank account for non profit association rule of meeting minimum balances. Every bank requires a different minimum balance for non profit accounts. To refrain from having to pay minimum balance fees, follow this rule at all times. Plan ahead to ensure that your finances never fall below the minimum amount required by your bank. Set aside emergency money in your bank account. If your non profit makes less money during the winter, budget your money over the summer to ensure that you have enough in your account to get through the winter months charge-free. Then, you will follow this rule and run your non profit organization successfully.
Minimum balances are required for most bank account types:
- Business Bank Account With No Fees
- Requirements To Open A Business Bank Account
- Mistakes When Opening A Bank Account
- Open A Basic Bank Account With Bad Credit
- Bank Account Definition Allows Banking
- Virtual Bank Account For Business
To enhance your charitable services, open a bank account tostart a non profit business and follow the rules associated with doing so. Firstly, file with the IRS as a non profit association. Maintain a copy of your bylaws and present it to your bank. Provide your bank with information from each officer. Understand the bank’s duty to report any transactions that exceed $10,000. Finally, never fall below the minimum account balance required by your bank. Follow these bank account for non profit organization rules to benefit your cause.
How To Open A Bank Account For Non Profit Organizations
There are several steps on how to open a bank account for nonprofit organizations. For most nonprofit organization types, business can start running in a matter of months. Or, if you start an online nonprofit organization, you can begin operations almost instantly. Meanwhile, more complex nonprofits require extra financial planning and paperwork. As a nonprofit founder, you should know how to simply establish a bank account for your organization. Read on to discover how to open a bank account for nonprofit organizations.
Apply For Nonprofit Status
First, you need to apply for nonprofit status to open a bank account wealth engine for your organization. Start by filing Form 1023 for the IRS to bid for recognition of tax-exempt status. Fill out the form with details on your business structure and nonprofit-related activities and services. More so, you need to verify who your nonprofit organization benefits. For example, document if your nonprofit supports charities for children, mental health, veterans or diseases such as cancer. Of course, banks require that you hold a standard tax-exempt nonprofit status when opening a bank account. Certainly, apply for nonprofit status to establish a bank account for your organization.
Gather Data On Organization Officers
Secondly, you need to gather data on organization officers to open a bank account for your nonprofit. Most banks require documentation of the officers associated with your organization since they carry out daily operations. Officers include the nonprofit’s president, vice president, secretary, and treasurer. Plus, you will need to provide information on your executive directors and CEOs. When applying for a bank account, provide the financial institution with your officers’ government-issued IDs, photo IDs, social security numbers and an extra form of identifying proof. Of course, extra forms of identification can be passports, health insurance cards or a utility bill. Definitely gather data on organization officers to open a bank account for your nonprofit.
Choose Between Checking And Savings
The next step in opening a bank account is choosing between checking and savings. Once you have met the initial qualifications, communicate with your nonprofit board about what bank account is most effective. Typically, the best bank for checking accounts manage everyday transactions including donations, purchases and paying off bills. Meanwhile, savings accounts are usually utilized to store reserved funds securely. Plus, your organization could earn a small amount back in interest. Certainly, discuss with your nonprofit board to determine the most efficient option. Of course, the leading financial institution can accounts with a mix of checking and savings options. Certainly, choose between checking and saving before opening a bank account for your nonprofit.
Select A Bank
Furthermore, you need to select a bank to establish an account for your nonprofit organization. Most national financial providers offer accounts specifically for nonprofit teams and operations. Of course, you can also find local banks or small credit unions that provide nonprofit products. Research banks and read reviews. As a result, you can understand how clients are managed, addressed and assisted. More so, review the bank requirements, such as application fees and minimum balances. Plus, you may want to find a bank with bonus offers for nonprofit founders and account holders. Surely, select a bank to open an account for your nonprofit organization.
