Proceed with Caution: Using Online Legal Services to Form a Nonprofit
When setting up a nonprofit organization, it can be tempting to use an online legal service to complete your paperwork. However, based on recent client feedback and experiences, caution should be exercised in using these platforms.
Considerations to keep in mind before using an online legal service to create a nonprofit entity include the following steps to protect yourself and the organizational entity.
Cross-check basic information
First, assess the organizational expertise of the legal service provider. There are many nuances involved in filing paperwork for nonprofits. Experience from clients dictates that many of these online providers don’t include the correct forms for nonprofits or offer adequate guidance on how to complete the forms.
The good news is that the IRS provides detailed information on what is required to start a nonprofit. This includes what forms are necessary, as well as information on how to fill them out correctly. If you decide to use an online legal service to file your nonprofit paperwork, be sure to cross-check what forms are necessary and ensure they are completed correctly as compared with guidance from the IRS. Also, be aware that when you sign the IRS paperwork to start a nonprofit, you legally attest that the paperwork is filled out correctly under threat of perjury. So don’t sign and submit this paperwork if you aren’t certain of its accuracy.
In addition to federal requirements, each state has a unique set of requirements for nonprofit formation. Make sure to check your state’s requirements for accuracy and compliance before you proceed in filing any organizational paperwork.
Talk to a qualified expert
Appropriate legal consultation can help save you and the organization time and resources. Nonprofit Solutions, P.C. (NPS) provides specialized legal counsel to tax-exempt entities including assistance with formation of nonprofits. NPS, specifically Jeri Holmes, has guided tax-exempt organizations through formation for over sixteen years. An expert, like NPS, will understand the nuances of nonprofit law and your state law requirements. This expert will additionally gather information about your organization and ask in-depth questions to create a complete picture of what needs to be done. They can guide you through the entire process, step-by-step, so you can be confident and assured your organization is legally compliant.
A lawyer with expertise in nonprofit law can additionally guide you and your organizational board along the way. From helping you understand who should be on your board to writing policies to training the board, this expert can empower you as a founder of a nonprofit. Getting all these things structured just right from the beginning will save you and the organization time and money down the road.
“From helping you understand who should be on your board to writing policies to training the board, this expert can empower you as a founder of a nonprofit.”
Understand the work involved
There are no shortcuts when starting a nonprofit. You will need to take an active role in creating many of the founding documents for your organization, which involves multiple hours of work.
To complete IRS forms correctly, you will need bylaws and financial projections for your organization, which further take concerted consideration and time to create. You’ll also need to understand both state and federal guidelines for the type of organization you are starting and the requirements of each.
An actively involved legal specialist, like NPS, can provide support throughout and answer all your questions. Usage of an online legal service provider may not offer ongoing support and should be considered as you choose the right legal specialist.
How to get help fixing past mistakes
If you realize you made a mistake when filing your nonprofit paperwork or have received notification from the IRS that there is an issue, NPS can help you work through it. The IRS typically allows a specific period to correct the mistake, and it is imperative to have someone with experience resolving these issues to guide you through this process in a timely and responsive manner.
In some cases, forms can be corrected and refiled, but generally, the time frame provided to respond is only a few weeks. In some instances, an organization may need to begin from the ground up by creating bylaws and policies. These documents normally take much longer to complete than the provided few weeks, but, with the right legal support, can be completed within the given time frame.
Online legal services may be a quick, inexpensive way to set up your nonprofit, but you should consider the totality of the issues involved in establishing your organization and if outside legal counsel will be needed in the long run. Initial consultation with a legal specialist, like NPS, can help you understand the detailed formation issues your organization will need to meet prior to filing.
If your organization needs assistance with filing startup paperwork or fixing past mistakes, contact Nonprofit Solutions today. We work closely with organizations to build a foundation for a strong future when resolving filing errors. You and your board can walk away with peace of mind about the paperwork and a clear direction for future organizational success.
