Starting a non-profit is a meaningful step. You’ve got a vision, a purpose, and a plan to help others. But once you form a nonprofit organization, your work isn’t done. There are important rules to follow to keep your non-profit running smoothly and to avoid getting into trouble with the IRS.

Let’s look at how to stay compliant and keep your non-profit in good standing without stress.

Why Compliance Matters

When you form a nonprofit organization, you get special tax benefits. But with those benefits come responsibilities. You need to follow certain federal and state laws, file the right forms, and keep your records in order. If you don’t, the IRS can take away your tax-exempt status. That means your non-profit might have to pay taxes — or worse, shut down.

Staying compliant also helps build trust with donors, volunteers, and the community. People are more likely to support your cause if they know you’re following the rules.

Annual IRS Filings – Don’t Miss Them!

Every year, non-profits must file Form 990 with the IRS. This form tells the IRS how your non-profit is doing — your income, spending, mission work, and leadership. There are different versions of Form 990 depending on how much money your non-profit makes:

• Form 990-N (e-Postcard): For non-profits with less than USD 50,000 in annual income. 
• Form 990-EZ: For non-profits with income between USD 50,000 and USD 200,000. 
• Form 990: For non-profits with income above USD 200,000. 

If you miss this filing three years in a row, the IRS will automatically cancel your tax-exempt status. That’s a penalty no one wants.

State-Level Compliance – It’s Not Just About the IRS

Each state has its own rules for non-profits. Some require extra forms, fees, or reports. You may need:

• A state charity registration is required if you ask for donations. 
• A business licence renewal each year. 
• To file state-level annual reports or updates. 

If your non-profit operates in more than one state, you might have to register in each of those states. This is called a foreign qualification, and it ensures you’re legally allowed to do business outside your home state.

Keep Your Records Straight

Good record-keeping prevents bigger problems. Your non-profit should:

• Track income and expenses clearly. 
• Keep board meeting notes. 
• Save receipts and grant paperwork. 
• Record all fundraising activities. 

If you get audited (checked by the IRS), these records will save the day.

Mind Your Mission

When you form a nonprofit organization, you promise the IRS and your state that you’ll use your money and efforts to serve a public cause, not to make profits for private individuals.

If your non-profit spends money on unrelated activities or helps a board member personally benefit from donations, the IRS may call it “private benefit” or “private inurement.” These are big no-nos and can lead to losing tax-exempt status or facing penalties.

Watch Your Political Activity

Nonprofits can educate people about issues, but they cannot support or oppose political candidates. Doing so risks heavy IRS penalties or losing tax-exempt status. A few do’s and don’ts:

• Share facts on public issues.
• Don’t tell people who to vote for.
• Don’t donate to political campaigns.

Hold Regular Board Meetings

A non-profit must be guided by a board of directors. They’re responsible for making sure the organization is doing what it promised and following the law. Board members should:

• Meet regularly (monthly or quarterly). 
• Review financials. 
• Approve big decisions. 
• Keep written records of meetings (called minutes). 

This shows that your non-profit is well-governed — a key part of staying compliant.

Get Your EIN

After you form a nonprofit organization, you need an Employer Identification Number (EIN) — even if you don’t have employees. It’s like a Social Security Number for your non-profit and is required to open a bank account, file taxes, or apply for grants.

You can get an EIN for free from the IRS or have a filing service handle it for you.

Consider Getting Help

Managing all these rules can feel overwhelming. That’s why many founders turn to services like MyCorporation to help with paperwork, EIN applications, annual filings, and even copyright or trademark protections. One mistake can lead to IRS penalties, but having expert help reduces the risk.

Prepare for an Audit (Just in Case)

Audits happen — even to well-run non-profits. Here’s how to be ready:

• Keep clean financial records. 
• Have all your IRS filings up to date. 
• Make sure your activities match your mission. 
• Keep your board informed and involved. 

Being audit-ready helps your non-profit run better and builds donor confidence.

Stay Transparent

Let people see how your non-profit is doing. Post your Form 990 online. Share updates on your website or in newsletters. Being honest and open earns trust — and helps grow your donor base.

Starting a non-profit is just the beginning. To truly make a difference, you need to stay compliant, organised, and prepared. Whether it’s filing the right IRS forms or keeping your mission in focus, these small steps protect your organisation from big problems later.

Remember: You didn’t just form a nonprofit organization to file paperwork — you did it to make an impact. Following these tips will help you stay compliant, avoid IRS penalties, and focus on what really matters.

Let your passion drive your cause, and let smart compliance keep it running strong.