Starting a nonprofit can be an exciting endeavor that can quickly become overwhelming. What starts out as a good idea can fade quickly into thoughts of paperwork, regulations, and unexpected costs. Where do you begin?
Here are four costs you need to consider before you launch your charity:
One of the first things to consider when launching your organization is where you will be conducting business. Will you work out of your home, or will you need to rent an office or storefront? If you choose to rent a facility, consider the total costs of rent, maintenance, and insurance, as they can add up quickly.
On the other hand, if you choose to start your business at your home, consider local statutes and regulations on conducting business in a residence, and remember that only the expenses that increase as a result of your business can be claimed as an expense.
Even if you’re starting a nonprofit or charity, your organization will require operation and board liability insurance policies to protect both your business operations and your Board of Directors. While federal and state laws cover the normal operational decisions of the members of your Board of Directors, additional insurance will provide added protection for your and your board members.
There may be other insurance policies to add depending on your business. Speak with an accountant or insurance agent to find the right policies for you and your organization.
Accounting and Legal Fees
It’s essential that accounting services are obtained to keep adequate financial records so you know your financial situation at any given moment, from your revenue and expenses and your profit.
Despite what the term implies, a nonprofit should not have equal revenue and expenses. You must make a profit so you have adequate resources to pay your bills and stay in business. Sufficient cash or savings should be maintained so expenses can be covered.
You should also be sure to consider that, from time to time, there may be a question about legal matters and advice from a lawyer should be obtained.
Supplies and Equipment
Make sure you have enough of the right equipment for your business, and keep a budget for necessary purchases. These supplies may include:
Our accounting ministry is here to help you achieve your goal of helping others. We’ve been working with nonprofits for over 30 years and would love to help you make your dream a reality! Drop us a line and we’ll help you get started.