Easy Steps To Protect Your Hawaii Nonprofit and Keep Your Nonprofit Compliant

As with any other business, there may be risks involved in running the nonprofit. Getting insurance for your nonprofit allows you to focus on your passion while minimizing your liability.

Here are some of the common types of insurance you may want to consider for your organization:

• General Liability Coverage
• Directors and Officers Coverage
• Social Service Professional Coverage

Your coverage needs will vary based on your organization and the work you do.

There will be times when you will be signing a document on behalf of your nonprofit. It is important that these times are easily distinguishable from when you are signing a document as an individual. If a document isn’t properly signed, you might suddenly find yourself personally responsible for something the organization should have been liable for.

To avoid such confusion we recommend you and all the members of your organization follow the following format:

• The official name of your nonprofit
• Your signature
• Your full legal name
• Your position in the organization

Nonprofits that have incorporated are required to maintain a registered agent with an office address in Hawaii. If the agent or the office address changes, you must file form X-14.

As a Hawaii nonprofit corporation you must file an annual report every year by the end of the quarter in which your organization was formed.

The quarters end on:

• 1st quarter: March 31st.
• 2nd quarter: June 30th
• 3rd quarter: September 30th
• 4th quarter: December 31st

So, if your organization was formed on Nov 10th, your annual report will be due Dec 31st. For an organization formed on July 3rd, their annual report will be due on September 31st.

The filing fee is $5. You can file online or submit Form D2 to the address below:

State of Hawaii
Department of Commerce and Consumer Affairs
P.O. Box 40
Honolulu, HI 96810

For more information, you can call the DCCA at (808) 586-2727 or visit them at their website.

There are two required filings regarding General Excise Tax:

• You must file Form G-45 (General Excise/Use Tax Return) with the Hawaii Department of Taxation. This may be due monthly, quarterly or semi-annually depending on the nature of your organization.
  • To learn more, you can read about the requirements for nonprofit filing.
• On the 20th day of the fourth month following the end of the taxable year your organization will also need to file Form G-49 (Annual Return & Reconciliation of General Excise / Use Tax Return)

All charities that will be soliciting for donations in Hawaii are required to register with the Department of Attorney General’s Charities Unit. The registration can be completed online.

For more information, you can call the Department of the Attorney General at (808) 586-1480, visit them at their website, or visit the office address found below:

Tax Division
Department of the Attorney General
425 Queen Street
Honolulu, HI 96813

If your organization will have employees you must register for withholding and unemployment insurance taxes using application Form BB-1, which can be filed online or by mail. The filing fee is $20. Paper forms can be mailed to the address found below:

State of Hawaii
Department of Taxation
P.O. Box 1425
Honolulu, HI 96806-1425

For more information, you can call the Department of Taxation at (808) 587-1510 or visit them at their website.

All organizations that have been granted the 501(c)(3) status are required to disclose the following documents to the public when requested:

• Annual returns for 3 years after the due date (this includes returns like Form 990, 990-EZ, 990-PF, and any Forms 990-T)
• All Form 990 Schedules (except portions of Schedule B), attachments and supporting documents.
• Application of exemption and all supporting documents such as Form 1023
• The official paperwork from the IRS that shows that your organization has tax-exempt status.

The following do NOT need to be shared with the public

• Portions of schedule B of Form 990/990-EZ that identify the contributors. (You only need to disclose the amount contributed and the nature of the contributions)
• Any unfavorable rulings such as an earlier denial of tax-exempt status.
• Any information the IRS has said you can withhold. This may include things like sensitive patents and trade secrets.

FAQ:

How long do I have to produce these documents if requested?

Ideally within the same day. If your organization doesn’t have an office or maintains limited hours during parts of the year, the information should be made available within two weeks.

Do I need to provide copies of the documents?

If someone asks for copies in person or in writing you must provide them with copies.

Can I charge for copies?

You can charge a reasonable amount for making copies of the documents requested.

NOTE: It may be easiest to have the documents available on your website so that anyone who requests copies can be sent to the site. This allows you to stay compliant without having to spend a lot of time dealing with document requests.

Most tax-exempt nonprofit organizations are required to file an annual return with the IRS (Check the list of exceptions).

Which form you should use to file the annual returns depends on the annual gross receipt amounts for your organization.

"Gross receipt" is defined by the IRS as “the total amounts the organization received from all sources during its annual accounting period, without subtracting any costs or expenses”

• For gross receipts ≤$50,000 --- File 990-N
• Gross receipts <$200,000 and total assets <$500,000 --- File 990- EZ
• Gross receipts >$200,000 or Total assets >$500,000 --- File 990

For any questions, you can call the IRS at:

• (800) 829-3676 (Form-related questions)
• (800) 829-1040 (General information)

When is form 990 due?

You have a little over 4 months after your taxable year comes to an end to file Form 990. It is due on the 15th day of the 5th month. So if your taxable year ends on Dec 31st, your form 990 is due on May 15th.

NOTE: If your organization fails to file form 990 for 3 consecutive years, it will automatically lose its tax-exempt status.

If your Hawaii organization has a gross income of ≥$1000 from a trade or business that is not related to the stated purpose of the organization, then it must file Form 990-T to pay tax on that income.

IRS - Information for Charities & Nonprofits
IRS - Required Provisions for Organizing Documents
IRS - 990 Series for Tax-Exempt Organizations
IRS - Applying for Tax-Exempt Status
IRS - 501(c)(3) Compliance Guide
Small Business Administration - License and Permits
Hawaii Department of Commerce and Consumer Affairs - Business Registration
Hawaii - Tax and Charities Division
Hawaii- Business Registration Division