NGOs normally have to meet legal requirements, which might include:
- Registering as an NGO with a government department;
- Submitting annual accounts to the government;
- Having an independent external annual audit;
- Keeping accounting records for a certain number of years;
- Collecting income tax from your employees and sending it to the government;
- Making sure that your employment contracts comply with labour law;
- Following other relevant laws, e.g. around political activities or trading or handling foreign currency.
The law is different in every country. This list only suggests some general areas to investigate. It is important to get advice about the law that applies to your NGO. Other NGOs (or donors) may be able to advise you and so might professional advisors, such as auditors or lawyers.
In the UK, most NGOs are regulated by the Charity Commission. Their Statement of recommended practice (known as the SORP) sets out standard formats and policies for NGOs' annual reports and accounts. As of June 2010, this is due to be revised and there is hope that the replacement will be internationally applicable.