The application for EINs is brief.
But before applying for an EIN, the person making the application should be able to answer questions such as the nonprofit's legal and trade names, mailing and street addresses, the county and state of its headquarters, the name and Social Security number of the responsible party just for purposes of receiving an EIN , and the name of an administrator or trustee IRS mailings can be sent in care of.
Other required information includes the reason for applying, the nonprofit's start date, main services provided, the closing month of its accounting year and the first date wages were paid.
Located in the mid-Atlantic United States, Elizabeth Layne has covered nonprofits and philanthropy since , and has written articles on an array of topics for small businesses and career-seekers. An award-winning writer, her work has appeared in "The Chronicle of Philanthropy" newspaper and "Worth" magazine. Video of the Day. How to Become a Tax-Exempt Business. Share on Facebook. Employer Identification Numbers The type of taxpayer ID number tax-exempt nonprofits are assigned is known as an employer identification number.
You should also be sure that your organization is not designed to profit an individual and that it provides a public benefit. Once you've determined that you want to proceed and that your organization roughly meets the IRS requirements, it's time to start dealing with the red tape. A lawyer can provide personalized guidance and help you avoid costly mistakes, but some people do manage on their own.
Corporations are formed at the state level, so you'll need to find out what the procedure is to form a corporation in the state where your organization will be based. The steps vary by state but will generally include the following:. In addition to following the official, required steps, it's not a bad idea to make a business plan , just like you would if you were starting a for-profit business.
Although your organization will be a nonprofit, you will still have to operate in the black if you want to keep it running. Nonprofits are allowed to make money; they just have to use those profits to further the organization's public purpose. By contrast, a private corporation exists to enrich its employees, managers, and shareholders. After meeting your state's requirements for forming a corporation, you're ready to apply for tax-exempt status with the IRS. First, you'll need to apply for an employer identification number EIN. This is a requirement for all tax-exempt organizations, even if they don't have employees.
DOR: Nonprofit Registration
The information that you include on this form will serve as the basis of the IRS's decision of whether to grant your organization tax-exempt status. Set aside plenty of time for this task; the main application is 12 pages long and quite detailed. Also, depending on the type of organization you are forming, you will also need to fill out one of the attached schedules e.
The IRS estimates the time to complete Form at about 90 hours for recordkeeping requirements, 5 hours to learn about the form, almost 10 hours to prepare the form, and another hour to copy, assemble, and mail the form. That's not including the schedules. IRS Form helps ensure that you've included all required information in your application and will help to prevent delays in processing.
Submit your application.
Nonprofit Kit For Dummies, 4th Edition
The IRS will let you know if it needs more information or if your form has been forwarded for review. Once the IRS has all of the information it requires, it will issue a determination letter either granting or denying tax-exempt status to your organization. The evaluation process usually takes three to five months. If you are denied, you can appeal.
Minnesota Filing Stage
If your organization gets approved for tax-exempt status at the federal level, that's great. Next, you'll need to make sure your organization will also be tax-exempt at the state and local levels so it doesn't have to pay state corporate income tax, sales tax, or property tax. Requirements vary by state, but your IRS approval may be all your organization needs to also be recognized as a nonprofit at the state level.
Once you've met your state's requirements for operating as a nonprofit, you'll need to get any permits or licenses required to operate your business and make sure to comply with building codes and other local regulations. Before you start operating, familiarize yourself with corporate requirements, such as holding meetings, keeping minutes, and filing information returns.
Once you've been approved at every level, there's still work to do.
Texas Secretary of State
Some nonprofits qualify for exemption from sales tax on purchases through the Minnesota Department of Revenue. This exemption allows purchases on office supplies, furniture, vehicles, computer equipment, and other taxed items to be purchased without a 6. Paul sales tax. Most exemptions are given to purely educational or direct service organizations.
Related non profit tax identification number
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