What are Nonprofits/Other Entities?

Unlike traditional businesses, nonprofit organizations typically are motivated by social, ideological, political, or environmental goals — rather than by profit. All revenue generated by a nonprofit goes toward fulfilling these goals instead of being redistributed as earnings to shareholders.

Because they lack a profit motive, nonprofit organizations qualify for tax-exempt status under Internal Revenue Code (IRC) 501(a) as described in IRS Publication 557. Here are some examples of nonprofits:

Private foundations

Employees associations

Business leagues

Child care organizations

Advocacy groups

Educational institutions

Veterans associations

State-chartered credit unions

Retirement fund associations

Religious institutions

Many other types of organizations also qualify for tax-exempt status. Even though they don’t have tax liabilities, however, these organizations must have a Federal Tax Identification Number. We can help you get that.

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Advantages of Forming a Nonprofit Company

Before you learn how to apply for a nonprofit tax ID number you should understand all the advantages and disadvantages associated with it. Here are some of the benefits of forming a nonprofit.

Tax Exemption

Organizations under the Internal Revenue Code 501(c)(3) are exempted from paying corporate income taxes. Some may even get state-level sales and property tax exemptions, depending on the state of business formation.

Eligibility for Grants

Some types of nonprofits are eligible to receive public and private grants, with 501(c)(3) organizations having special access to certain public grants. Also, any charitable donations to such companies are tax deductible.

Separate Legal Entity

A nonprofit Corporation or LLC exists as its own legal entity, separate from its owners. It can enter into contracts on its own, sue or be sued, is responsible for its own obligations, and has a clear mission, separate from the owners’ interests.

Limited Liability

Like any other LLC or Corporation a nonprofit also enjoys limited liability protection. This means that the owners’ or members’ personal assets can’t be seized to pay for the nonprofit organization’s debts and financial liabilities.

Clearly, there are major advantages to opening a nonprofit if you are eligible for it, but you will need to apply for a nonprofit tax ID number to make it official. GovDocFiling can help make the process quick and hassle-free.

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Disadvantages of Forming a NonProfit Company

While there are many advantages to forming a nonprofit, it comes with its own set of disadvantages as well. Here are some of the most important ones to consider.

Formation Costs

Creating any business takes time and effort, but getting tax-exempt nonprofit status is even more difficult. You need to pay business formation fees, file tons of paperwork, and maybe even hire a consultant or an attorney.

Shared Control

Given the nature of nonprofit organizations, they can’t be allowed to be controlled by one or two people. Depending on the state, it may require several directors, thus ensuring shared control & management oversight.

Compliance Obligations

Nonprofits need to comply with certain regulations to retain their nonprofit status and day-to-day operations. They need to form corporate bylaws or an operating agreement, file annual reports, update the state on important changes, etc.

Public Scrutiny

Given that nonprofits are created in the public interest, they are open to public scrutiny. The general public can obtain state and federal filings of the organization to check and analyze its expenditures, salaries, & other details.

Forming a nonprofit can be costly and time-consuming, but GovDocFiling can expedite the process and take care of all the paperwork for you, including obtaining a nonprofit tax ID.

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Eligibility Criteria for Nonprofits

Before filing for a nonprofit EIN (employer identification number), be sure you are eligible for tax-exempt status. Under Section 501(c)(3) of the Internal Revenue Code, an organization can be tax-exempt only if it is organized and operated exclusively for the exempt purposes as defined in that section of the code.

To be eligible for nonprofit status, an organization serve the following purposes:







Public safety

Cruelty prevention

Any organizational profits cannot directly benefit any private shareholder or individual. The organization also must not be what is defined as an “action organization,” such as a lobbyist group or political campaign activist group. Other requirements also apply.

Seems like too much work? GovDocFiling can help simplify and expedite the process.

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Compliance Requirements to Maintain the Nonprofit Status

The most important compliance requirement is to file annual reports using Form 990 and update the state on important changes like a change in mailing address.

Apart from that, nonprofits should avoid the following activities:

Participation in political campaigns

Government lobbying

Deviating from mission

Violating public policy

Not operating in public interest

Missing annual filings

These are things to avoid to maintain the nonprofit status, but to get that status you need a nonprofit tax ID and GovDocFiling can help with that.

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Why You Need to Apply for a Nonprofit Organization EIN

Once formed, your nonprofit organization will enjoy tax-exempt status. To qualify for this recognition, however, you must first apply for an Employer Identification Number (EIN) with the IRS. Also known as a Tax ID, this identification number is what federal and state agencies use to track your tax status from year to year.

In addition, many banks and businesses will request your nonprofit Tax ID before working with you. When soliciting contributions from donors, being able to provide your nonprofit EIN (employer identification number) can add legitimacy — both to your organization and to the various causes it supports.

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What is the Process to Start a Nonprofit Organization?

Here is the step-by-step process to start a nonprofit organization in the US.

Choose the type of nonprofit organization

Define your nonprofit's mission and structure

Formally register your business with the state

Apply online to obtain a nonprofit tax ID number

Find ways to raise funds for your nonprofit

Select and register a unique business name

Appoint a board of directors for your nonprofit

Draft articles of incorporation/operating agreement

Apply for the section 501(c)(3) tax-exempt status

Stay compliant and maintain your status

GovDocFiling can help with the entire nonprofit formation process, making it quick and hassle-free. Start by applying for your nonprofit tax ID number online.

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When Should You Apply for the 501(c)(3) Tax-Exempt Status?

Ideally, you should apply for tax-exempt status within 27 months of business formation to get the most tax exemption. If you do so, all the donations received since the date of formation will be tax deductible.

However, if you apply after 27 months, your fund would be eligible for tax exemption from a postmarked date mentioned in Form 1023.

But before you can apply for that, you need to get your nonprofit tax ID number using GovDocFiling’s streamlined application process. Simply fill out the form below and we’ll take care of the rest. Yes, it’s that simple!

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How to Apply for a Nonprofit Tax ID Number

Many organizations apply for a nonprofit EIN (employer identification number) directly through the IRS (Form SS-4). However, filling out this application can be a tedious and time-consuming process, even for experienced tax experts who feel comfortable with complex legalese.

Fortunately, there is an easier and faster way to apply for your nonprofit Tax ID number.

At GovDocFiling, we’ve created an intuitive online application that you can fill out in just a few minutes. This simplified form asks all the relevant questions required for obtaining a nonprofit organization EIN — without the hassle or confusion.

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Types of Tax-Exempt Organizations

Nonprofits are legally formed at the state level by corporations, trusts, limited liability companies and unincorporated associations. Charitable organizations are perhaps the most common example people think of, but all of the following also are eligible for tax-exempt status, according to the IRS:

Corporations organized under an act of Congress

Cemetery companies that are not for profit or run only to benefit their members

State-sponsored worker’s compensation reinsurance organizations

Cooperative organizations to finance crop operations

Withdrawal liability payment funds

Qualified nonprofit health insurance issuers

Cooperative service organizations of operating educational organizations

Title-holding corporations for exempt organizations

National Railroad Retirement Investment Trust (45 U.S.C. 231n(j))

Employee-funded pension trusts (created before June 25, 1959)

Mutual reserve funds

Title-holding corporations or trusts with multiple parents

Farmers’ cooperative associations

Religious and apostolic associations

Benevolent life insurance associations

Mutual ditch or irrigation companies, mutual or cooperative telephone companies

State-sponsored high-risk health coverage organizations

Qualified nonprofit health insurance issuers

Mutual insurance companies or associations

Black lung benefit trusts

Cooperative hospital service organizations

Ready to Apply for Your EIN?

GovDocFiling’s streamlined Tax ID filing services come with advantages that simplify the application process:

Our nonprofit EIN form is written in “plain speak” to minimize confusion and allow you to fill out the online application as quickly as possible.

Our online form is available 24/7, allowing you to start the application process at your leisure. By contrast, the IRS’s online portal is buggy and frequently unavailable.

Our tax experts will carefully review your application before sending it to the IRS for approval. This verification step helps to eliminate errors and reduce unnecessary delays.

Our support team is available 24/7 by phone or email. The IRS offers limited email support, and its offices are closed on weekends, evenings and holidays.

Arguably the biggest advantage of our filing services is that we guarantee same-day delivery, with most nonprofit applicants receiving their Tax IDs in just a few hours — and we don’t charge $300-plus for rush delivery like most services do.

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Frequently Asked Questions

You need to fill out the IRS (internal revenue service) Form SS-4 to apply for a non-profit tax ID number. You can send the application by mail of fill it out online. In any case, it is a tedious and time-consuming process to obtain an employer identification number.

However, if you leverage GovDocFiling’s services, you can simply fill out an online form to apply for a nonprofit tax ID number within minutes.

Before you apply for tax-exempt status you must have an LLC or Corporation and corresponding operating agreement or articles of incorporation. You must also have a nonprofit tax ID number.

Once you have the prerequisites, you can apply for the 501(c)(3) tax-exempt status by filling out Form 1023-EZ. To be eligible for this your organization must have gross annual receipts of less than $50,000 for three consecutive years and total fair market assets of less than $250,000.

A federal employer identification number is just like the social security number for a business and a must-have.

If you want to apply for tax-exempt nonprofit status, you must have a tax ID number first. Other than being a prerequisite to apply for nonprofit status, tax Id is useful for the following purposes:

  • It is the means by which government tracks your tax status
  • You will need it to open a business bank account
  • It adds credibility to your organization for fundraising purposes
  • Employer identification number (EIN) is also required to hire employees and pay them
  • You need an employer identification number to file taxes

The point is that you can’t really run a business without a tax ID number and the same is true for a non profit organization as well. So, use GovDocFiling’s simplified online EIN application process to obtain a nonprofit tax ID for your organization.

Here are the key benefits of forming a nonprofit organization:

  • You can apply for tax-exempt status and not pay corporate income taxes
  • Some states would also allow tax exemption on sales and property taxes
  • Your organization will be a separate legal entity if you formally form a nonprofit
  • As an owner or member, your liabilities will be limited when it comes to paying business debts
  • A nonprofit organization is eligible to receive private or public grant money

However, not any organization can become a nonprofit just to get these benefits. It needs to be driven by a nonprofit motive and should be one of the types of eligible organizations.

Here is a step-by-step guide to forming a nonprofit organization in the US:

  • Choose the type of nonprofit organization and entity type
  • Select a unique and relevant business name
  • Define the mission and structure of your nonprofit
  • Select and appoint your board of directors
  • Register your business with the state
  • Draft your articles of incorporation or operating agreement
  • Also, apply for a nonprofit tax ID number
  • Apply for the section 501(c)(3) tax-exempt status
  • Find ways to raise funds for your nonprofit
  • Stay compliant to maintain your status of an exempt organization

GovDocFiling can help you through the process by taking care of all the paperwork and legal formalities, from business formation to an employer identification number (EIN) application.

Apply for Your Nonprofit Tax ID Number Today

If you’re looking for an easy, fast and hassle-free way to secure your nonprofit EIN, we’re here to help. To get started, fill out your Tax ID application by clicking on the button below. And remember, our tax-savvy customer service experts are available 24/7 if you have any questions.

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