Non-profit organizations include public charities, private foundations, and a variety of other types of entities. Although these groups focus on a range of different missions, they have one core element in common: they are exempt from income tax on an organizational level. If you are thinking about launching a non-profit, you need to obtain a tax ID number for your organization. Called an EIN, this number is essential for all tax forms and banking documents prepared on behalf of your non-profit. Wondering how to get an EIN for your non-profit? Curious about why you need this number? Then, keep reading to learn what you should do.
- Prepare Mandatory Business Information
- Apply for a Non-Profit Organization Tax ID (EIN) Number Online
- Apply for a Non-Profit Organization Tax ID (EIN) Number via Mail or Fax
- How Do I Obtain a Tax ID (EIN) Number for my Non-Profit Organization?
- How Long Does it Take to Obtain a Tax ID (EIN) Number for my Non-Profit Organization?
- Why Do I Need a Tax ID (EIN) Number for My Non-Profit Organization?
The Internal Revenue Service (IRS) uses an EIN to identify your organization. Just like you have a Social Security Number (SSN) or an Individual Tax Identification Number (ITIN) to identify yourself to the government, your non-profit also needs a special number for identification. These numbers are always unique, and using them is much more effective from an organizational standpoint than using your name or the name of the nonprofit.
When you apply for an EIN, you have to provide a range of details about your non-profit organization. You need essential contact details such as the name, address, and phone number of your non-profit. You also need your name and SSN or ITIN or those same details for whoever is the responsible party for the non-profit organization. Note that if you or the other responsible party has ever obtained an EIN in the past, you need that number as well.
The EIN application requires you to specify the type of organization you have. If your non-profit is a church or church-controlled organization, you simply select that option, but if it’s any other type of non-profit, you choose “other non-profit organization” and you note the type of organization.
If you have employees, be prepared to note the number of employees, the type of work they do, the first date you plan to issue paychecks, and whether you expect your non-profit organization’s employment tax liability to be more or less than $1,000 for the year. Luckily, you don’t have to be very specific about the type of work your employees do. You just have to choose between agricultural, household, or other employees.
Ideally, you should apply for your EIN after you have legally formed your nonprofit organization. By law, all tax-exempt organizations risk losing their tax-exempt status if they don’t file all required tax returns for three years in a row. Once you apply for the EIN, the government considers you to be legally formed, and as a result, the clock on the three year time period starts ticking when you get your EIN. If you’re not at that stage yet, you may want to wait a bit before getting your EIN. That said, you need your EIN for a lot of different start-up purposes so you should get it as soon as you can. You need to strike the right balance on timing.
To get your EIN as quickly as possible after you have formed your organization, you should apply for a non-profit organization tax ID (EIN) number online. Essentially, you open a web portal. Then, you answer a few questions related to the information explained above. Finally, you hit submit and wait to receive your EIN.
Don’t have the ability to apply for an EIN online? Luckily, regardless of which type of nonprofit you run, you have other options. Namely, you can apply for a non-profit organization tax ID (EIN) number via mail or fax. With these submission methods, you need a paper EIN application.
Simply complete the application thoroughly. You need the same info as you do for the online option. Then, just mail or fax your application materials to the address or fax number featured on the application. Then, sit back and wait. Once you receive your nonprofit’s EIN, you can start using it immediately.
As detailed above, you can obtain an EIN for your non-profit organization fairly easily. The steps are as follows:
- Decide if you want to apply for an EIN online, using a fax, or through the mail.
- Thoroughly complete the application with the details explained above.
- Submit your non-profit organization’s EIN application.
- Wait to receive your EIN.
- Start using your EIN for tax forms or banking documents for your non-profit.
Now that you know how to obtain a tax ID (EIN) number for a nonprofit, you’re probably wondering how long the process takes. If you have all the required information when you start, you should be able to finish the application in 30 minutes or less. Then, the processing time varies by application method. Typically, you should expect to get your number within the following time frames:
- Online – same day
- Fax – four business days
- Mail – four to six weeks
Note that there can be delays if you provide misinformation. For instance, if you write down your Social Security Number incorrectly on the form or forget to note your number of employees, you may experience processing delays.
Almost all non-profit organizations must file an informational tax return every year. If your non-profit brings in less than $50,000 annually, you only have to submit the 990-N form which is commonly referred to as an e-postcard, but if your gross receipts exceed that amount, you typically need to complete a longer return. In both situations, you need to include your non-profit’s EIN on the return.
However, that’s not the only situation where your nonprofit needs an EIN. You also need a federal EIN (FEIN) Number if you hire employees and file employment tax forms. Generally, financial institutions also request an EIN if you want to open an account or apply for a loan for your non-profit.