Why Does a Non Profit Organization Need a Tax ID?

Running a business is hard work. There is a lot of worksite safety and other regulations that need to be considered. Even for non profit organizations, it’s important to make sure you follow the rules regulating these types of businesses. But, did you know many non profits can benefit from tax-exempt status? If you’re not sure how to apply for tax-exempt status, check out these tips. The first thing you should do, however, is secure your organization’s IRS-EIN-Tax-ID, like any other company.

Your Tax ID Number

Your company’s non profit organization tax ID number does not secure tax-exempt status. The tax ID number is your organization’s identification related to all of your business’ activities. It’s essential to apply for this number during the initial startup phase, so you don’t have to use your personal social security number. With a federal tax ID number, it will be easier to hire employees, conduct banking transactions on behalf of your organization, file taxes and secure a business license.

Tax-Exempt Status

After obtaining the federal tax ID, you can then start the process of becoming a tax-exempt organization. You’ll need to use your tax ID during the filing process with the federal government. Some states may also allow your non profit to apply for exemption from state taxes. After incorporating your organization, you will need to submit IRS paperwork that details your non profit’s purpose. Then, you will need to submit the appropriate filing fees and wait for a decision. If your organization is granted tax-exempt status, the IRS will send your company a non profit IRS determination letter. This is an important document that needs to be available to donors and other stakeholders so they can take advantage of the tax-exempt status.

IRS EIN Tax ID Filing Service can help your non profit get closer to tax-exempt status by guiding you through that important first step, applying for a federal tax ID. Get started on your organization’s tax ID application by filling out your details and answering the questions here. Once your tax ID application is complete, you can take the necessary steps to get tax-exempt status.