Apply for a Non-Profit Organization Tax ID (EIN) Number | How to Apply Online
Does a non-profit organization need an EIN number? The answer is yes. EIN stands for Employer Identification Number, but these numbers aren't just for employers. Instead, the EIN acts as a unique tax ID, and you must include this number on a range of government documents, tax forms, and banking applications. In other words, your non-profit organization needs an EIN whether you have employees or not. Here's a closer look at the details so you know what to expect.
- Prepare Business Owner Information
- Apply for a Non-Profit Organization Tax ID (EIN) Number Online
- Apply for a Non-Profit Organization Tax ID (EIN) Number by Phone, Mail or Fax
- Does a Non-Profit Organization Need an EIN Number?
- Why Does a Non-Profit Organization Need a Tax ID Number?
- How Do I Obtain a Tax ID for a Non-Profit Organization?
Whether you apply for a non-profit organization tax ID (EIN) number online or through any other method, you need to prepare business owner information. If you have the information on hand and accessible, the application process will go more smoothly. You need information about the responsible party for the non-profit organization. That includes the name, mailing address, and personal tax ID (for example, Social Security Number (SSN), Individual Tax Identification Number (ITIN), or EIN) of the applicant. If a third party designee is completing the application, the head of the organization needs to authorize that individual to submit the application.
On top of information about the person completing the application, you also need information about your non-profit organization. In particular, you need to specify if the organization is a church or controlled by a church, or you need to note that it is another type of non-profit organization and specify your activities. Make sure that you know why you're applying. Possible reasons may be starting a new organization, becoming compliant with withholding regulations from the Internal Revenue Service (IRS), creating a pension plan, or changing the type of organization. Many organizations also apply for banking purposes, and you need to note the reason, such as opening a bank account or applying for a loan.
If you want speed and convenience, you should apply for a non-profit organization tax ID (EIN) number online. When you apply online, you can enter the information about your organization into your home or office computer. You don`t have to worry about printing forms, driving to the post office, finding a fax machine, or dealing with other hurdles. As an added bonus, applying online is the fastest way to obtain your number.
Typically, you get your EIN the same day that you apply, and you can start using it right away. Note that the government only issues one EIN per applicant per day. As a result, if you run several different non-profit organizations, businesses, trusts, or other entities, you need to apply for EINs on different days. Unfortunately, if you need multiple EINs, you may not be able to get them all the same day.
Alternatively, you can apply for a non-profit organization tax ID (EIN) number by phone, mail or fax. If you formed your non-profit organization outside of the United States or its territories, you have to apply for your EIN over the phone. Residential applicants do not have this option.
To apply over fax, you simply print out the application, fill it out by hand, and fax it back. Make sure to include your return fax number, and once the government has what it needs, it should send back your EIN within four business days. The process is the same through the mail - you just need to fill out the application, pop it in an envelope, and mail it to the government. Then, you should receive your EIN within about four weeks. Both of these options take significantly longer than applying for your non-profit EIN over the internet, and if you make errors or forget information on the application, the process will take longer.
A non-profit always needs an EIN number. Organizations such as limited liability companies (LLCs) and sole proprietorships may not need an EIN until they hire their first employee. However, these organizations also need EINS for sales and excise tax forms as well as for banking purposes, so in most cases, they also end up needing a federal tax ID before they hire any employees. In contrast, however, non-profit organizations always need EINs whether they are hiring employees or not.
That said, you should wait until your non-profit organization is legally formed. Once your organization is legally formed, you have to file required tax returns or you risk losing your tax-exempt status. If you don't file anything for three years, you automatically lose your tax-exempt status. Usually, the clock doesn't start ticking until your organization is legally formed, but if you apply for an EIN, the government will assume that your organization is legally formed and the timeline starts at that point.
If your organization is exempt from paying income tax, you may be wondering, "Why does a non-profit organization need a tax ID number?" The answer is multi-faceted. First, it's important to note that non-profit organizations are only exempt from income tax. If they sell items, they usually have to pay sales tax. Similarly, if they have employees, they have to deal with payroll taxes. The organization needs an EIN to file all these forms. Additionally, if your non-profit wants to open a bank account or apply for a loan, you may need an EIN for that as well.
You may be still wondering, "How do I obtain a tax ID for a non-profit organization?" Here's an overview of the steps. Make sure that your non-profit organization has been formed legally. Get help with a consultant for that process if necessary. Prepare information about yourself and your non-profit, and make sure that you understand why you need a tax ID (EIN). Start the application process online. Get your number the same day and start using the number. Watch your non-profit grow and thrive.