If you’ve already completed your state nonprofit paperwork, the next step is to get an Employment Identification Number or “EIN.” An EIN is a number that designates your specific organization for the IRS, like a social security number for your organization, and you have to get one for your nonprofit in order to file for 501(c)3 status, open a bank account, and more.
Getting a Nonprofit EIN can take 5 minutes, but it can also be confusing if you’ve never done it before. Here’s the step-by-step process for acquiring your nonprofit’s EIN.
Before You Start Your Nonprofit EIN Application
Before you start, have the following information handy as you’ll need it for your Nonprofit EIN application:
- Your responsible party’s (you or another board member or officer of your nonprofit) address, phone number, and social security number or taxpayer identification number. The address must be physical, a P.O. Box is not sufficient.
- Your organization’s name, address, county, state, and incorporation date.
Step 1: Navigate to the IRS EIN tool
The majority of nonprofits can use the EIN Assistant, the IRS’s online tool for acquiring an EIN. Exceptions are nonprofits that were formed outside the United States or have a business location outside the United States. You can access the assistant through this link: https://sa.www4.irs.gov/modiein/individual/index.jsp. Then click “Begin Application”.
Step 2: Choose your entity structure
The second step is to choose an entity structure. Since the EIN Assistant is used by all kinds of businesses and corporations, not just nonprofits, the IRS would like to know how to categorize your organization. For nonprofits, choose the bottom option “View Additional Types, Including Tax-Exempt and Governmental Organizations” and then click continue.
Step 3: Choose tax-exempt structure
Once you click to view additional types, you’ll be presented with a list of nonprofit structures. Pick the one that best fits your organization.
Block/Tenant Association
Block associations are made up of neighborhood residents who combine to promote the safety and general welfare, and work to preserve and improve the quality of life in their immediate community.
Tenant associations (or tenant organizations) may be made up of tenants who live in a certain building or development, or may be on a larger scale — i.e. renters in a city who belong to a county or citywide tenant association.
Church
For tax purposes, a “church” refers to any organization claiming to be a church or any convention or association of churches. The word “church” includes temples, mosques, and other houses of worship. To be considered a church for tax purposes, a group must be part of an organized religion, must have a mission statement, and must be formally organized as a distinct legal entity. Certain characteristics are generally attributed to churches. They include:
- A distinct legal existence and religious history
- A recognized creed, form of worship, and literature of its own
- A definite and distinct ecclesiastical government including a formal code of doctrine and discipline
- An organization of ordained ministers, selected after completing prescribed courses of study
- Established places of worship with regular congregations, religious services, and/or religious instruction for members.
Farmers’ Cooperative
A farmers’ cooperative is a farmers’, fruit growers’, or like association organized and operated on a cooperative basis to:
- Market the products of members or other producers and return to them the proceeds of sales, less necessary marketing expenses, or
- Purchase supplies and equipment for the use of members or other persons and turn over the supplies and equipment to them at actual cost, plus necessary expenses.
Members in a cooperative share in the profits and participate in the management of the association.
Homeowners/Condo Association
A Homeowners/Condo Association is an organization of homeowners residing within a particular development whose major purpose is to maintain and provide facilities and services for the common enjoyment of the residents.
Memorial or Scholarship Fund
A memorial or scholarship fund is set up in memory of someone who has died. The family may request that donations in memory of their loved one be sent to a specific charity, church, or school. Scholarship funds provide monies to be awarded to deserving students in the future.
PTA/PTO or School Organization
Parent-teacher associations (PTAs) act on behalf of the student. They speak to local and federal government on issues dealing with students.
Parent-teacher organizations (PTOs) are most often single-school groups that operate under their own bylaws and concentrate on activities at their building or in their town only.
School organizations are usually created by each school and are independent from similar groups at other schools. Some examples of school organizations are: high school marching bands and junior varsity cheerleading squads.
Social or Savings Club
A social club is organized for pleasure, recreation, and other similar non-profitable purposes and substantially all of its activities must be for these purposes.
A savings club is organized to offer benefits and services to its members for purposes of saving money on purchases. Some types of savings clubs include: grocery savings, airline/cruise savings, and home décor savings
Other Non-Profit/Tax Exempt Organizations
Non-profit organizations include corporations, trusts, limited liability companies, and unincorporated associations that qualify for tax-exempt status under Internal Revenue Code (IRC) 501(a) as described in Publication 557 (Tax-Exempt Status for Your Organization).
Non-profit organizations include: public charities, private foundations, educational organizations, employee associations, veteran’s organizations, business leagues, state-chartered credit unions, child care organizations, and teachers’ retirement fund associations. This list is not all-inclusive.
Sole proprietors and partnerships cannot be considered for tax-exempt status. For-profit organizations cannot be considered for tax-exempt status.
Some common confusion at this step may be to choose either Community of Volunteer Group or Sports Teams (community) when setting up your nonprofit, however neither of these options are allowed to be incorporated, therefore you should not select either of these to get your nonprofit’s EIN.
If you‘re in doubt, choose the latter, “Other Non-Profit/Tax Exempt Organizations.” The vast majority of nonprofits will fall under this designation. Once you’ve selected your entity type, click continue.
Step 4: Select purpose of EIN
Once you’ve selected your entity type, you’ll be asked the purpose of your EIN. Choose “Started a new business,” and click continue.
Step 5: Identify the responsible party
After you’ve identified the purpose of the EIN, the IRS requires you to designate a responsible party for your organization. This person must either be a board member or officer of the organization, such as the executive director, treasurer, or secretary. Provide the responsible party’s name, title, and social security number or taxpayer identification number and click continue.
Step 6: Provide your nonprofit’s contact information
Then, you’ll enter the nonprofit’s address, phone number, and mailing address if necessary. Click continue when finished. NOTE: Like with most IRS applications, P.O. Boxes are not allowed for the main address.
Step 7: Enter basic organization details
In this step, you’ll enter basic information about your new nonprofit, including the name, any official alternate names, county, state, and month and year of incorporation. If your organization has a different mailing address than your responsible party, you’ll also enter that here. Check your state documentation if you’re not sure about the incorporation date. Enter your information, then click continue.
Step 8: Answer additional questions
On this screen, you will be asked four questions about your nonprofit organization:
- Does your business own a highway motor vehicle with a taxable gross weight of 55,000 pounds or more?
- Does your business involve gambling/wagering?
- Does your business need to file Form 720 (Quarterly Federal Excise Tax Return)?
- Does your business sell or manufacture alcohol, tobacco, or firearms?
- Do you have, or do you expect to have, any employees who will receive Forms W-2 in the next 12 months?* (Forms W-2 require additional filings with the IRS.)
Answer each question honestly (for most nonprofits, these will all be “No” answers) and click continue.
Step 9: Select your organization’s purpose
From a list, you’ll select the purpose closest to your nonprofit’s legal purpose or mission. The majority of nonprofits will fall under Social Assistance. If Social Assistance doesn’t quite fit your nonprofit, you can select “other.”
Optional Step: Selecting Other
If you selected Other, you’ll have two additional screens to fill out. On the first screen, you’ll select “Organization.”
On the second screen, you’ll specify the type and purpose of your organization (Athletic, Conservation, Environmental, Fundraising, Homeowners Association, Religious, Social or Civic, or Other). Select the one that fits you best and type in your specific purpose on the box to the right of your selection, then click continue.
Step 10: Select how to receive EIN letter
Once the IRS approves your EIN, you will receive a confirmation letter, either by mail or online. If you select by mail, it will take up to 4 weeks for delivery. If you select online, you’ll receive your EIN immediately, In almost all circumstances, you’ll want to select Receive letter online.
Step 11: Review and submit your application
Finally, you’ll submit your Nonprofit EIN application. Before submitting your application, take the opportunity to review and confirm the information you have provided. Double-check for accuracy to prevent any delays or issues with your EIN application.
Once you have reviewed and confirmed your information, proceed to submit the application. The IRS will then send you a confirmation notice indicating that your application has been received.
Step 12: Get your Nonprofit EIN
In most instances, you will receive your EIN immediately. However, there might be cases where the IRS requires additional information, resulting in a delay. If this occurs, the IRS will inform you accordingly.
When you receive your EIN, store it securely as you will need it for tasks such as opening a bank account or filing taxes. Keep it accessible and safe.
Step 13: Celebrate your accomplishment!
Congratulations! You have successfully acquired your Nonprofit EIN. With this important milestone completed, you can now focus on your next step, filing for 501(c)3 status. Think you’ll need help with that? We can help you avoid complicated paperwork and get your nonprofit started right.
Note: This is a general guide to the EIN process, and should not be considered legal or tax advice for your specific organization. For specific advice, please seek the counsel of an accountant or attorney.
Photo by Glenn Carstens-Peters on Unsplash
