Why Does a Nonprofit Organization Need a Tax ID?

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Nonprofit organizations are unlike other business entities in that the organization’s primary purpose is not turning a profit. Nonprofits are also recognized in the Internal Revenue Code (IRC) as tax-exempt, which means they do not pay federal income taxes on charitable contributions.

There are more than 25 types of organizations that are classified in the IRC as tax-exempt; among them are churches, church-controlled organizations, assemblies, special associations, and nonprofits to name but a few.

Under section 501(c)(3) of the IRC, tax-exempt status for nonprofits is granted to organizations that serve one or several of the following purposes:

charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, or the prevention of cruelty to children or animals.

Nonprofits are unique in that they must benefit broad public interest, and not just that of their members. Further, all tax-exempt organizations should have a tax ID number, or what’s called an Employer Identification Number, or EIN for short.

Why You Need a Non-Profit EIN Application

An EIN is used to identify various types of business entitles and organizations, primarily for tax purposes. Although nonprofits are not concerned with turning a profit, and despite the fact that they do not pay federal income taxes, nonprofits do need to obtain EINs.

If you’re wondering how to obtain your nonprofit Employer Identification Number (EIN), you’ve come to the right place.

To qualify for tax-exempt status, you must apply for an EIN, a unique, nine-digit number that will be attached to the nonprofit in perpetuity. You need this number to qualify for tax-exempt status, and for all state and local reports.

EINs also allow nonprofits to obtain bank accounts in the name of the charity, apply for permits, and hire employees.

If you are creating a nonprofit organization, chances are you’ve identified a group of people you’d like to help. You’re also declaring to the world—and to the U.S. Government—that you are not in the business to make a profit for yourself or your shareholders. So, you might wonder, do nonprofits have a tax ID number? The answer is yes. Read on to learn why.

Why Does a Nonprofit Need a Tax ID?

Nonprofits are one of more than two dozen types of organizations to which the IRS grants tax-exempt status. That means nonprofits do not pay federal income tax on the charitable donations they receive. However, in order to be granted that status, the organization must show that they benefit the public good beyond simply the individuals who belong to that group. In spite of their tax-free standing, nonprofits must secure an employer identification number (EIN), as it is also used to grant that status, as well as for all local and state filings, the right to apply for and secure bank accounts in the name of the organization, hire employees, and apply for permits.

Where to Find a Tax ID Number for a Nonprofit

You can get a tax ID for your charity quickly and easily at irs-ein-tax-id.com. All you have to do is log on to the site and choose the nonprofit filing status for your organization. Then, fill out the application and submit it. You will receive your new tax ID by email that day, usually within an hour. In the event you submit your application after 9 p.m., you will receive your EIN the next business day.

Filing for an EIN is easy and straightforward. And it will make your business life much easier.

Select Your Entity Type to Apply for a Federal Tax ID Today