Are you an animal lover hoping to encourage the adoption of more strays? An environmentalist passionate about green causes? Or leading a group of civic-minded citizens to keep your city cleaner? You may qualify for tax exemption and other benefits when you apply for non-profit status of your group or organization.
A non-profit organization is a non-commercial business entity put together for the purpose of promoting some cause for the public good in such areas as education, religion, charitable works, research and the arts. When established as a 501 (c) 3 non-profit corporation, the organization is considered exempt from paying income and property taxes, as well as being legally able to solicit and receive tax-deductible contributions from contributors and supporters.
- In order to be considered a non-profit corporation, your organization must have a written mission statement, a brief outline of what your goals and purpose are, a board of directors of qualified individuals who contribute their time and talent in helping the organization further its mission, written articles of incorporation that have been formally filed with the office of the secretary of state in in the state where your organization is operating, drafted bylaws, the development of a budget and record keeping system, and an accounting system.
- Having formed a legitimate non-profit organization, you are now ready to apply to the Internal Revenue Service for 501(c)3 status, recognizing your group as having tax exempt public charity status. Your local IRS office or the IRS website can provide you with publication 557 providing detailed instructions for filing form 1023, the application for non-profit status. it's a smart idea to consult with an attorney specializing in non-profit corporations, because Form 1023 serves as a legal document that will impact your organization's ability to fund-raise and be exempt from taxation.
- Non-profit organizations are also required to apply for a Federal Employer Identification Number (EIN) whether or not you have actually hired employees to be on your payroll. Use form SS-4 to request this number. The EIN is secured from the IRS and serves as the identification number for your non-profit organization when filing tax documents, in much the same way that a Social Security number identifies a private individual.
You must also contact your local, municipal and state departments of revenue to file for exemption from income, property and sales taxes. Find out from your state's Attorney General's office if your organization needs to obtain a license or permit in order to legally fund-raise. If you plan on communicating with donors by mail, you can also apply to the U.S. Postal Service for a non-profit mailing permit as outlined by Publication 417.