How to get an EIN for a Nonprofit
One of the first things that should be done when establishing a nonprofit organization is obtaining an Employer Identification Number (EIN). It is issued by the Internal Revenue Service and is used for various purposes, including filing taxes, opening a business account, hiring employees, and requesting tax exemption.
Before submitting Form 990 online or requesting tax exemption, the EIN number should be acquired.
What Is an EIN?
The Employer Identification Number (EIN) is a nine-digit unique number that is provided by the IRS for identifying your organization from a tax perspective.
Consider it as the Social Security Number of your organization.
Why Does a Nonprofit Need an EIN?
You'll need an EIN in order to:
● Register your nonprofit as tax-exempt (Forms 1023/1024)
● Open a bank account for your nonprofit organization
● Recruit staff members and run your payroll operations
● File your nonprofit's tax return online (Form 990)
● Seek funding/grants
You won't be able to eFile Form 990 without the EIN.
How to Get an EIN for a Nonprofit
1. Eligibility Determination
Prior to application, it must be established that:
Your business has been formally registered (LLC, corporation, or trust)
There is a designated individual with a Social Security number or ITIN
2. Collect Necessary Information
The information needed is as follows:
● Organization’s legal name
● Mailing address
● Information of the responsible person
● Kind of organization (non-profit corporations, trust)
● Purpose of application (founding non-profit, opening bank account)
3. Apply for EIN Online
The quickest method is by applying directly via the IRS website.
Advantages of online application:
● Instant EIN issue
● Free EIN application
● Effortless and swift procedure
Upon receiving approval, you may use your EIN immediately.
4. Save Your EIN Confirmation
Once you have received your EIN:
● Print out and retain the notice of acceptance (CP 575)
● It is required when filing Form 990 electronically or applying for tax-exempt status.
When Should You Apply for an EIN?
It is recommended that you obtain an EIN as soon as your nonprofit is officially registered.
This will allow you to:
● Open a bank account
● Submit applications for tax exemption on time
● Carry out compliance activities such as filing Form 990
Common Mistakes to Avoid
When getting an EIN, make sure you do not:
● Provide wrong information about your organization
● Apply more than once for the same organization
● Provide personal rather than organization information
● Forget to store your EIN verification
This is because precision is vital to prevent future problems when filing Form 990.
What to Do After Getting an EIN
Now that you have your EIN number:
● Apply for tax exemption (Form 1023/1024)
● Create a bank account for your nonprofit
● Establish financial records
● Prepare to submit annual documents such as Form 990 eFiling
Start Your Compliance Journey
Applying for EIN is the first thing that must be done to ensure compliance. After obtaining an EIN, one can easily handle the filing process and other matters related to nonprofit management.
After you decide to eFile your return, find a suitable provider for Filing Form 990 electronically.