Applying for nonprofit status is a simple process you can perform online. Applying for the more comprehensive federal tax-exempt status requires more expertise and assistance from an attorney. Understanding the difference between nonprofit and tax-exempt status will help you choose the one that’s best for you and perform the steps necessary to obtain your designation.
Meet with your key stakeholders to discuss whether your organization only needs nonprofit status, or if you want or need federal tax-exempt status once you have obtained nonprofit status. Nonprofit status is a designation granted when an organization incorporates at the state level. It can provide a variety of benefits, such as exemption from state sales and income taxes and access to state grants and programs.
Review the benefits of federal tax-exempt status, which provides different benefits based on which of the more than 30 501(c) designations you receive. These benefits can include the ability to give donors a tax write-off when they donate to your organization. This doesn’t happen when you only have state-level nonprofit status.
Visit the website of your Secretary of State and look for the links to incorporate a business. Read the directions to learn what you will need to do to apply for nonprofit status. You will find instructions for incorporating a new nonprofit or changing the status of an existing corporation.
Prepare the documents you will need to apply for nonprofit status. These usually include Articles of Incorporation. This document states the name of the organization, its purpose, the address of the business, the board of directors and a dissolution clause, stating what you will do with the organization’s assets in the event it disbands. Nonprofits usually designate that their assets go to another nonprofit organization with similar missions. You most likely will need to provide the full names of your board members, their titles and street addresses.
Apply for an employer identification number with the Internal Revenue Service when you receive nonprofit status from your state. Visit the website of the IRS and follow the directions for doing so. You will use this number when you file your annual tax forms.