A nonprofit organization is a business which does not include profits as a primary aim. Though the business can be set up such that profits are earned, they will have to be used to serve other purposes of the organization and cannot be used for any personal gains.
The IRS exempts all nonprofit organizations from taxes if they submit a nonprofit 501 (c) 3 tax exempt application and acquire the status. The IRS has a complete section devoted to this which contains all relevant clauses that apply to these organizations.
A business will be given the tax exempted status only it is aimed at public good and helps them out. If you are interested in starting this organization, here are the look at the main steps you will have to follow.
- Conduct a thorough research and gather proof that there is a need for such an organization. There are already millions of these in the country, but most of them are nearly the same and seek donations from pretty much the same organizations, foundations and individuals. As such, there is already a lot of competition in the industry, so you will have to come up with unique purposes.
- Sort out your documents and apply for registration. Select a name for your organization, create a charter and submit this to a relevant local body.
- Submit your application for a Federal Employer Identification Number, which is abbreviated as EIN. You will need this number for all of your transactions.
- Form a board of directors for your company that must work in a very professional manner and must not take any profits from the company for personal use. Draft out a set of policies for your company.
- Submit a nonprofit 501 (c) 3 tax exempt application to the IRS. You will have to pay a fee, which is in between $300 and $750 according to the operational budget of your company. You should seek professional help for this so that you can get over the process in a relatively short time without incurring a lot of problems. Generally, this takes three months but a pro can be quicker and help you acquire the status in a shorter time period. Your nonprofit 501 (c) 3 tax exempt application will only be accepted if you qualify IRS purposes of such an organization and fulfill their requirements. If this is, you will be sent a letter and will be exempted from taxes.
- Start raising your fund,. In many states, you may have to follow additional laws for soliciting your donations. Talk to a representative at a state office close to you and find out information in this regard. Contact donors, corporations and foundations that can provide your financial help.
- Use the funds to conduct suggested activities of your organization. All these must provide benefits to the public at large and must not be for your own individual purposes.
If you need more information about our accounting and tax services, please contact us at 407-344-1012. Freedomtax Accounting’s staff has been providing honest accounting services and tax services for 15 years. Our Orlando accounting and tax firm has its main offices in Kissimmee, FL. Our services are provided nationwide, but mainly in the Central Florida market to areas like Orlando, South Orlando, Kissimmee, St. Cloud, Poinciana, Clermont, Davenport, and Hunters Creek, FL. Our tax accountants and IRS enrolled agents (irs ea) specialize in corporate accounting and bookkeeping, tax services, tax preparation, back taxes help, tax debt relief, tax resolution, tax planning, itin numbers, incorporations, and non profit 501c3 tax exempt status applications.