What Do Non-Profit Organizations Include?

October 14, 2017 , In: Finance , With: No Comments

When many people think of non-profit organizations, they imagine them as something separate from the world of business.  Non-profit organizations have the reputation of doing useful work while remaining unscathed by corporate greed.  From the perspective of the IRS, though, corporations and non-profit organizations are more alike than different.  Both types of organizations have income and expenses, and they both pay employees; thus, their tax obligations are quite similar.  Non-profit organizations, just like businesses and even churches, must file tax returns.  Therefore, non-profits need a non-profit organization Tax ID number.  It is the same as getting an EIN number for a business, except that you select non-profit organization as your entity type.

What Qualifies as a Non-Profit Organization?

The types of non-profit organizations that most readily come to people’s minds are international humanitarian organizations.  Besides those, most people think of non-profits as scrappy startups dedicated to fulfilling a social mission rather than turning a profit.  In reality, non-profit organizations are quite a diverse group of entities.  The following types of organizations can all register with the IRS as non-profits:

  • Educational institutions, such as schools and universities
  • Charities and philanthropic organizations
  • Veterans’ organizations
  • Credit unions
  • Child care organizations

Anything that puts all its income into fulfilling its mission instead of earning a profit can be a non-profit organization.  Paying employees counts as part of the organization’s expenses.  Many non-profits do employ volunteers, but having paid employees does not disqualify you from being a non-profit organization.

How to Get an EIN Number for Your Non-Profit Organization

The fastest way to apply for an EIN number for your non-profit organization is to fill out form SS4 online.  Within an hour of submitting the form, your non-profit will receive a confirmation email with its EIN.

Non-profits do not have to pay taxes, but they do need EIN numbers.

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