Non-Profit Series: 9. Additional Applications and Accounts for Non-Profits

Written by Sagan L. Carman-Downer

Once you have made the decision to start a non-profit organization and completed the steps to officially form an entity (filing Articles of Incorporation, for example), there are additional steps that may be necessary. This article will explain some of those additional steps.

Apply for Federal Employer Identification Number

One of the next steps will be applying for an Employer Identification Number (EIN or federal tax id). This is a unique number assigned to the organization by the IRS. An EIN will be used for things like opening bank accounts and identifying the organization for tax purposes. The organization will complete a form called an SS-4, which can now be completed online through the IRS website. If completed online, the organization can receive the EIN immediately after the application is submitted.

Set Up EFTPS Account

Your organization may also need to set up an account with the Electronic Federal Tax Payment System. This is a system for the organization to deposit tax money withheld from any employees the organization may have. This will include money withheld from employees’ paychecks for FICA taxes and income taxes. The organization should automatically receive instructions in the mail for setting up this account after they have received their EIN.

Apply for State Identification Number

Even if you have received an EIN through the IRS, you may still be required to obtain an additional tax identification number through the state where your organization is located. Many states require the organization to apply for this additional identification number for state tax purposes. This is likely necessary if you will have employees that the organization will be required to withhold state income tax for, or if you will be required to collect a sales tax or other state tax. This can typically be done by submitting an application for an identification number through the state’s department of revenue.

Additional State Requirements

There may be additional requirements that vary by state. For example, in Nebraska, the organization may have to purchase a workers’ compensation insurance policy. This is an insurance policy that provides benefits to employees who are injured during their employment. Unless the organization meets certain exceptions, they may have to provide this type of insurance for its employees or officers. Another example in Nebraska, is the requirement that the organization complete an application through the Department of Labor for unemployment insurance. If the organization will have employees, they may be required to complete this to provide unemployment benefits to employees.

This list provides information on some of the next steps that the non-profit organization will need to take once they have officially formed an entity. There may be additional requirements depending on the state in which the organization is located, and the type and size of the organization. To ensure that you have completed the necessary steps, submitted the necessary applications, and created the necessary accounts, it is best to speak with an attorney in your state.