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With the right documents, businesses can apply for tax-exempt status

Posted on November 4, 2019

The business CPAs here at Teipen Selanders Poynter & Ayres know how to help guide business organizations through gaining a tax exempt status. It’s not that difficult, but organizations must make sure they have the right information on hand and follow the right steps.

To become a tax-exempt nonprofit, there are few things your organization must do right from the start.

  • As you form your business, you must first determine whether the business a going to be a trust, association, or a corporation.
  • TPSA can help you with this understanding, as the differences in organizational structure will absolutely have an affect on your business taxes.

After determining the type and structure of your organization, here are the steps to apply for tax-exempt status:

  1. Gather documents – An organization applying for tax-exempt status must have organizing documents, including:
  • Articles of incorporation for a corporation
  • Articles of organization for a limited liability company
  • Articles of association or constitution for an association
  • Trust agreement or declaration of trust

If your organization’s name is legally changed by an amendment to these documents, also attach a copy of that amendment to the application.

  1. Determine Indiana’s (or your state’s) registration requirements

Every state has it’s own specific registration steps and requirements. State government websites have useful information for tax-exempt organizations. TPSA can also provide you with Indiana’s non-profit and tax-exempt information and registration requirements.

  1. Request an employer identification number (EIN) for your organization

Organizations can apply for an EIN online, by fax, or by mail – but must be legally formed before applying. (Side note from TPSA CPAs: This is mandatory. Nearly all organizations will see their tax-exempt status terminated if they fail to file a required tax return or notice for three years in a row.)

  1. Submit your application

Using IRS Form 1023, you can submit your tax-exempt application on line. As long as your documentation is all there and correctly filled out, you should have your application accepted by the IRS within three weeks.

Like everything else in life, the devil is in the details. If you are considering forming a tax-exempt or non-profit organization, have a talk with our business-savvy CPAs. We can help save you a lot of time and effort.