Fortunately, getting an EIN and using it to register your organization with the Internal Revenue Service (IRS) is a straightforward process. This article will provide everything you need to know about why an EIN number matters and how you can apply for one.
What is an Employer Identification Number?
Your organization’s EIN is the unique identifier that the IRS and other government agencies will use to identify your organization. It’s a simple nine-digit number with the format XX-XXXXXXX. Your EIN is unique to your organization, there aren’t any other nonprofits or businesses with the same number.
Although EIN stands for Employer Identification Number, it is really a tax identification number used by the IRS for any organization. No matter if there are employees or not in the organization.
Who needs an EIN?
EINs are required for a wide range of organizations, including both for-profit businesses and nonprofits.
There are a few criteria to help you determine whether or not your organization needs an EIN:
- Any business or organization that has employees
- Any organization that operates as a corporation or partnership, even if they don’t have employees
- Entities such as trusts and estates
- All types of nonprofit organizations
The EIN Application:
Applying for an EIN can seem intimidating, especially if you’re just one person managing the incorporation of a new nonprofit. However, the EIN application process is relatively straightforward, and there are EIN services that will take care of the whole process for you.
The first thing you should know is that the IRS EIN application is free. You won’t face any direct registration costs, and there’s no need for any legal or accounting support. While other parts of registering your business, such as incorporating, may carry such expenses, your EIN application doesn’t cost anything if you go directly to the IRS.
Before applying for your EIN
Getting an EIN is not the first step in registering your nonprofit. First, you’ll have to establish the legal structure of your nonprofit. See our guide on incorporating as a nonprofit for the whole process.
Incorporating your organization involves defining the leadership structure and bylaws that you’ll operate under.
You’ll then have to file your completed paperwork (called either articles of incorporation, certificate of incorporation, or articles of association, depending on the structure and your state) with the appropriate state organization. Requirements vary from state to state, and there will be a filing fee that depends on the state.
If you are looking to incorporate as a nonprofit but are lost as to where to start, Crowded offers complete end-to-end incorporation services.
Methods for submitting your EIN application
When you apply for an EIN number, you’ll do so directly with the IRS. They provide a variety of different methods that allow any organization to submit the proper forms for their application.
Most of the time, the best way to apply for an EIN is through the IRS online EIN application. This simple and free online application process guides you through the process.
Tip: Be sure to have all relevant information on hand before you start! Incomplete applications can’t be saved, and there’s a 15-minute time-out for inactivity. If you’re not properly prepared, you might have to start the application over.
Here’s what to expect for the online IRS EIN application:
- 1. Select the legal structure of your organization: Most of these apply to businesses and other entities, so you’ll want to view additional types to find nonprofit organizations. This provides a list of various nonprofit organizations, including churches, social clubs, sports teams, and more. You can choose the appropriate type or “other” if you don’t fall into one of those categories.
- Choose your reason for applying for the EIN: You might apply for it when hiring employees, purchasing a business, or changing the organization type. If you’re registering a nonprofit organization, then you likely want to select that you’re starting a new business (even though it says business instead of nonprofit).
- Provide information about yourself and other nonprofit organization leadership. The name and address of the organization are also important information that you’ll need.
The process is quick, and you can always reach out to the IRS via phone for support during the application process. In most cases, you’ll receive an EIN immediately upon completing the application process.
Applying by Fax or Mail
The online application process essentially guides you through the completion of Form SS-4, Application for Employer Identification Number. Of course, you can always print out the form and complete it manually as well. This might be a bit less intuitive than the online process, but you’re still providing the same basic information.
Once you’ve completed the form, you can fax or mail it to IRS:
Cincinnati, Ohio 45999
The IRS has several fax numbers depending on the location of your organization:
For organizations inside one of the 50 states or D.C.: 855 641 6935
For organizations inside U.S. territories: 855 215 1627
For organizations outside of the U.S.: 304 707 9471
If you apply by mail, the IRS will mail you the response to your application at the address you provide for your organization. The general processing timeline for applications by mail is four weeks. Applications by fax can provide a fax number to receive a response within four business days.
Tip: Once you receive your EIN document, be sure to keep your EIN document in a safe place so your organization can use it year after year. For nonprofits that have treasurer/board member turnover, such as school/university groups, EIN numbers sometimes get lost in translation.
Filing for tax-exempt status with your EIN
Now that you’ve received your EIN from the IRS, you’re ready to file for your tax-exempt status. This is the last step in legitimizing your nonprofit organization and will ensure that you have the appropriate tax-exempt status for your 501(c) classification. See our guide on how to apply for tax exempt status.
There are several different forms that your organization may need to file, depending on its specific classification. A strictly charitable organization filing for 501(c)(3) classification would file Form 1023. Most other types of nonprofit organizations would use Form 1024 for their 501(c) classification.
Choosing the best bank for your nonprofit
Your EIN is an integral part of registering your nonprofit organization and achieving tax-exempt status. However, it’s also just as important when it comes to setting up a bank account for your nonprofit. We compiled a list of best banks for nonprofits for you to choose from.
When you go to open a bank account for your nonprofit, you’ll need your EIN to do so. The same goes for any credit that your organization might need, even if it’s just a credit card for operational use. It’s a lot like using your SSN when opening a personal bank account or credit.
Crowded’s EIN and incorporation services
For new and existing nonprofits who either need and EIN or have lost theirs, Crowded can help! For only $20, Crowded will apply on your behalf to the IRS for an EIN, or retrieve a lost EIN.
If the application process for the EIN is overwhelming, utilizing Crowded’s EIN service is smart because you will get your EIN the next day without breaking your budget.
If you are in the process of founding a new nonprofit, and need to incorporate as well as an EIN, Crowded can incorporate your nonprofit for $95. For a no-stress option, your nonprofit could be up and running for $115 (EIN: $20 + Incorporation: $95).
See how we compare:
Registered agent fee
Crowded is a solution specifically designed for nonprofit groups that simplifies the management of your organization’s finances. Furthermore, Crowded provides free bank accounts with affordable banking fees.
Once you have your EIN and are incorporated, you can sign up for a Crowded account that includes digital banking and tools for online payment collection, expense management, unlimited digital debit cards, built-in passive fundraising tools, and much more. Our focus is on nonprofit membership clubs, and we provide unique benefits while minimizing your overall banking costs.