The typical application form for NGOs seeking 501(c)(3) status is Form 1023. It takes a considerable amount of time and effort to finish the lengthy, intricate application. Nonprofits are required to give specific information about their goals, programs, governance, and financial management. For small NGOs, the $600 application fee for Form 1023 might be a sizable outlay of funds.
For small nonprofits with assets and annual gross receipts of less than $50,000, a simplified version of the application known as Form 1023ez is available. It takes less time and effort to complete because it is shorter and less detailed. Form 1023ez has a $275 application fee, which is less than half of Form 1023’s price.
Which form ought to your nonprofit submit, then? The answer is based on the scope, complexity, and financial constraints of your company. Form 1023ez can be your best bet if your nonprofit has a plain mission, a simple organizational structure, and few financial resources. However, if your nonprofit has a more intricate organizational structure, a more expansive objective, and a greater budget, Form 1023 might be required to give the IRS the degree of information they need.
Nonprofit organizations must carefully evaluate who they choose to serve on their board of directors in addition to choosing which form to submit. In addition to making strategic decisions that will aid the nonprofit in fulfilling its objective, board members are in charge of directing the organization’s operations and ensuring that all legal and regulatory obligations are met. Nonprofits should look for board members who are passionate about their objective, have the requisite experience and knowledge, and are prepared to invest the time and money required to make the organization successful.
A nonprofit must submit an annual information return to the IRS after being granted tax-exempt status. The majority of 501(c)(3) organizations are required to submit Form 990, which gives the IRS details on the organization’s operations, management, and finances. Penalties and the loss of tax-exempt status are possible in the event that Form 990 is not filed.
Form 990-N, a straightforward online form that merely asks for the most fundamental details about the organization, is available for nonprofits with gross receipts under $50,000. Form 990-EZ, a condensed and less comprehensive version of Form 990, is available for nonprofits with gross receipts between $50,000 and $200,000.
For nonprofit organizations, applying for tax-exempt status with the IRS can be a difficult and time-consuming procedure. Nonprofits can, however, successfully navigate the procedure and receive the tax-exempt status they require to fulfill their goal by carefully weighing their alternatives and getting advice from knowledgeable experts.