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Choosing a Tax-exempt Status for Nonprofit Companies

Published on Jan 27, 2012

Summary

Read 'Choosing a Tax-exempt Status for Nonprofit Companies' at 'Time to Start Up,' the small business blog by BizFilings.
Tax-Exempt Nearly everyone’s heard of the infamous 501(c)(3) tax-exempt formation. But did you know that there are other no less than 32 tax-exempt options for nonprofits? To follow is a listing of four of the most popular ones — including 501(c)(3) — along with a brief description of what makes each of them unique …

501(c)(3)

These are typically public charities or private foundations established for a variety of purposes including: religious, educational, charitable, scientific, literary, testing for public safety, fostering of national or international amateur sports, or prevention of cruelty to animals and children.
  • Application form number: 1023
  • Annual return required to be filed: 990 or 990EZ, or 990-PF
  • Charitable contributions allowable: Typically, yes

501(c)(4)

Geared toward civic leagues, social welfare organizations, and local associations of employees. This type of nonprofit generally promotes community welfare, as well as charitable, educational and recreational endeavors.
  • Application form number: 1024
  • Annual return required to be filed: 990 or 990EZ
  • Charitable contributions allowable: No, generally

501(c)(6)

This type of nonprofit is often a business league, chamber of commerce, or real estate boards. The general nature of activities involves improvement of business conditions of one or more lines of business.
  • Application form number: 1024
  • Annual return required to be filed: 990 or 990EZ
  • Charitable contributions allowable: No

501(c)(7)

Consisting predominantly of social and recreation clubs, this type of nonprofit organization focuses on pleasure, recreation and social activities.
  • Application form number: 1024
  • Annual return required to be filed: 990 or 990EZ
  • Charitable contributions allowable: No
A Note on Defining Your Business Purpose Your business purpose is an explanation of what your nonprofit corporation is formed to do or provide. Having a very detailed description is essential. If you plan to apply for tax-exempt status, the IRS will require a copy of your Articles of Incorporation and will pay particular attention to your business purpose and use it to classify your business. For a complete list of nonprofit, tax-exempt formation choices, visit our IRS Organization Reference Chart. We’re Here to Help If you have questions, or would like assistance with forming a nonprofit company, feel free to give our customer service team a call between 8am and 7pm CST, at 800-981-7183. Or, send us an e-mail anytime. We’re always happy to help. Business Blogs blog