Advantages of Having the 501(c)(3) Tax-Exempt Status for Your Organization

Taxes written on a white block placed on dollar bills

If you’re thinking of starting a non-profit charity organization,we recommend you immediately file for tax exemption under the IRS requirements.

The IRS recognizes non-profits as entities that can be exempted from paying federal income tax and receive tax-deductible donations.

All in all, becoming a 501(c) (3) approved entity can be very beneficial for you. In this blog, we have highlighted all the benefits of tax exemption.

Sense of Fulfillment

The first thing any Non-Profit Organizationowner wants is a sense of fulfillment. They need to give out the message of harmony, unity, support, and love. Among all these things, they have to stay code compliant and successful. And in the end, money and support are required to keep an organization going. This is where your 501(c) (3) comes into play.

This status will help you ensure a steady income while having a grip on your sense of fulfillment and giving back to the community.

Low Postage Rate

A Non-Profit Organization, which is 501(c) (3) approved, enjoys low postage rates. They can mail more than 250 copies of a single draft at a very low cost. In addition, this exemption also qualifies you for limited but free TVC and radio announcements generating cause awareness.

Eligible for Grants

With the tax-exempt status, organizations are eligible to apply for grants. This is a huge benefit, considering that Non-Profit Organizations often require external help to keep their operations running smoothly. It’s quite evident that a majority of funders and grant approvers look for Non-Profit Organizations that are tax-exempted.

You Can Buy Things Tax-Free

The 501(c) (3) tax-exemptions status allows Non-Profit Organizations a special exemption from paying the sales tax when buying things. However, these purchases must be in-line with your daily business operations.

Eligible to Get Volunteers Without Paying Them

With the tax-exempt status, Non-Profit Organizations can exercise a special right to get volunteers for their daily operations. And the best part is, you may not have to pay the hired volunteers under this unique exemption.

A woman setting money aside for tax returns

Which Factors Can Affect Your 501(c) (3) Status?

Important Note: If you don’t file a 990 tax return for three consecutive years, you will lose the 501(c) (3) status.

While the 501(c) (3) status offers myriad benefits to non-profit organizations, there are some things that affect its integrity. These factors include benefits that are received from private sources. Lobbying, money laundering, and political activities can lead to tax exemption revocation.

Lastly, if you start earning any UBI, i.e., excessive unrelated business income via your non-profit entity’s accounts, the IRS will immediately eliminate your name from the exemption list.

Let Our Expert Filing Team at A2Z Filings Help You

Need expert assistance in filing all the paperwork and meeting IRS’s stringent requirements for the 501(c) (3) form? Don’t worry because A2Z Filings is here to help. As a prominent name in the document filing services sector, we offer a complete form filing, bookkeeping, and business management solution for Non-Profit Organizations in the US.

Get in touch with us right away!

Tips To Get Started on the 501c (3) Application Process

a person preparing for the 501c3 application process

a person preparing for the 501c3 application process

Getting your tax-exempt 501(c)(3) status is a critical step in establishing your nonprofit organization. It is a major marketing unique selling point, as your donors can deduct the contributions they make to your charity from their taxes. However, the 501(c)(3) requirements are quite complex, and you need someone who specializes in setting up non for profit 501c3.

You need to do certain tasks before starting your nonprofit organization, like hiring your team, preparing the 501(c)(3) application, filing for tax-exempt status, creating a business plan, and writing persuasive grant proposals. As mentioned, the 501(c)(3) application process can be overwhelming, so when preparing the 501c3 application process, here are a few steps you need to take care of.

Sort Your Articles of Incorporation

Before you start on your application process, make sure to sort out your articles of incorporation. These essential documents highlight your intention of establishing your charity as a legal entity that can operate as a business, receive donations, and get tax-exempt status.

You’d need to submit your articles of incorporation to the local state office. However, make sure to do your research to find out the appropriate office to submit your documents. You can either establish your organization as a nonprofit corporation, charitable trust, or an unincorporated association. All have different requirements, so consult a specialist to understand the structure that best suits your mission.

Get Your EIN And Fill the IRS Form 1023

After submitting your articles of incorporation, you’ll need to sort out your employer identification number. You need your EIN to continue with your main application process. Ensure that you fulfill the two notable requirements before you get your EIN. Your charitable organization needs to be incorporated in a US state or territory, and you, as the owner, need to have SSN or other taxpayer identification. EIN process is straightforward, and you’ll receive it immediately.

The IRS Form 1023 is crucial for your 501c3 application process. You need to fulfill various requirements along with your Form 1023. Make sure to consult with an expert. They’ll help you fulfill all the requirements and ensure that you don’t experience any hiccups along the way.

a notebook with a pen and laptop.

Determine The Type of Your Nonprofit

You need to determine the type of nonprofit organization as it will impact the type of forms you’ll be required to fill to get your recognition as a tax-exempt entity. The two main types of organizations that are listed on the application are public charities and private organizations.

All organizations are considered private foundations unless they are churches, schools, research centers, or hospitals. Speak to your tax experts and determine the type of entity you want to build. It is important to start on the right foot so that you have a seamless path ahead!

If you’re looking for a reliable expert who can help you establish your organization and provide the best nonprofit formation services. Our extensive experience and client-centric approach have enabled us to become a reliable tax experts for nonprofit organizations.

We can help you file 990 tax returns for nonprofit, Nonprofit 501(c)(3) Corporation Document Preparation, 501c3 filing service, and professional bookkeeping services. Anyone looking for professional services can contact us on 561-212-1192 or email us at More information can be found on our website.

What Are the Main Functions of a Board of Directors?

A board of directors meeting.

A board of directors meeting.

A board of directors is one of the most important groups in a non-profit organization. These elected individuals represent the interest of the community and make decisions that impact the overall organization. Even though there’s no legal requirement for nonprofits to have a BoD, most choose to have one for operational efficiency.

If you’ve ever wondered what a board does, here’s a brief guide detailing the main functions and roles in a respective company.

Involved In Recruitment and Compensation Decisions of Executives

One of the main functions of a board of directors is to find managers and executives to help them run the day-to-day operations of the business. The board plays an important role in supervision, recruitment, and deciding the compensation for these executives. Furthermore, they also play a crucial role in evaluating the performance of these managers.

Devise A Governance System

Another important function of a board of directors is to develop an efficient

governance system for the organization. Even though the governance article helps the organization with the framework, the board must develop a comprehensive policy for effective governance.

The policy identifies the roles and rules of the group and how it will function to run the business effectively. The policies developed should be implemented organization-wide and shouldn’t be limited to a group of people.

Provide Leadership to The Organization

The board of directors are entrusted to provide direction and leadership to the organization. Their governance system helps them carry out their day-to-day operations and maintain key relationships with the community.

Their interactions and relationship with the CEO are key as it helps to devise a leadership plan for the organization. Even though the board convenes once a month or even less, they are continuously kept in the loop about important occurrences and are involved in all major decisions.

A casual board of directors meeting.

Protect The Shareholders’ Interest

As mentioned, a board of directors are entrusted to govern the organization. Therefore, they have a fiduciary duty to protect the interest of the nonprofit at all times. Furthermore, they must also protect the organization’s assets and all the donations that donors have made in the organization.

They should make decisions focused on the sustainability and vision of the welfare organization and not ones that harm the reputation of the charity. Moreover, they are also expected to take care of all the organization’s human capital, equipment, and facilities.

Starting up a nonprofit organization can be quite difficult. You need to comply with various rules and regulations and handle all the tax affairs of your newly established organization. Therefore, it is always recommended to get the help of an expert who can guide you in your nonprofit formation and handle all your tax affairs.

A2Z Filings provides the best nonprofit formation services! We can help you file 990 tax returns for nonprofit, Nonprofit 501(c)(3) Corporation Document Preparation, 501c3 filing service, and professional bookkeeping services .

Anyone looking for professional services can contact us on 561-212-1192 or email us at More information can be found on our website.