August 23, 2009

Ministry Organizations Getting Started

Question:

I want to create a ministry organization (other than a church). What kind of license would I need if its a ministry? What kind of tax ID do I need?

Answer:

Generally, it's not so much a matter of licenses (although local zoning and building codes must be followed).

A ministry will need a federal employer's identification number even if it employs no workers because opening a bank account will likely require one. Form SS-4 is used for this purpose.

The bigger issue is the 26-page Form 1023--Application for Recognition of Exemption. Its completion is necessary to receive an IRS Determination Letter that acknowledges the organization's eligibility to receive charitable (deductible) contributions and to exclude its exempt revenues from taxation.

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