To be classified as a non-profit, also called an exempt organization, approval must be secured from the Internal Revenue Service. First, register your business with the Idaho Secetary of State as a for-profit entity. The process to establish a non-profit can be expensive and time-consuming and many business activities do not qualify. Your attorney can assist with the application process. Information about establishing a non-profit, tax reporting and maintaining non-profit status is found on the IRS website. After receiving IRS approval, the business can then amend their registration with the Idaho Secretary of State to that of a Domestic Non-profit Corporation.
Alternatives: Before establishing a non-profit, you may want to consider other, less expensive, ways to accomplish your goal. See Alternatives to Forming a Charitable Nonprofit for recommendations.
If you decide to move forward in creating a non-profit, you may find it helpful to go through the Business Wizard. You can search for information related to the primary activity of your non-profit and find out if you or your employees may need specific licenses or permits, such as occupational licenses.
Taxes: Non-profits are not exempt from all taxes. Your non-profit may be required to collect or pay state sales or use tax. If so, you will need to secure a sales and use tax permit from the Idaho State Tax Commission by submitting IBRS. To find a list of exempt organizations, see the Tax Commission’s website.
Recordkeeping: IRS requirements for exempt organizations
Assistance:
- The Idaho Non-profit Center provides information about establishing and maintaining a non-profit in Idaho.
- The Idaho Attorney General publishes the booklet, Service on an Idaho Non-profit Board of Directors, which explains the responsibilities and liability associated with serving on a nonprofit’s board.
- The Association of Fundraising Professionals Idaho chapter provides training and networking opportunities for non-profit staff members who are engaged in fundraising activities.
If your nonprofit is engaged in activities involving children, the elderly, or vulnerable adults, your employees and volunteers will need a background check and to be fingerprinted. For information, see the Idaho State Police website.
Closing/Selling: If you close your non-profit, sell it or convert it to a for-profit entity, you must notify the ID Attorney General. The Idaho Charitable Assets Protection Act governs how you can legally dispose of the assets of the non-profit.
You will also need to notify the IRS and the Idaho State Tax Commission of the closure or conversion of the non-profit and file a final tax report.
