To be classified as a non-profit, approval must be secured from the Internal Revenue Service. The process 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 register with the Idaho Secretary of State’s office as 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. For information and a list of exempt organizations, see the opens in a new windowTax Commission’s website.
Recordkeeping: IRS requirements for exempt organizations
Assistance: The Idaho Non-profit Center offers information about establishing a non-profit in Idaho, including establishing a board of directors, writing by-laws, recruiting volunteers, financial record keeping and more.
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.
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, visit the opens in a new windowIdaho 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 Idaho Attorney General using the form found here. 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 of the closure or conversion of the non-profit and file a final tax report.