Need for Non Profit Bank Account
Non-profit organizations are those that serve in the public’s interest. Its income is used for the growth of the company instead of personal gain. Popular Non-profit organizations such as the Make-A-Wish Foundation and the United Nations Children’s Fund (UNICEF) receive millions of dollars in donations and need bank accounts to protect this money. A bank account for a non-profit organization cannot be that of the founder or any other employee. It must be separate, for security purposes.
Having started a Non-profit organization, you will need a bank account in which all income will be held. A bank account is also crucial in the case of an audit. Non-profit organizations are audited to ensure they comply with the rules of tax exemption. The bank keeps records of all deposits and withdrawals and what the money is used to do. Know the basics before opening a non profit bank account.
Steps to follow before Opening a Non Profit Bank Account
Check the nonprofit bank account rules before you plan for the same.
Step 1: Apply for 501c3 tax returns exempt status
Before starting the account, apply for 501c3 tax returns exempt status. This exempts the organization from paying taxes on income. This status can only be granted by the Internal Revenue Service (IRS).
Step 2: EIN or TIN
Secondly, Apply for an Employer Identification Number (EIN) or Taxpayer Identification Number (TIN). This can be done on the IRS website or in office. This takes little to no time to be approved.
Step 3: Apply for Non-Profit Status
Afterwards, apply for non-profit status with the IRS. You will have to submit information about the organization such as employees and financial information. You will also have to specify who the organization will benefit and all its activities. A bank will ask you for the documents before opening a non profit bank account. So, this step is mandatory.
Step 4: Compile Information
Next, compile information required to open the account. This includes the EIN/TIN, articles of incorporation and articles of organization of charter. Additionally, compile a list of all the organization’s official officers who will be able to deposit and withdraw from the account. They will be required to submit IDs and their social security number.
Step 5. Select the Best Bank for Non Profit Organization
Selecting a bank is the final step in this process. There are many non profit organization banks which offer accounts specifically for non profit organizations. Special benefits and fees are offered to non-profit organizations in most banks. To select the best bank for your enterprise, seek advice from a Certified Public Accounting (CPA) Firm.
List of Best Non Profit Bank Account
- PNC Bank
- Home Savings Bank
- Community Credit Union
- United Community Bank
- Wells Fargo
- Bank of America
- BB&T Bank
- M&T Bank
- Your Local Community Bank
Non-profit organizations may handle a lot of or very little money. Nonetheless a bank account is needed for holding and protecting the money this organization uses for good. If you need assistance in opening a non profit bank account, get in touch with us.