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How Much Does it Cost to File for 501c3 Tax Exemption

501c3 Application Filing Cost

How much does it cost to file for 501c3 tax exemption?  Let me answer this question in two parts:

First, there is the required IRS Form 1023 User Fee, which is either $400 or $850 depending on your organization’s projected income over the next four years.  If your organization’s projected annual revenue averages $10,000 or more during the next four years, then your user fee is $850.  If your organization’s projected annual revenue averages less than $10,000 during the next four years, then your user fee is $400.  This application fee is made payable by check to the United States Treasury and sent in as part of your 501c3 application packet. This User Fee payment is non-refundable.

Second, there is the cost of hiring an experienced advisor or professional to prepare your 501c3 application packet, and you have several options:

(1)   Do the work yourself and pay nothing.  Although completing IRS Form 1023 is possible for you to do on your own, it will require many hours of research, writing, and the risk of making mistakes is high. Even the IRS projects 100+ hours of preparation time for a first-time applicant.  If you do decide to prepare this IRS Form 1023 on your own, we strongly recommend that you allow Nonprofit Elite to review your final application the same way the IRS will, so that you can be assured of success.  Yes, we do charge a fee for this service, usually around $250, but it is well worth the peace-of-mind to know that your 501c3 application will be approved.

(2)   Use a CPA or attorney.  CPA’s and attorneys who specialize in nonprofit organizations routinely charge $2,500 – $5,000+ for preparation of IRS Form 1023 applications for small organizations, and $10,000-$15,000 for more complex ventures.  We know this because many of them outsource their nonprofit work (Form 1023 Applications) directly to us.

(3)   Online, template-based services.  With a quick search on the web you’re sure to find published fees as low as $500-$600 (think Legal Zoom or similar type services).  Just be careful to read the fine print and ask enough questions to make certain you’re getting exactly what you need.  Often these “discounted” fees are for document preparation only and do not include the additional work of editing formation documents (often required) or responding to IRS follow-up inquiries down the road.  Also, many of these companies send you long questionnaires so that you’re basically filling out the forms yourself, and then you’re to blame if something goes wrong.  Too often the initial promise of a $500 preparation fee ends up at three times that amount with a lot of extra time and frustration on your part.

Of course, we believe your best option for obtaining 501c3 tax exempt status quickly and efficiently is to partner with Nonprofit Elite.  If you choose to work with us, we’ll take on full responsibility for the success of your 501c3 application, and we’re almost always able to do it for less than half of what you’ve already been quoted.  We provide both startup consultation and document preparation hand-in-hand, so that you understand exactly what’s going on every step of the way.  More important is the peace-of-mind we provide, backed by our 100% approval rate with the IRS and full money-back guarantee.

Here’s what’s included in the cost for our 501c3 application services:

— Prepare or review your state Articles of Incorporation (Certificate of Formation) for appropriate Purpose, Dissolution, and Nonprofit clauses.  These important sections of your formation documents are often left out, even by attorneys and CPAs, and this is the number one reason why so many IRS Form 1023′s are rejected by the IRS.

— Prepare or review your organizational Bylaws.

— Obtain your Employee Identification Number (Federal Tax Identification Number), if needed.

— Prepare IRS Form 1023 – Application for Recognition of Exemption, including all schedules, financial projections, narratives, and attachments.

— Continue working on your behalf, including IRS follow-up correspondence, until you have received your successful Letter of Determination from the IRS.

If you have additional questions about the cost of your 501c3 application or would like to know more about Nonprofit Elite and the services we provide, please contact us today.  We are easily accessible and always glad to help!

11 Comments
  1. 1.CPA’s and attorneys who specialize in nonprofit work routinely charge $1,500 – $3,500 for preparation of IRS Form 1023 for small organizations, according to your article…what is an estimate of what your company’s fee for providing your comprehensive 100% approval rate and full money-back guaranteed package….

    2. Does that fee include the actual incorporation of the non-profit

    3. Are there any other hidden fees…our organization is small anticipated income over the next 3 years will exceed $10,000 assuming that we are successful

  2. Bill, I am sending you an email with answers to your questions. -BW

  3. I have heard 2 sides of the story some people say you can collect donations and/or gifts to pay for your 501c(3) filing fee and some say it’s illegal. I am very confused! Can anyone clear that up?

    • Very good question. As long as you file your organization’s IRS F1023 Application within 27 months of the date of your incorporation, and as long as your application is approved by the IRS, then your approval as an exempt organization is retroactive back to the date of your incorporation. Practically, this means that you may indeed begin operating as a tax exempt organization prior to receiving your Letter of Determination, including making and accepting tax-deductible donations. So yes, you are able to make/accept donation to your organization and then use those funds to pay for your startup filings, you just don’t have any proof of status to show people.

      However, you must follow through with obtaining your successful IRS Letter of Determination within 27 months, or else your your exemption goes away (actually it never happened to begin with), leaving you with the responsibility of making the appropriate changes to all of your preceeding accounting records. Hope this helps!

  4. I run a youth football and cheerleading program and I am very confused as to how this process works and what your fees would be to complete the application process. Could you please let me know? The main problem I have a hard time understanding is if an organization has a revenue of $10,000. Since we are a non-profit youth organization everything goes right back into the program for the kids. Does this count as revenue?

    • The short answer is yes…any money that comes in to your organization, whether it’s through donations or through your own programs, is considered revenue. Send us an email at Info@NonprofitElite.org with your contact information (or call) and we’ll get in touch with you to help!

  5. same questions as bill Hunter
    Addition What are state fees

    • State fees for incorporation vary from state to state and can range from $25 to $100. Email us at info@nonprofitelite.org and we can answer your questions more specifically.

  6. Hello. I have my tax id already. i need help with everything else. how much will that cost me?

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