My question involves business law in the state of: Texas
Two associates and I have formed a nonprofit which has been recognized by the Texas Secretary of State, and we now need to obtain an EIN in order to open a bank account and, later, to file income tax paperwork.
This nonprofit organization was formed for the express purpose of arranging for, promoting, and managing fund-raising events to benefit one specific established 501(c)(3) organization. We do not work for this 501(c)(3), and are not allowed to organize events as volunteers directly for them (per their rules). However, the 501(c)(3) will give us a license to use their name and allow us to issue receipts to donors in their name provided our finances are reported to them and are completely transparent. We are happy to do this, but of course we formed the nonprofit corporation to protect ourselves individually, and to avoid any personal tax liability.
Given the above, we do not intend to apply for 501(c)(3) status for our nonprofit, although we recognize that even though we pass through all income (less expenses) to the 501(c)(3) we are working to benefit, we will still owe a certain amount of income tax because we can't deduct 100% of the contributions. We believe it is worth that price to avoid the pain of applying for and maintaining the tax-exempt status for ourselves. (The 501(c)(3) we are working with agrees and accepts that we will have income tax as an expense.)
The question is: On the SS-4, Line 9(a), we need to declare the "type of entity" we are. Our inclination is to declare as "other nonprofit organization" but there is a requirement to "specify" if we do so. Is "other nonprofit" the correct choice in our case, and what do we "specify"? Also, on Line 10 "Reason for applying", is it simply "Started new business" or is "Banking purpose" more correct?
Thanks in advance for any advice!