MAY I Operate my Business as a Non-Profit?

Probably not, but it is important to understand just what one is.

People own and operate various business entities. Some organizations operate as non-profits. Exactly what is a nonprofit? Is it possible to conduct your business as a nonprofit?

The answer is a business organization can’t be operated as a non-profit, even though some non-profits may appear to be businesses. Generally, the objective of a business entity is to benefit the owners or principals of the business enterprise by earning them a financial profit. A for-profit business organization may take the common legal forms, such as for example corporations, limited liability companies, partnerships and joint ventures. Thus, a for-profit corporation exists to financially benefit its stockholders by the payment of dividends, and an unincorporated entity, for instance a partnership, exists to financially benefit its members by the distribution of income.

Instead of earning a profit because of its owners, a non-profit can be an organization which has no owners and which has as its purpose the promotion, advancement and achievement of a particular mission. Such as a business, a non-profit may take the proper execution of a corporation or an unincorporated band of persons banded together to accomplish their mission. The missions of non-profits is often as varied as the human experience. For instance, non-profits are formed to advance local, national or international missions such as for example charitable work, disease prevention, humanitarian relief and environment goals. Non-profits can also be as simple as several concerned citizens who wish to fund a neighborhood watch or parents who’ve bake sales, car washes, or pancake breakfasts to make money to finance their children’s little league teams or scout troops. In each one of these cases, the mission isn’t to enrich the operators of the charities or the involved parents, but to perform a mission.

An adequately organized and operated non-profit that serves the general public interest could be exempt from state and federal taxes. To make sure eligibility for non-profit status and tax exemption also to avoid abuse, state and federal accountability rules should be followed, including reporting requirements and control by a disinterested or independent board of directors.

If a non-profit really wants to receive tax-deductible contributions, the mission should be broad enough to benefit everyone. If the reason is charitable but only a restricted amount of people are helped, the non-profit could be exempt from taxes, however, not have the ability to receive tax-deductible charitable contributions. For instance, non-profits called “mutual benefit” organizations can benefit their members, such as for example condominium associations or social clubs. Other non-profits may benefit businesses or residents of certain geographical areas, such as for example chambers of commerce and professional associations (e.g., the American Medical Association). Since these non-profits benefit individuals to a big extent rather than benefiting society most importantly, they might be exempt from taxes, but donations aren’t apt to be charitable deductions.

Non-profit will not indicate free labor. Even though many nonprofits are driven by self-sacrificing volunteers, there is absolutely no legal reason suitable offices might not be maintained or why officers and employees might not receive substantial salaries and the most common employee benefits, as long as the compensation is reasonable and appropriate given the mission, the actions of the non-profit and the efforts of the employees with respect to the organization.

Serving the general public good and advancing worthy causes has rewards for the average person and for society. Remember, however, that non-profits are governed by federal and state laws, regulations. The latter change from state to convey. Altruism should be tempered by prudence, in fact it is always prudent to get and trust knowledgeable tax and legal advisers when undertaking any substantial activity.

Like this post? Please share to your friends:
Добавить комментарий

;-) :| :x :twisted: :smile: :shock: :sad: :roll: :razz: :oops: :o :mrgreen: :lol: :idea: :grin: :evil: :cry: :cool: :arrow: :???: :?: :!:

We use cookies to give you the best experience on our website. By continuing to use this site, you agree to our use of cookies.
Accept Cookies