Non-Profits

The decision to form a non-profit company is distinct from any other choice of business structure.

What Is A Non-Profit?

A non-profit company or business is one which is operated for the common good. Typical non-profits can include churches, volunteer fire departments, aid organizations, schools and charitable research. Non-profits are not in business to rake in profits. Their incomes are generated for the purposes for which the business was designed, whether it is research, feeding and clothing the hungry and poor, or funding a volunteer fire service.

Deciding To Become A Non-Profit

A business owner does not just decide to opt for a non-profit business structure. The initial intent of the business should already dictate the opportunity for becoming a non-profit. The IRS maintains a detailed list of those businesses that qualify to be non-profits.

When a business has decided to register itself as a non-profit, there are a number of articles of organization, much like those for a corporation, that the business must file with the state in which it will operate.

Certain rules govern the operation of a non-profit: the business is required to name a certain number of directors who will serve on a directorial board, along with business members; the business is required by law to hold regular board meetings in which minutes are recorded and filed for legal purposes. The structure of the non-profit must be clearly laid out with appropriate operating procedures.

Advantages for Non-Profits

A non-profit really becomes a corporation, meaning that its directors and members have no liability for debts and lawsuits the business entity might incur. Non-profits also have the added advantage of filing for tax exemption. A tax exempt status means that the business is not required to pay taxes on any income the business generates. Also, non-profits with tax exempt status make it possible for tax payers who have donated to their organization to deduct their charitable donations from their personal income taxes.

Financing A Non-Profit

Non-profits can find funding through a variety of sources that are unavailable to more traditional business structures. Many make a regular habit of seeking funding via grants and the goodwill of charitable citizens whom they can call on to regularly support their cause.

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