July 29, 2010

Forming a Non Profit

Forming a non profit. By Tracy O
Another popular type of corporation is nonprofit organization. As a nonprofit you are in the business of providing a service or program for the sole purpose of development rather than for self or community. S and C corporations are for-profit organizations that sole purpose is to profit and redistribute those profits amongst the stakeholders in the business. A nonprofit may accrue earnings but it is for the sole purpose of self preservation and financial backing for future business plans. The stake holders does not financially profit from the success of the nonprofit.

 These are formed for civic, educational, charitable, and religious purposes and enjoy tax-exempt status and limited personal liability. (SBA)

The major advantage of non profit is the ability to file for tax-exemption from income tax and for some charitable organizations, property taxes. It does not make them exempt from employment taxes. Other advantages are the limited liability and starting a nonprofit may qualify you for grants and other financial assistance.

Starting a corporation can be a tedious task and making sure that your business structure is set up correctly and meet the many legal requirements can be overwhelming. Seeking the assistance of an attorney will not only help you make an inform decision but will also make sure that you are in compliance with the state and federal government.

Keep In Mind
This is the end of the three part discussion on different business structures. When trying to figure out which entity is best for you and your business, keep the following in mind:
  •     Your Business goals
  •     Business structure-How do you want your business structured?
  •     Business legal vulnerabilities- Are you entering a high-risk business that may make your business vulnerable to lawsuits?
  •     Tax effects- What are the tax implications and which entity offers the best tax benefits.
  •     Profit/Loss projection and investment
  •     Start Up cost
  •     Ease of ending business
Deciding on the right entity can be at times tough and maybe speaking with a professional who has experience in business and tax law can you help you decide on the right business entity for you.

Make sure to visit your secretary of state website for state specific requirements for starting a business in your state.
www.sos.state. (enter your state abbr.).us

"Copyright © 2010, Dawn Austin, Recipe for Small Business, writer, SmallBiz Stew. All rights reserved. Permission granted to reprint this article on your website without alteration if you include this copyright statement and leave the hyperlinks live and in place."
What business entity best fit your business structure?

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