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NONPROFIT CORPORATION

• Advantages of Owning a Nonprofit Corporation

   

  A Nonprofit Corporation is a business organization that has a public purpose and receives different treatment from the business entities already mentioned, when tax season comes around. A Nonprofit Corporation is capable of making a profit. They are commonly eligible for benefits including sales, property and income tax exemptions when taxed by the state. Federal tax exemptions are also available for nonprofit organizations, sometimes they are even tax-exempt. Once the nonprofit pays its bills necessary to run the organization, all profits are given back to the nonprofit, rather than shareholders and business owners who receive their dividends at this point for a for-profit business.

• Disadvantages of Owning a Nonprofit Corporation

   

  The main disadvantage is that shareholders do not make a profit from owning a nonprofit organization, but the business owners obviously know this when they started the nonprofit because that is the reason they did start it, to do good for the community or an artistic endeavor. A nonprofit orgnization still has to py its staff and volunteers as well as employment taxes. Therefore, if your NFPO is doing good for the community, it should not be looked upon as having disadvantages.

• Forming a Nonprofit Corporation

   

  Nonprofit organizations must be incorporated by the laws of the state. To be federally tax-exempt, the organization needs to apply with the IRS by requesting an EIN number and applying with recognition of exemption filing forms 1023, used for charitable organizations and 1024, for other tax-exempt organizations. 501 (c)(3) is one of the most common forms os nonprofit organizations that is most commonly used for charitable, educational, scientific, educational, relgious and literary work.