For-profit vs non-profitQuestion How do I decide whether to set up my business as a for-profit venture or a non-profit venture?
Answer Actually, this shouldn't be a difficult decision. If you're operating a business that sells things to customers, you should be a for-profit firm. If you still think non-profit might be your thing, here are some things the IRS looks at for that structure.
The United States tax codes say, essentially, that for an organization to be tax-exempt under section 501(c)(3) of the Internal Revenue Code, none of its earnings may inure to any private shareholder or individual. In addition, it may not attempt to influence legislation as a substantial part of its activities, and it may not participate in any campaign activity for or against political candidates. The exempt purposes are charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and the preventing cruelty to children or animals.
Brain Trust contributor:
Author of Hurdle: The Book on Business Planning
President, Palo Alto Software
Related Categories: Accounting, Finance, Taxes, Business Planning, Business Structure, Entrepreneurship
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