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Table of Contents
- 1 What Is a Nonprofit? Most businesses are in it to make money. Usually, whenever a business pulls in income, some of that money is leftover after all of the business expenses are accounted for. This money is a profit, and companies that take that profit home at the end of the day are known as for-profit companies. For-profit businesses, like many companies, are interested in making money for the sake of anyone with a stake in the company. However, not every business operates in this way. Some companies, called nonprofits, exist to satisfy a public good, like food for the needy, educational services, or medical aid to the underprivileged. Nonprofit companies don’t keep profits for themselves — instead, they use all of their income to support their chosen cause. In recognition of the good that nonprofits do, the United States government gives nonprofit companies a break from taxes. This tax break allows them to devote themselves to their cause, without losing money to the government each year. However, in order to ensure that this tax status isn’t exploited, the IRS has strict requirements that all would-be nonprofits have to meet. Nonprofits that pass the government’s test are known as 501(c)(3) organizations and are exempt from federal taxes on any income related to their charitable activities. 501(c)(3) status is a powerful tool for companies. Whether you’re converting your small business to a nonprofit or starting a nonprofit from scratch, here’s what you need to know. Research: Identify a Need and Define a Purpose
- 2 Recruit Partners and Build a Leadership Team
- 3 File Paperwork and Apply for Nonprofit Status
- 4 Develop Your Marketing and Operations Plans
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