Not sure if a nonprofit is for you?
Answer a few quick questions, and our Help Me Choose tool can help you move closer to finding the right business structure fit.
NONPROFIT
What is a nonprofit?
A nonprofit structure gives organizations who help others a path to tax-exempt status. It also provides charitable or cause-driven groups an enhanced level of credibility along with limited liability protection for its directors and officers.
What are the advantages of a nonprofit?
From increased trust to earning tax exempt status, formalizing your nonprofit can deliver many benefits to you and those you serve.
Increased protection
Registering as a nonprofit can increase protection of personal assets from organizational liabilities.
Your purpose, optimized
Obtaining 501(c)(3) tax-exempt status can allow even more of the donations received to be allocated to the organization’s cause.
Empowered fundraising
With a recognized organization structure in place, you’ll inspire confidence in donors and community partners alike.
Compare nonprofit to other business structures
| Provides limited liability protection |
Provides limited liability protection |
Provides limited liability protection |
Provides limited liability protection |
Provides limited liability protection |
|---|---|---|---|---|
| Can be for solo business owners |
Can be for solo business owners |
Can be for solo business owners |
Can be for solo business owners |
Can be for solo business owners |
| Can be for businesses with multiple owners |
Can be for businesses with multiple owners |
Can be for businesses with multiple owners |
Can be for businesses with multiple owners |
Can be for businesses with multiple owners |
| Income is reported on business owner’s individual tax return |
Income is reported on business owner’s individual tax return |
Income is reported on business owner’s individual tax return |
Income is reported on business owner’s individual tax return |
Income is reported on business owner’s individual tax return |
| Can apply for 501(c)(3) status in certain circumstances |
Can apply for 501(c)(3) status in certain circumstances |
Can apply for 501(c)(3) status in certain circumstances |
Can apply for 501(c)(3) status in certain circumstances |
Can apply for 501(c)(3) status in certain circumstances |
| Businesses making at least 40K in annual profit may see a tax benefit |
Businesses making at least 40K in annual profit may see a tax benefit |
Businesses making at least 40K in annual profit may see a tax benefit |
Businesses making at least 40K in annual profit may see a tax benefit |
Businesses making at least 40K in annual profit may see a tax benefit |
| Pays owner out a salary for services provided |
Pays owner out a salary for services provided |
Pays owner out a salary for services provided |
Pays owner out a salary for services provided |
Pays owner out a salary for services provided |
| Can issue stock |
Can issue stock |
Can issue stock |
Can issue stock |
Can issue stock |
| Double taxation applies |
Double taxation applies |
Double taxation applies |
Double taxation applies |
Double taxation applies |
| Must appoint a board of directors |
Must appoint a board of directors |
Must appoint a board of directors |
Must appoint a board of directors |
Must appoint a board of directors |
Tax implications for your organization:
If your nonprofit earns 501(c)(3) status at the federal level, contributions to the organization become tax deductible and the organization is generally not subject to federal income tax like for-profit businesses. However, the IRS does have specific parameters around the types of purposes or causes that are eligible for this status.
Other considerations
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Must file its own tax return with the IRS annually
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Must comply with IRS regulations to apply for and maintain tax exempt status, including: ongoing filings, fees, and administrative record keeping
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Required to appoint corporate officers and maintain a board of directors
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Cannot issue stock
Frequently asked questions
An EIN is an employer identification number and is needed in certain situations. For example, partnerships and corporations are required to have an EIN. Sole proprietorships and LLCs that have employees, pay excise tax, or contribute to a retirement plan also need an EIN. EINs are included with all of our packages.
A nonprofit is a business structure that has requested tax-exempt status from the state and/or IRS. The nonprofit does not pay tax on its income provided the income is from activities associated with the nonprofit’s charitable purpose. Examples of nonprofits can range from charities to your kids’ local sports club.