A nonprofit structure helps organizations who are busy helping others by giving them 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 organization?
From gaining increased trust to earning tax exempt status, formalizing your nonprofit can deliver many benefits to you and those you serve.
Registering as a nonprofit can increase protection of personal assets from organizational liabilities.
Your purpose, optimized
Applying for 501(c)(3) tax-exempt status can allow even more of the donations received to be allocated to the organization's cause.
With a recognized organization structure in place, you’ll inspire confidence in donors and community partners alike.
Tax implications for your organization:
If your nonprofit earns 501(c)(3) status at the federal level, this means 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.
Must file its own tax return with the IRS annually
Must comply with IRS regulations to apply for and maintain tax exempt status, including: ongoing filings, fees and administrative record keeping
Required to appoint corporate officers and maintain a board of directors
Cannot issue stock
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