If you are not primarily concerned with making money, forming a non-profit organization in Bloomington may be the best direction to take. A non-profit corporation could help you avoid tax issues and still see your objectives met on behalf of the public. When forming a business of any sort, working with an attorney from the beginning could help you build a strong legal base and ensure that your business is set to endure the market.
A nonprofit is another form of corporation that is organized to benefit the public. It could be a specific group of individuals or membership. A nonprofit’s purpose and activities must serve the nonprofit organization’s mission to benefit the public. It is not necessarily what a normal company is in business for. A nonprofit cannot operate for individual profits of its members or shareholders.
This type of business might be advantageous because most nonprofits are exempt from taxation. Nonprofits are also eligible for certain types of public and private grants. As with any other business entity, the legal entity is separate from its founders, members, or shareholders and this comes with limited liability protection. When the objective of a business is not necessarily profit, forming a non-profit organization could help founders to achieve their goal while limiting risk and minimizing tax liabilities.
The downfalls of a non-profit are that of all the business entity structures, a nonprofit is the most cumbersome, time-consuming, and expensive to create. Non-profits need to get approval from the IRS that they have a mission that warrants a nonprofit status. The IRS scrutinizes a nonprofit more in-depth than a normal corporation, so they should keep the detailed records of annual filings for the state and the IRS.
Personal control is also generally limited due to all the laws and regulations surrounding nonprofits. A nonprofit’s finances are open to public inspection because they are getting tax exemptions. The members and shareholders of a nonprofit need to make sure they are not involved with the organization for personal gain if they are invested in the nonprofit. The lack of ability for personal gain is really the core of a non-profit, and if any of the founders or stakeholders are seeking financial gain from the formation of the corporation, a non-profit may not be the correct format.
There may be tax advantages with forming a corporation, particularly non-profits. Another consideration is costs including the cost of operating and maintaining a business entity, the cost of forming the business entity, and any requirements and regulations associated with each business type.
Non-profits are exceptionally complex as they have a myriad of restrictions and regulations provided by federal law. Violations of these regulations could lead to significant penalties, and in some extreme cases, it may even lead to allegations of fraud or tax evasion. For help creating your non-profit and ensuring the legal compliance of your corporation, consult with an experienced business law team. Working with someone who knows the laws could help your company flourish and avoid complications, so call today and schedule a meeting to discuss your options.