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
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