Why A Non Profit?

Why A Non Profit?

There are many benefits to forming a non-profit corporation:

Tax Exemptions

Non-profit corporations are eligible for state and federal exemptions from payment of corporate income taxes, plus other taxes. With Federal corporate tax rates as high as 34%, or more, plus additional state taxes, an exemption can be helpful. It’s important to note that mere formation of a non-profit corporation does not necessarily qualify you for federal and state tax exemption. Forming a non-profit corporation is the first step. Filing a 501 (c)(3) exemption with the Internal Revenue Service (IRS), is also required. Federal and state income tax exemptions are attractive to those expecting to earn a significant amount of money.

Receive Private & Public Donations

A primary benefit of forming a non-profit is the ability to receive and attract private funds and donations. Starting a nonprofit is very much like starting a business. It’s just that you have to find donors instead of investors.

Personal Liability Protection

Another important benefit of forming a non-profit corporation is the liability protection it offers to the individuals who organize and manage it. Non-profits enjoy the same liability protections applicable to for-profit corporations. Non-profit board members, officers and employees can be protected from liability for debts non-profit debts or lawsuits against the non-profit. Creditors can only pursue the assets of the non-profit and not those working, managing or volunteering for your non-profit. It’s important to note, however, that your non-profit must be properly formed in order to be afforded these benefits. An improperly formed or maintained non-profit is vulnerable to lawsuits. That’s why it’s so important to ensure your non-profit is properly formed and maintained.

Perpetual Legal Existence

Non-profits have perpetual existence. Because they have an independent existence, the death or withdrawal those managing it does not usually terminate the non-profit. This feature makes the non-profit attractive to donors wishing to contribute for the long term.

Employee Benefits

Another non-profit corporation benefit is that it can take advantage of employee benefits employee benefits that not typically available to owners of an unincorporated organization. Such benefits include medical benefits, life insurance, education, childcare, and retirement plans are just some of the available benefits.