If you’re toying with the idea of starting a nonprofit organization but have questions, then you’ve come to the right place. The intricacies and qualifications of nonprofits are areas that are widely unknown and often misunderstood by the public. This overview can help you understand the term better and decide if your venture meets the requirements for nonprofit status.
What Is A Nonprofit?
Nonprofit organizations are businesses with tax-exempt status which as explained by Investopedia, “…further religious, scientific, charitable, educational, literary, public safety or cruelty-prevention causes or purposes.” Since they’re tax-exempt businesses that exist to serve the public good, donations to which are also tax-deductible, their operating information and financial details must also be available to the public. Put more simply, it’s a business that exists to serve the public good rather than make money.
It’s important to make the distinction between nonprofit and not-for-profit organizations. While nonprofits must provide some benefit to society, a not-for-profit is more of an organization meant to serve the recreational interests of a subsection of society. An example of a nonprofit is a charity that provides for the homeless. On the other hand, a cheerleading club could be a not-for-profit organization.
Why Start A Nonprofit?
If you’re on the fence about starting a nonprofit, here are some benefits of doing so:
- Tax Exemptions
- Tax-Deductible Donations
- Personal Liability Protection
- Employee Insurance & Pension Benefits
Why Consult An Accountant?
The issues nonprofits face are often nuanced and complex. The rules can be rigid and difficult to navigate alone. Also, going to an accountant from the beginning allows them to help you decide if you should seek nonprofit status, if it aligns with your goals, if the benefits are right for you, and it gives you the chance to ensure that you follow all regulations properly and protect yourself from future issues. If you’re considering nonprofit status, we’re here to help. Contact us today for a consultation.