Could a non-profit be the right entity structure for your new business? Learn more about how non-profits work, what a non-profit corporation is, and see if it is the right business structure for your new Nevada business:
What is a non-profit corporation?
A non-profit corporation, also referred to as a 501(c)(3) corporation, is one recognized by the IRS as tax-exempt and organized for a public or charitable purpose. A non-profit corporation must have at least one director or trustee and, upon dissolution, must either distribute its assets to the state or federal government or to another non-profit.
Most corporations that are formed 'for profit' are allowed to engage in "any lawful business activity." Non-profit corporations are required to state a specific purpose that benefits either the public at large, a segment of the community, or a particular membership-based group.
Contributions to 501(c)(3) corporations are exempt from federal or state taxation. Many wealthy individuals make substantial contributions in their estate plans for qualified non-profit corporations. These estate plan contributions are actively pursued by many non-profits as part of their campaign for public support.
For tax purposes, non-profit corporations must be formed for religious, charitable, scientific, educational or literary purposes in order to claim the 501(c)(3) tax-exempt status.
- No taxes paid on income.
- Lower postal rates on third-class bulk mailings.
- Less expensive advertising rates.
- Eligibility for many state and/or federal grants.
- Nonprofits are exclusive beneficiaries of free radio and television Public Service Announcements (PSAs) provided by media outlets.
501(c)(3) Eligibility Rules:
- Organized and operated for charitable, educational, religious, literary or scientific purposes.
- Gains not distributed to directors, officers or members.
- Any assets remaining upon dissolution must be distributed to another qualified tax-exempt entity or group.
- No participation in political campaigns for or against candidates for public office.
- Not substantially engaged in grassroots legislative or political activities, except as permitted under federal tax rules.
Is a Non-Profit Corporation the right structure for your new business?
Don't wait to take advantage of the protections the law affords you and your business. No matter what business entity you choose, it needs to be for the right reasons. Let our business formation experts help you decide which business entity is right for you by calling 1-800-508-1729.