When people think about corporations, a few names will spring to mind: Disney, McDonalds, Walmart, Coca-Cola, Apple, maybe even something like Comcast or Nintendo. And that’s because most people only really think about for-profit corporations. However, just about every major charity is also incorporated, as are many colleges and universities. The big difference is that these are nonprofit corporations, and depending on what you intend to do, a nonprofit corporation might be just what you need.
The most obvious difference between a for-profit corporation and a nonprofit corporation is in the names themselves: for-profit corporations are for businesses where the owners expect to derive a profit from its operation, while nonprofits are for organizations where the owners don’t make a personal profit. Nonprofits include many kinds of organizations, including religious charities, but also political advocacy groups, educational institutions, scientific research groups, and other similar entities. You can still make a living, such as by drawing a paycheck as an employee, executive or board member, but there’s no such thing as a dividend payout from a nonprofit.
Another important thing to note is that nonprofit corporations can apply for tax exempt status and are not subject to many of the financial reporting requirements that for-profit corporations are. While they still need to keep records of your income and expenditures, and make those transcripts available for public scrutiny, they can avoid much of the financial and bureaucratic strain that for-profit corporations face. The catch is that to gain these benefits, you need to comply with certain restrictions, including with regards to certain activities that you can or can’t do. If you engage in a prohibited activity or fail to comply with the requirements set forth in the law, the benefits of your tax-exempt status can be revoked.
If you need any help starting your nonprofit organization, or have questions about applying for tax-exempt status, you’ll need an attorney who thoroughly understands the religious organization law and not-for-profit law and their tax implications. The non-profit law attorneys at Wingate, Kearney, & Cullen, LLP have offices in Brooklyn and Long Island, New York. The firm is experienced in incorporating religious and nonprofit organizations and applying for tax-exempt status. For more information or to schedule a consultation, call (718) 852-5900 or fill out our contact form.