Considerations When Starting a Not-for-profit Company
You want to help our community become better by raising awareness of something you are passionate about to the general populous. It can be the arts, education, homelessness, or even business development. How do you give yourself the best opportunity to achieve this goal? That’s easy, you start a not-for-profit organization! But wait, not so fast. While non-profits can make it easier to help the community there are a few things you need to consider before starting a company.
The most important is whether there are other entities that already provide the same or a similar service to the one you are considering. If so, you might not need to start an entity, but instead simply join under their umbrella. Of course, you will want to do some research about how they work and whether you believe you can work with that group. If you cannot find another entity or you cannot work with the one you found you then have a few more questions to answer.
First, what type of non-profit you are going to be. While most people think of a charity when they think non-profit there are actually many types – civic organizations are another popular type for bettering the community. Next, you need to consider what regulatory or compliance requirements you will have to comply with – non-profits, especially charities, tend to have more oversight than most for-profit companies. They need to register with the IRS and, possibly, the state department in charge of consumer protection. One thing many people starting a non-profit may not realize is that they still must file tax returns, usually via IRS Form 990, pay sales and use tax, and pay taxes on “unrelated business income” which is simply money from sources that aren’t the company’s main line of business.