Advantages/Restrictions
What are the advantages of forming a non profit corporation?
- Your non profit will be exempt from state and federal income tax.
- You will be able to receive gifts and grants not available to businesses and individuals.
- Donations to your non profit will be tax-deductible.
- You will be able to provide employee benefits such as health insurance and retirement plans.
- You will gain a clearer sense of identity and purpose as well as the good will that comes with being a non profit.
- Your non profit may qualify for exemption from property tax.
- You will qualify for special non profit bulk mailing rates (and even discounted rental rates).
- You will enjoy limited personal liability if legal action is brought against your non profit or if it falls into debt.
- Your non profit will remain in existence even if you no longer maintain your connection to it.
Are there any restrictions in running a non profit corporation?
- There are some limitations on who may receive a salary from your non profit.
- The assets of your non profit may not be distributed to your directors or officers (but salaries are allowed).
- Your non profit may not support or oppose political candidates and may influence legislation only to a limited degree.
- There are limitations on the amount of unrelated business activities your non profit may engage in.
- You will need to maintain accurate financial records, file yearly tax returns, and hold meetings of your Board (and document them in the form of minutes).