Many clients will come to me and ask what a non-profit is and how do they get one. A non-profit is an entity classified under Internal Revenue Code 501(c)(3). If the IRS grants your application for 501(c)(3) status, you become what is known as a charitable organization. That means any income the entity makes, you do not have to pay income tax on it.
Also, if somebody makes a donation to that business, the donation is tax deductible for the donor. You can see how this is a very desirable business entity. The downside is, it can only operate for non-profit or charitable purposes. Some charitable purposes are providing shelter for the homeless and food for the homeless. Churches can become charitable organizations. Certain sporting clubs for children or amateur sports in international competition can also be a non-profit.
Lawyers at the law firm of Mattleman, Weinroth & Miller, P.C., are experienced business attorneys working throughout the state of New Jersey. Contact the office if you have legal questions about your business and set up a free initial consultation.