Are there advantages to running a business as a non-profit agency?
What are the indications that your business should actually function with non-profit status? What are the criteria for converting a business to a non-profit group? What steps are involved in the process?
Operating as a non-profit organization in the USA requires filing an Application for Recognition of Exemption under IRC Section 501(c) with the Internal Revenue Service. There are very specific requirements to be recognized as a non-profit organization, and if these are not met, there are severe penalties for attempting to operate as a tax-exempt. In most cases, if it really is a "business," it should not even attempt to qualify for non-profit status.
I've written free educational online learning games and software games that we sell to schools. Operating as a business for years, we have made NO profit. That's why I was wondering if we could convert to np and offer our products completely free
Mr. Tully is correct, just because you do not make any money does not mean you qualify for non-profit status. You need a separate federal tax ID number and have to fill out a lengthy form stating where you expect to get funding and how it is to be used. The funding of the non-profit cannot be used to support the activities of a business owned by the same person who creates the non-profit organization. Separate tax returns and all sorts of details are involved.
If you are operating a business and you make no money, you pay no taxes. You just have to proved your expenditures exceeded your revenues when you file your tax return.
Thanks so much. I knew there was a lot of paper work, but I thought we might be able to get ed. funding since almost ALL of our traffic is from schools playing the free online games I create. I would love to continue creating, but we need to eat
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