Start a nonprofit FAQs
There are many advantages to starting a nonprofit. Nonprofits benefit from liability protection like other entities, but they can also take advantage of their tax-exempt status and access to grants and charitable donations.
Nonprofits are usually intended to serve the community and its members. Since they are expected to benefit communities, the government offers tax advantages to help maximize the services they can offer. Many nonprofit founders may say that the "feel goods" is a benefit from starting a nonprofit, but there are tangible advantages as well.
While the federal government may not require you to write bylaws, your state might. Regardless of whether they are required or not, it is a good idea to write them. Nonprofit Bylaws define your business operations. Nonprofits are usually governed by more than one person, so having set rules and structure can help the organization run more smoothly.
You will need to form your nonprofit business entity, write your mission statement, create a business plan and assemble your board.
You can, but it can be tricky. If you start and run the nonprofit, but are not a founder, you may be able to take a reasonable salary. If you are a founder (and take the role of chairperson, director, president, or other), any compensation (or salary) you receive has to be approved by the board. Nonprofits are expected to be NON-profits and should not be created to benefit the founders financially (excessively). Founders being paid can create sticky situations with the IRS, so you'll want to make sure you set up your organization correctly and keep well-organized accounting records. Before starting a non-profit, you'll benefit from consulting with a lawyer and an accountant familiar with nonprofit requirements to make sure you set up your organization and file taxes correctly.
While we hear about 501(3)(C)s the most, there are other types of nonprofits. The IRS recognizes 27 types of nonprofit organizations. The most familiar type is charitable organizations. Others include: