Should I Start A Nonprofit?

Should I Start A Nonprofit?

Starting a nonprofit can be an excellent opportunity for entrepreneurs looking to open a new business while helping people and making positive changes in the world around them. Strategizing and building a successful nonprofit requires a particular set of skills. Yet, from a company owner’s perspective, the experience is not significantly different from owning any other small business. Exploring the potential benefits and risks of starting a nonprofit organization can help you decide whether it is the right choice or if starting a traditional business would be the best option. When gathering information and determining if a nonprofit organization is the right path, you must consider various aspects. The essential factors include how you plan to fundraise and fund the business, your mission, and your proposed budget. When prospective business owners are thinking about a new business venture, they commonly wonder, should I start a nonprofit? For more information, call the Jennifer V. Abelaj Law Firm at 212-328-9568 to discuss your options.

The Benefits of Starting a Nonprofit Organization

The mission of nonprofit organizations is to work towards bettering the community and citizens who live there. Opening one is excellent for credibility because it demonstrates philanthropy, trustworthiness, and a desire to do good. Opening a nonprofit can mean helping others while also accommodating a comfortable life for the organization’s leaders and their families. There are many other benefits of starting a nonprofit organization, including:

Running a Nonprofit is a Rewarding Experience

Starting a nonprofit organization allows business owners to see first-hand how the company positively affects the community. For example, opening the doors of an education nonprofit enables business owners to share knowledge, educate others, and bring positive change. 

Nonprofits are Eligible for Separate Entity Status

Nonprofit organizations are increasingly intersecting with LLCs and forming hybrid organizations. Traditional fundraising methods are the cornerstone of nonprofits. Yet, many struggle to raise sufficient funding they need to help their cause. Therefore, organizations are strategically restructuring to include for-profit ventures to raise additional financing without losing their nonprofit status and tax exemptions. When businesses structure correctly, the Internal Revenue Service allows them to operate under both statutes. A knowledgeable attorney at the Jennifer V. Abelaj Law Firm is available to answer questions and help you answer the question: Should I start a nonprofit?

Nonprofits have Limited Liability Protection (LLC)

Nonprofits have the same liability protections as other LLCs and corporations. The protection means that tax laws cannot hold organization leaders or team members personally liable for the nonprofit’s debt.

There are Many Tax-Exemptions and Deductions

The nonprofit association could qualify for tax-exempt status if the business meets specific requirements. Further, there are various other tax exemptions the federal government offers. Under the Internal Revenue Code Section 501(c)(3), the nonprofit is exempt from paying federal income taxes, and donations are tax-deductible for the donors. The requirements for this exemption include being an organization that benefits a charitable, religious, scientific, literary, or educational cause.

Nonprofit Organizations are Eligible for Public and Private Grants 

Public and private grantmakers typically fund nonprofit organizations that qualify for public charity status with the internal revenue service. Nonprofit organizations are eligible for many grants when many other businesses are not eligible to apply. Even for the grants open to for-profit and nonprofit organizations, the latter will take preference in most cases.

Incorporated Nonprofits can Offer Benefits to Employees 

When nonprofit organizations choose to incorporate, they can offer benefits to employees, including health insurance, retirement, and pensions. Nonprofit organization team members typically love their work and dedicate themselves to the cause. They realize the work will not make them wealthy but appreciate helping others and the community. Offering them the benefits means showing them gratitude and appreciation. 

A Successful Nonprofit Could Mean Leaving Behind a Lasting Legacy 

Opening a successful nonprofit business can mean that you are a successful business owner and an important person in history. A nonprofit organization can have a meaningful and lasting impact on people’s lives that they remember for years to come. 

The Disadvantages of Opening a Nonprofit

People commonly see a community’s needs and decide they would like to start a nonprofit organization. Yet, it is essential to note that creating and successfully sustaining a nonprofit business are challenging tasks. It can take years of determination to get the organization running effectively. According to the nonprofit and grant information knowledge base from Candid Learning, the cost of opening a nonprofit organization is often steep. Organizing the business takes plenty of time, money, and effort. Business owners will also need to pay fees to apply for the tax exemption and incorporation. Many also find that hiring an accountant, attorney, or other consultants is also necessary for ensuring they navigate the process correctly. Other disadvantages of starting a nonprofit include: 

• Significant paperwork and detailed record-keeping, more so than with for-profit businesses  
• Articles of incorporation and bylaws limit personal control of individual owners 
• Nonprofit organizations always face public scrutiny 

The most significant disadvantage is the funding limitations typical for nonprofit organizations. Fundraising problems can often be a nonprofit’s most considerable setback and challenge. It is not uncommon for them to find it necessary to discontinue services and support they provide to those in need when they cannot meet fundraising requirements to keep the business running successfully. Grant writer services are also expensive but crucial for obtaining the grants needed to keep the doors open. 

Call an Experienced Nonprofit Lawyer Today

Tax-exempt status and legal liability elimination sound like the right way to go when starting a new organization. However, prospective business owners must consider many crucial elements of running a nonprofit, including raising funds and attracting the right talent with competitive wages and benefits. Running a successful nonprofit organization comes with many challenges. Yet, it can be the most rewarding business venture you can experience with the proper planning and preparation. For more information on, should I start a nonprofit? Call the Jennifer V. Abelaj Law Firm at 212-328-9568. A knowledgeable nonprofit lawyer can help go over the benefits and disadvantages to help you figure out the best option for your new business.