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Advantages and Disadvantages of Forming a Non-Profit Organization

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  1. #1
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    Default Advantages and Disadvantages of Forming a Non-Profit Organization

    Many are considering forming non-profit organizations nowadays just by having an overview of the basic advantages. And, the majority of these people burn out quickly. However, itís necessary to study comprehensively about the rules/regulations, have a better understanding of what to expect, etc. before you set your foot in the nonprofit world.

    As the name suggestsóa non-profit organization is an organization that takes its profit (by selling goods and services, donations, etc.) to further achieve its objectives and missions.

    Read along to learn about the advantages and disadvantages of forming a non-profit organization, which you might have overlooked.

    Advantages of forming a non-profit organization
    Tax exemption- Perhaps the biggest advantage to start a non-profit organization is an exemption from federal tax. Entities that qualify for public charities under the Internal Revenue Code 501(c)(3) can enjoy exemption from corporate income tax. With this, the organization can usually exempt from other local taxes as well. Contact a registered agent for 501c3 application process.

    Limited liability- The creditors and members have limited access to the assets of the non-profit organization. Additionally, the founders, directors, and other members arenít liable for any debt related to the organization. An individual canít use the corporation for irresponsible or illegal activities.

    Disadvantages of forming a non-profit organization
    Cost- Starting a non-profit organization isnít a process that can be completed overnight. It requires time, money, and efforts. However, submitting an application to the IRS can cost up to $800. If you donít have comprehensive knowledge, you may need to hire a consultant to make sure everything is done correctly.

    No profits- As discussed earlier that shareholders of a non-profit entity arenít eligible to collect the profits. Also, itís quite difficult to calculate profits for investors. At the end of the year, the excess funds are transferred back to the organization.

  2. #2
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    Default Re: Advantages and Disadvantages of Forming a Non-Profit Organization

    Thank You for sharing Information of Advantages and Disadvantages of Forming a Non-Profit Organization.