NON-PROFIT BUSINESSES IN DALLAS, TX

Nonprofits are agents of change in the world today. They are established for a specific noncommercial purpose, usually religious, educational, or charitable.

Typical not-for-profit businesses include:

• Schools/Universities
• Hospitals
• Museums
• Churches
• Food Banks
• Homeless Shelters

Advantages and Disadvantages of Starting a Nonprofit

There are many advantages to becoming a nonprofit. Tax exemption is a significant advantage of becoming a 501c3 classified nonprofit. Once an organization is tax-exempt, any charitable donations made by individuals are tax-deductible. A nonprofit can also receive discounts on postage and advertising rates which makes for more efficient operation.

Another advantage is legal protection, as the founders and members are generally not held personally responsible for a nonprofit’s debts. The legal advantage is available without 501c3 status, as are the benefits that become available for employees, such as health and retirement plans. Furthermore, a nonprofit corporation that formalizes its existence improves the chances for longevity and success because the mission and vision must be clear and achievable.

There are a few disadvantages to becoming a nonprofit. Nonprofits cost money and time to start. Once a nonprofit starts, you must keep excellent records and file all paperwork yearly. This can be resolved by hiring the proper professionals to handle such details. Since nonprofits are there to serve the public, they are also under greater public scrutiny.

Types of Nonprofit Companies

There are four main types of non-profits familiar in the United States. Each contains the ability to achieve tax-exempt status despite their slightly different goals and corporate structure. They include:

Public Charities

Typically, a charity provides low-cost or free services to the public using funds received from the public, known as a donation. This can be obtained through private donations or fundraising events specifically designed to solicit members or advocates of the organization.

Social Advocacy Organizations

This type of group is member-based and sets out to achieve specific goals without achieving a profit. The organization uses donations and member dues to send out information that promotes a particular social agenda.

Foundations

This type of organization often works to better the community, whether contributing financially to local charities or holding events that benefit residents. They are funded by and contribute on behalf of another for-profit corporation.

Trade and Professional Organizations

People in the same organization can benefit from the activities of this type of non-profit. They are funded primarily through membership dues.

Political parties are also eligible for tax-exempt status but do not fall under the standard nonprofit category.

How to Achieve 501c3 Status

Corporations may file for federal tax-exempt status, also known as 501c3 by the IRS, if incorporated as a nonprofit corporation or trust. They must meet specific stringent criteria to be considered free from paying taxes. These include:

1. For most states, you must name a Board of Directors to manage the high-level decisions of the non-profit corporation. These must be individuals and not corporations.
2. You must create a purpose statement and operate solely within the guidelines it sets forth. Acceptable purposes include charitable, educational, scientific, literary, and sports competitions and preventing cruelty to animals or children.
3. When incorporating, the assets of your nonprofit must be dedicated to other charities, significantly should the corporation dissolve. This would be written as a dissolution statement in your Articles of Incorporation.

All other steps associated with Incorporation apply to creating a nonprofit organization, such as paying fees and registering for business locally.