What Is a Nonprofit Company?
A nonprofit company's or organization's purpose is to serve the community. They receive donations, charities, goods and services and sponsorships to help further their cause. They serve the community through organizations such as:
- Churches
- Public schools
- Public hospitals
- Museums
- Art galleries
- Political organizations
- Research institutes
- Volunteer service organizations
The Benefits of Starting a Nonprofit Company
Independent Status
A nonprofit organization has the advantage of being able to register itself under its own name. Enter contracts and be sued in its own name and is responsible for its own obligations. It doesn't involve the names of the owners or any of the employees or hold them accountable.
The IRS Code 501(C)
Under this tax code, nonprofit companies are exempted from federal and state taxes since they contribute a large chunk of their revenue to a social cause. According to the Internal Revenue Section 501 (c) must benefit the following sectors in the community:
4. Process the Payrolls of All the Employees
Some businesses require bookkeepers to prepare and process the payrolls as well as assist with tax payments, while others have HR departments who handle this function of the business.
5. Sending Out Invoices and Managing the Accounts Receivable Ledger
To ensure that you receive all your payments on time, a bookkeeper’s job is to prepare and send out invoices to your clients in a timely manner to prevent any delays. They must also chase after clients to pay if they are delaying payments.
- Science
- Education
- Public health
- Protection of animal rights
- Protection of children's rights
- Religion
- Public safety
- Literary
Internal Satisfaction
Working for a good cause makes you feel happier and more content knowing that you are helping others and giving back to society. This kind of inner satisfaction is more valuable than any amount of wealth. Knowing that you are assisting other less fortunate families by putting food on their table, providing them skills and employment and helping them with their medical bills feels more rewarding like nothing else in the world.
Personal Liability Protection
A nonprofit organization functions as a limited liability company that keeps business and personal assets separate. If for any reason the company defaults on its debts, and if a lawsuit is filed against the company, members' personal assets will not be harmed. Instead, the liability will lie with the company and its assets. However, this rule does not exempt the employees and owners of the NPOs if they perform any illegal acts or act irresponsibly. They must work to maintain the best interests of the company and will be held responsible in the case that they don't perform.
Can Receive Grants
NPOs can receive public and private grants to help run their cause. In some cases, NPOs are exempted from paying property taxes and sales depending on the state.
Leaving a Legacy
A successful nonprofit organization can exist independently as long as it continues to serve its purpose even long after its owners have passed away or moved on from the organization. As long as the organization generates revenue, it can continue to exist as a sole entity and keep receiving grants and donations from its trustees. This is a tempting goal for social entrepreneurs looking to make a lasting impact in the world.
If you are looking to start a nonprofit company and need help figuring out the formalities, click here and let Business Rocket do it for you.
