A nonprofit corporation is an organization that has a mission to serve the public interest and has filed incorporation papers with the state. Because the corporation works for the public good, it receives exemptions from state and federal taxes it would otherwise have to pay. Hence, to a certain extent, these groups are publicly subsidized.
The basic definition of a nonprofit organization is a business that does not pass on excess revenue to owners, shareholders, or other investors. Instead, a nonprofit uses this money to further its purpose, which includes paying the salary of its owners and other employees.
One of the most common types of nonprofit organizations is a 501(c)(3), named after a section of the IRS code, but there are other types.
The main benefit as a non-profit organization is “No Taxes” As a nonprofit corporation, your organization can get state and federal exemptions from corporate income taxes plus certain other taxes. Another benefit, Individual donors to your nonprofit corporation can claim personal federal and state income tax deductions, and inheritance may be exempt from federal estate taxes.
On the contrary, non-profit organizations have few restrictions too, such as no pay for your directors and limits on political campaigning and lobbying. And when your organization closes, its assets must be given to another nonprofit.
