How a Non-Profit Incorporation Forms LLC
Posted on Monday 13 April 2009
A non-profit incorporation is formed based on different state laws and is established for purposes other than to make profits. It can be formed for various reasons like religious, charitable, education or as a research-oriented organization. These organizations can apply for tax-exemption at both the federal and state level. If a non-profit incorporation has been offered tax-exemption under 501(c) (3) of the Tax Code, it need not pay federal corporate income taxes which results in saving a huge amount of money.
Forming an LLC
A non-profit incorporation which has received 501(c) (3) eligibility can receive a grant from both public as well as private organizations. They also receive similar LLC or limited liability protection as is received by for-profit organizations. When a non-profit forms LLC, its directors or trustees, officers and members are not directly responsible for its debts and liabilities. The non-profit incorporation cannot function to generate profits for the owners and it should adhere to the norms of the IRS regulations.
Excellent Alternative
A non-profit incorporation forming an LLC is an excellent alternative to the regular way of running a business. In an LLC, the state laws take care of its formation and they follow federal tax regulations. It is much simpler to form an LLC with exemption from tax for non-profit incorporation. As soon as the decision is taken that the business will be formed as a non-profit incorporation, you should review the advantages of forming an LLC against that of forming a regular corporation.
TAGS: form LLC,
Non-Profit Incorporation
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