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Incorporating as a non-profit 501(c)3 organization provides an organization considerable tax benefits, but what are the drawbacks? Below are some pros and cons for filing for non-profit status.
Pros for incorporating as a non-profit 501(c)3 organization
Cons of incorporating as a non-profit 501(c)3 organization
If you are debating between filing as a corporation or a non-profit 501(c)3 organization, take a moment to answer the questions below. They will help frame your organization's priorities and help you determine whether non-profit organization status or for-profit incorporation is the better fit.
Does your organization prefer flexibility over cost benefits?
Will your organization be more successful in securing funding by being able to offer a tax exemption for donations or will investors be more drawn by potential returns on investment?
Will your organization be able to attract high-quality leadership with any limits on compensation?
Despite the time and paperwork involved in filing as a 501(c)3 non-profit, will the status enable your organization to focus more time and resources on your mission or cause?
If you have additional questions or concerns about whether non-profit status is right for your organization, consult with an attorney who specializes in non-profit 501(c)3 incorporation.