Should I start a small business or a non-profit?

Question

I started a website to raise environmental awareness. I want to start selling website related merchandise and donate a portion of the proceeds to charity. Should I start a small business and just donate the money on my own, or should I start a non-profit and donate through that? The plan is to travel around the country doing speaking engagements, promoting the website, as well as selling the products to keep the site going, to be able to afford the travel, etc. This will be my only source of income, if I start a nonprofit, would it be legal for me to donate my own money to it, and can I pay myself a salary so I can concentrate all my time on this project? I also want to hold a series of dinners to introduce friends and people from my community to the site. If I start as a business, is it legal for me to charge people to attend the dinner? The money would pay for the dinners, a portion would go to charity, and the remainder would pay for the travel, merchandise and expenses.

Answer 1

A site that raises awareness of environmental issues is a great idea to run as a non-profit! You need to apply at both the fed and state level to exempt the business from paying taxes on income generated through sales. As president of your board of directors, you would be entitled to draw a salary, but of course, you would have personal income tax due on that. (I'm pretty sure you may donate your own money to it, even if the salary is your source of income - check with a tax attorney.) Every year you file a 990 for your 501 (c) (whatever#) to announce your income and expenditures - yes, you can charge people to attend dinners, it's called a 'benefit' for good reason.

Check out the application for tax exempt status, Form 1023 on irs.gov. There is a certain structure that a non-profit organization must have (such as a board of directors). It's a lot easier to just run as a sole proprietor, but as far as building the enterprise is concerned, it is just as difficult to build a business as a non-profit, as a for-profit one. (Marketplace competition is always in effect) Either way, though, you can personally do quite well.

Visit your local SBA and or SCORE chapter for educated advice on your question.

Answer 2

It's more difficult to start a non-profit than a for-profit business. You can still donate from a for-profit company, and take the donations as tax deductions.

Yes, in a non-profit, you can donate your own money and pay yourself a salary.

Answer 3

You can call and talk to an accountant