4 Advantages of a 501c3 Organization

The 501c3 organization is a business structure that allows an entity to become a charitable organization. Setting up your business in this way will allow you to help others through the charity business structure. At the same time, there are numerous other benefits that you might want to consider.

1. Tax Exempt

Perhaps the biggest advantage of setting up as a 501c3 is that you will be exempt from taxes. You will not have to pay federal corporate taxes and in most cases, you will also be able to get out of paying state or local taxes. In addition to this, when people make donations to your business, they can get a tax deduction. This makes it possible for many people to give you money because they could use the tax break. By saving money on taxes, you can do use the money to do much more good for the cause that you are trying to help.

2. Grant Eligibility

Another benefit of setting up your business with this structure is that you will be more likely to be eligible for grants. There are many federal and state grant programs that tend to favor charitable organizations. By simply writing up a grant proposal and adhering to the rules of the program, you might be able to secure a large grant that you do not have to pay back. The possibilities in front of you with this kind of money could be endless.

3. Formal Organization

Another advantage of setting up this type of business is that you will have a formal structure and organization. Many times, people that wish to form a group to help a specific cause do not have the foresight to set up this type of business. In many cases, it leads to the eventual demise of the group. When you set up a formal structured business, you have a specific entity that can be separated from the founders of the business. You can set up bylaws and rules associated with the business in order to outline the goals and objectives of the charity. By doing this, the charity can last long after the original owners have moved on. 

4. Personal Protection

By setting up this type of business structure, you will also be able to protect yourself and your assets. With this type of business, if a lawsuit is filed, the assets of the company are the only thing that can be taken. Someone cannot come after your own personal assets when going after the company. If you do not set up this type of business structure, an individual could potentially bankrupt you based on the actions of someone associated with the group or your own actions. There is no reason to throw away everything that you have worked for in your life just so that you can avoid filing some paperwork and paying a nominal fee to get the business started. 

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