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Q: Should I Setup a Nonprofit or Stay with a For-Profit?

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If you’re thinking about turning your for-profit business into a nonprofit organization, simply because your for-profit has not been profitable, then you’re doing it for all the wrong reasons, and there’s a good chance the IRS will not approve your application.  Let’s face it – if you didn’t make a go of it in the for-profit environment and you couldn’t generate an income to pay your bills, what makes you think you can make it work as a nonprofit?
 
Most people will say it’s because they’ll then qualify for grants, but what you need to understand is that in most cases, you can’t get a grant to cover 100% of your salary, all the “company’s” administration fees, program costs, etc.  So if that’s what you’re after – either stay a for-profit or start a new business.
 
Some things to note about a “nonprofit” organization:
1.      It’s is owned by the public.
2.      It belongs to no private person, and no one person controls the organization.
3.      The assets are irrevocably dedicated to the charitable, educational, literary, scientific, or religious purposes of the organization.
4.      Control of a nonprofit lies with a governing board of directors or trustees – not “you.”
5.      Nonprofits usually have a staff that are both paid staff and volunteers. In fact, in many nonprofits, volunteers outnumber paid employees.

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