Unveiled: Myth of Non-Profit

Corporate Bylaws Example - Unveiled: Myth of Non-Profit

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Modernly, an entrepreneur has a myriad of options when it comes to the legal formation of the business. The sub-categories for enterprise entities range from corporation to itsybitsy liability companies and many others. Even with all the different sub-categories, an overarching consideration involves a decision concerning whether the enterprise should be for profit or not. Instinctively, most population would pick the previous over than the latter because they would assume that a non-for profit would not originate income. Any way intuitive, that assumption would be faulty.

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Corporate Bylaws Example

The designation non-profit is not synonymous with the business' possible to yield income. Instead, it is a government induced name for a enterprise to collect some tax benefits when it is operated for charitable interests. When a enterprise is for profit you have a direct transfer of money for services in the middle of the buyer and the business. On the other, with a non-profit the enterprise does not receive revenue directly from the customer; a third party pays on profit of the customer. That third party may be a foundation or government entities who donate to the business. In whether scenario, the enterprise will originate income.

The decision concerning which type of entity would be most advantageous depends on the type of enterprise involved. Some enterprise ideas will automatically push you in one direction or another. For example, an idea to originate a women security will automatically push you toward the non-profit kind and a retail store will generally push you closer to being a for profit business. There are some ideas which do not specifically fall into whether category. In that case, person may use some creative brainstorming to categorize themselves as a non-profit to advantage from the advantages that the designation affords.

Some of the advantages of the non-profit status comprise social funding options, tax exemption benefits and smoother operational functioning. In enterprise operation, the designation of non-profit eliminates the interaction with the consumer for the payment of services. It allows the enterprise to focus on the service, not the bottom line. This shift allows the consumer to view the enterprise differently because they don't necessarily have to reach into their pocket every time they receive service. That dynamic allows for a association of trust and mutual collaboration in the middle of the enterprise and the customer.

A person who is considering filing for non-profit exemption should also consider some of the drawbacks. To begin with, the process to collect the exemption is costly and lengthy. From the organizational standpoint, a higher level scrutiny is placed on the society for enterprise records. The owner also has to share control of the enterprise with board of directors who shape and craft the bylaws and rules of the organization. Lastly, the owner cannot pocket the business' revenue unless it is a wages which must be reasonable because the business' financial records are matter of social records.

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