Full question:
I want to start a business that will sell goods and products obtained from a Christian orphanage and surrounding villages in Africa. The products will be mostly sold in the US. I want to donate approximately 25% of the profits back to the orphanage. I would keep the remaining 75% for my own livelihood and to sustain the company. The business will be operated from my home and via the internet. Would this qualify for a nonprofit business or should I set up a LLC? I do want to make a profit but plan to donate a generous portion back to the orphanage. I am hoping to expand this concept working with other philanthropic ministries as well. Please advise on how to set up this business. Also, can you recommend a business forms package in conjunction with your advice?
- Category: Corporations
- Subcategory: NonProfit Corporation
- Date:
- State: Arkansas
Answer:
The decision depends on your business structure and how you plan to compensate yourself. In Arkansas, a "not-for-profit corporation" is one where no income is distributed to its members, directors, or officers. If you seek tax-exempt status as a charitable organization, you must demonstrate that your organization serves the public interest, such as providing relief to the underprivileged or advancing religion. Nonprofit corporations can raise funds through grants and donations and may qualify for tax exemptions. The most common federal tax exemption is under Section 501(c)(3) of the Internal Revenue Code, which defines organizations that can operate for charitable purposes. To maintain tax-exempt status, nonprofit corporations must adhere to several rules: - They cannot engage in political campaign activities. - They can only lobby to a limited extent. - Profits cannot be distributed to members or directors, although reasonable salaries are allowed. - They must pay taxes on unrelated business income exceeding $1,000. - Engaging too much in unrelated activities could jeopardize their nonprofit status. For more detailed information, refer to Arkansas statutes and IRS guidelines. Users can search for state-specific legal templates at .This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.