August Jackson is a contributor to various websites. She has taken courses in copywriting and has worked in corporate America as a proofreader. By August Jackson J. The Tax Advantages of an S Corp vs.
Corporations in General Corporations enjoy continuity of existence, limited liability for owners, officers and directors, centralized management by a board of directors and the free transferability of ownership. C Corporations Many investors can purchase the stock of one C corporation.
S Corporations Tax laws allow S corporations to be taxed like partnerships. Close Corporations If a corporation has only a few stockholders and is not traded on a national stock exchange, it may operate as a close corporation. Gains on the sale of both debt-financed property and Section property, which I think this would be, can be subject to capital gains taxes on T.
Hi, I am a tenant in common owner with my two sisters. The properties are commercial and residential rentals. One sister tells us, that she just got approved for a non profit ministry for children. Her name will come off of the deed and the foundations name will go on the deed. Can she do this legally? Where does this leave me and my other sister?
We want to sell. From your description, it sounds like your sister if perfectly within her legal rights to do this. I think you probably need to consult an attorney about this if your goals are indeed this misaligned with each other. Good luck with it. You have to be careful in how the two entities interact with one another. The nonprofit cannot directly steer business to or promote the commercial interest of the LLC.
But in general, yes, the same person can be involved in multiple organizations. RE: ownership of a non-profit. At least in the State of Missouri, the state owns the assets if those assets are not transferred to another charitable entity. In the s, Wellpoint, a for profit health insurance conglomerate, approached Blue Cross and Blue Shield of Missouri. The case was settled out of court for stock in Wellpoint and other considerations, cash, etc.
That money founded the Missouri Foundation for Health in And Wellpoint is still making money, as far as I know. Good job you are doing here Greg. Since shareholding is not encouraged at this kind of entity, how will their contributions and percentages of contribution be captured? How will prosperity know that such initial funds with were raised at the inception and by whom, and how much each?
Should all these details be part of the bylaws? What is your answer to this, Greg. Great question, Isaac. Most startups we work with usually take the donation route, but not all of them. Percentages are really irrelevant in this setting.
Greg, if a not for profit corporation bought penny stocks and made a profit, where should the money go when the corporation is dissolved? If the organization is shutting down and has any assets, regardless of how they were acquired, those assets are permanently dedicated by law to a charitable purpose. In other words, the assets must be given to one or more other charities at dissolution.
Both searches likely lead to the same page. Our community privately owned swimming pool was initially operated as a for-profit corporation. In addition, members would have to pay annual dues. A few years ago the corporation changed to a non-profit corporation and there was no longer a membership fee nor did new members receive a certificate but they still had to pay the annual dues.
This sounds like a legally complicated situation. At the simplest level, the equity no longer exists given that a nonprofit corporation has no mechanism of ownership stock. But, the devil is in the details.
Did the fractional owners members approve the creation of the nonprofit and dissolution of the for-profit? And if they did, were they aware that their ownership would go away?
What formal steps were taken to transfer ownership of real property from one entity to another? These are really somewhat rhetorical questions, Bruce. Frankly, I would consult an attorney familiar with corporate matters to make sure everything is buttoned down. In my opinion, i being part of the board would suggest that the president appoint a committee chairman to gather a committee to deal with the issue…. I also feel your By-Laws holds the answer, or should… if it doesnt, better speak to the by laws committee chair..
I have been the by laws committee chair for our non profit for over 10 yrs. Or is another term more appropriate? Any thoughts on that? I agree that calling a VFD a public charity sounds a bit strange. But, by technical definition, that is correct.
The board of directors claim they own it. The directors control and run the operation. Government provides funding for that operation for the public benefit. While it plays to the public in a philosophical sense to claim taxpayers own it, it makes no sense at all in actual practice.
Taxpayers fund many things over which they have no direct say. An independent corporation of any description is just that. While the hand that feeds you implies a close relationship, there is still that dividing line over who controls what.
In effect, he wants to manage the corporation. Naturally, the directors dispute his authority to that. I believe funding has been severly curtailed as a result. Just like to hear your comments and perhaps get some reference to authoritative sources that might clarify the situation. Your comments are dead-on, Randall. If it exists as an IRS recognized, c3, charitable entity, then it is an independent corporation governed by a board of directors and accountable to the state under corporate law and to the federal government under IRC c3.
Any such agreement should necessarily be contractual in nature and revokable by the board. Reference IRS Publication for all the nitty-gritty. Seems like by failing to maintain an arms-length independent status could risk losing either corporate status or c 3 status.
And might that proxy be held liable for actions of the nonprofit if there was de facto control by the proxy? Bear in mind, the funder has legitimate concerns as to where the money is going. The corporation has concerns over someone effectively taking over the business. Another question. Is Form usually sufficient? As a matter of public relations, what more could be done to demonstrate to the public what they get for their dollar?
Thanks for any help. I am wondering what the difference is between a foundation and a non-profit corporation. I have some money that I would like to use to get started in a Ministry of Helps. I know this is probably a dumb question but I was just wondering the difference. Thanks for your time. Not a dumb question at all. In fact, we answer similar questions almost daily. In IRS terminology, a foundation is a specific type of c3 nonprofit, one that usually has no active programs.
And to further confuse the matter, a nonprofit corporation is the business entity type that most foundations and charities choose to adopt. You will learn much more about how this all works once you get started with us.
Nice post. This is a poorly understood concept that really needs more attention. Thanks for highlighting it. I am a member of a board that runs a c3 housing project. It has been in existance for 35 years. The board wants to sell it. Where do the proceeds go? Can we take a consulting fee? We have never been compensated. If your passion is for starting something, consider looking at existing models and seeing what you can replicate in your community or in a new context.
Can you do a small pilot program or launch a beta product? Can you research comparable programs to add validity to your theory that this is an idea with great potential? Nonprofits have a social mission, while social enterprises have both a social mission and a profit-driven mission.
There are advantages and disadvantages to each model. For more on this, check out our review of the social-change landscape. Anyone starting a new organization is going to need lots of support. Say goodbye to your evenings and weekends, and get ready for an uphill battle. Private sector organisations are owned by individuals. These businesses are driven by profit. The profit from private sector organisations benefits the owners, shareholders and investors. They are financed by private money from shareholders and by bank loans.
Public sector.
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