Forums: Discussions for entrepreneurs and small business.

I am in the process of starting an education business, providing after school enrichment programs.  What are some things to consider when deciding to make it a not-for-profit organization or not?

Some advantages of making it a not-for-profit include easier access to the community - for example, advertising at local libraries and school districts.  The tax-exempt status is another advantage. 

The disadvantage so far is the lack of experience in running a non-profit org in the team. 

Any pointers?

The most important factor is your expectations from the business.

(1st) It's good idea to find out how your State treats a non-profit VS for profit.

What are the requirements, limitations, tax impacts, etc.

For example: A charitable organization (non-profit) in Massachusetts is actually owned by the State...so if you go to sell the busines..that money goes to the State!!!

A school and non-profit is a fairly common fit. Marketing-wise there are expectations people/customers have about non-profits VS for profits. The same for employees.

~Roland

I’ve been in the nonprofit sect for many years and yes, you’re right about the some of the advantages of becoming a nonprofit organization. However, there is a big cost. Nonprofits are governed by an elected board of directors or board of trustees. Ultimately, they have all the power. Consequently, you wouldn’t be in control. As an individual, you can’t personally profit and as such, there isn’t any advantage in being tax exempt for you.

If you have a great idea and want to personally profit from it – start a for-profit company.

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First of all consider your expectations and the main aim of starting no profit organization. You must be sure of meting your expenses from your end also. You may get external help but not just from the start.