How do you restructure a for-profit business to a non-profit one?
We recently found out that even if you earn income from your business as long as the income generated goes back to the business that it can be restructured as a non-profit. We are a church supported work that reaches out to the next generation by discipline in the physical, mental, moral and social issues through Tae Kwon Do. Through our understanding, the moment that you receive income from your business, you ought to be a for-profit enterprise. Recently we received information that this business can be restructured as a non-profit because most of the income is used in the overhead expense and salaries of staff (there are no stock holders in this business).
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When operating a for-profit or non-profit business, it should be approached the same way. The only difference is that a non-profit business isn't looking to take the profit from the business, even though you still want to provide the most benefit you can for the organization.
You will have to file documents with the IRS to show that you want to become a non-profit business. Visit www.irs.gov for more information or a local accountant. My main question is what would be your main purpose for changing? In addition, do realize you can still be audited and will still need to justify legitimate expenditures?
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