What are the pros and cons of for-profit and non-profit businesses?
I can't seem to find anyone who can explain the pros and cons of profit vs. non-profit aside from the obvious. I want to be protected, but don't necessarily want the government and red tape.Given your mission to help provide job training for military members, you really could go either way with a for-profit or not-for-profit business. The significant differences between the two include: (1) how they are taxed, (2) how the profits can be distributed (not-for-profit corporations cannot distribute profits to their directors, whereas for-profit corporations can distribute profits to their owners), (3) the minimum number of people required to be involved in management (in NY, for example, NFPs cannot have less than 3 directors; a for-profit can have as few as one owner), and (4) the process of how the entities are formed.
I want to establish a place for military members who are being discharged from the service. There are so many places for military members who have been injured (not nearly enough) but nothing for those that are coming home. Most have left for the service right after high school, some right after college and come home with no job skills that can be translated onto a resume. I want to give them a place to get some job skills, an education, love and support from those who know what they have been through.
An important question for you is what you want to get out of it financially. While you are entitled to receive a reasonable salary for the services you render to a not-for-profit, you cannot take a portion of the profits that the entity generates (as you could if a shareholder of a for-profit corporation). On the other hand, you may be able to qualify for more government grants as a not-for-profit than a for-profit.
Nina L. Kaufman, Esq. is an award-winning New York City attorney, edutainer and author. Under her Ask The Business Lawyer brand, she reaches thousands of entrepreneurs and small business owners with her legal services, professional speaking, information products, and LexAppeal weekly ezine. She also writes the Making It Legal blog.