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Growth Strategies

What are the pros and cons of for-profit and non-profit businesses?

min read
Opinions expressed by Entrepreneur contributors are their own.
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.

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.

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