How can I turn a for-profit business into a nonprofit business?
I own a 3-year-old for-profit transportation company catering to senior citizens at discounted prices. I would like to restructure the company as a nonprofit. The company is losing money and the clients don't seem to be able to pay more for services. However, the transportation is vitally needed. I thought restructuring the company into a nonprofit would be a way to keep the company going with subsidized money from local, state and federal funds.
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It can be very thorny to convert a for-profit to a not-for-profit corporation. First of all, in most states, the companies are qualitatively different and have different formation requirements.
Second, you will likely run into tax issues with the transfer of assets from the for-profit to the not-for-profit company.
Third, the governance and operation of the not-for-profit is different from running a for-profit enterprise.
Before you think about making this change, realistically evaluate the likelihood that government sources of income will flow your way--and soon. Otherwise, you could find yourself in deeper trouble for mismanaging a nonprofit.
Make sure you consult with an attorney and an accountant who are well-versed in non-profit issues.
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