Does anyone operate as a 501(c)(3)-nontaxable entity or a non-for profit?

[Black Orchid]

I am in the process of organizing myself to become a CBE in 2008 and hopefully a doula by 2009. I was looking into the option of operating as a non-profit or a non-taxable entity because I truly do not expect to profit from my endeavor.

Anyway, does anyone here practice (m/w, CBE, doula, anything) as one or both of these designations?

Thanks

[olive&pimiento]

:

[Black Orchid]

Originally Posted by olive&pimiento

:

I was so excited to see a reply!

So, like, does nobody pay taxes? Or do your operate as a sole-proprietor? I am running through my options.. I don't want the complexity of being incorporated because I'm not going to make much money, I'm sure... but I like the idea of have an entity that is separate from myself for liability purposes.

[MindfulBirth]

Sorry..I was hoping someone had replied with an answer, too. I've never thought about setting myself up as a 501(c)3...how involved that would be..what you have to prove..etc.

I've been thinking lately about what I want to do and yelling at myself just the other day for not having done any research about it.

I'm also curious if most doulas/CBEs who work alone just pay their taxes as "other income" or as a sole proprietor or something else.

[mendomidwife]

I am a sole practitioner, but if you go to Legalzoom.com you can educate yourself about the implications and ways to do business.

Carla

[nashvillemidwife]

I am also a sole proprietorship. Are you trying to set up a charitable organization, or trying to avoid paying taxes? If you're not expecting to make much money, then you won't be paying a lot of taxes either.

[Black Orchid]

we own our own business currently... as an llc... i do the books and i see how complex it is. i really do not want to have to deal with all of that, plus the fees, etc. plus i live in pa and you income gets taxed twice (once via franchise taxes and the other via personal income). combined with my dh's income from his business it might put us over the top of being able to "afford" me having a business... meaning, i'd be working to pya taxes gotta love the government.

anyway... i am thinking that i will take a resonable "Salary" for ym time teaching and doula-ing when i eventually do that, but anything that is earned over and above that "Salary" i was hoping to keep in the business to cover expenses for clients who might not be able to afford the going rate fees. yk? so i guess everything i brought in would not go into my pocket at that time, so i do not want it to be taxable until it is "used".

i was curious if anyone operates this type of model. i know there was a thread earlier debating charging less than the going rate and how to make serivces available to those who need it, but cannot afford it. i want EVERYONE to be able to give birth naturally, without pain, not just the upper-middle class ladies in my community i thought this might be a more fair way to do it.

thoughts?

[cathicog]

I will be an LLC, to protect my husband's assets, which are considerable. I will also be doing a sliding scale fee, to cover those who cannot afford the typical "midwifery care" fees here. (I was blessed, in 1981, so I want to pass that on to a few others.) However, I do want to contribute to my 401K, and I expect to make some money on this, to pay my husband back for his investment in my midwifery education...I hope to be practicing at least 20 years..... hth...

[tlcdoula]

I am set up as a Limited Liability Corporation for my regular business. I am also in the process of trying to go for a 501 (c)(3) for a non profit group that I am starting, and that is so much more involved and so much more expensive. I don't think I would ever set up my own business as a non profit because then legally the business cannot make a profit, and I am sure we would all like to see our business make a profit.

The second group I am setting up I am doing so in order to apply for grants so that I can assist under priviledge and low income mamas.

[Maggi315]

This is something i had posted before on another forum. I had thought about making my business non-profit both for the tax reasons, but more importantly, for the benefits, including tax deductions for clients, qualifying for grants and monies, etc. But it does seem like alot of work to me, although I don't think I've explored it fully.

right now, I am a sole prop. but expect to become a LLC this year now that i have others working with me. For now, they are going to get a 1099 and file as independent contractors, since they also do other work. I haven't wanted the headache of adding employees and payroll to the business and haven't really seen a need.

Now that tax time is coming up, maybe we should start a thread about paying taxes, tax deductions, etc. especially for those of us new to this and needing some help and support. I would love to just get an account to do it for me, but can't afford any I have found. I posted in the WAHM section and the tribal section hoping to find a mama who might want to do it, but no luck yet.

I would appreciate any information anyone gets about this subject to get passed on to me either here or pm me!

[Black Orchid]

a BIG nice benefit to having a 501 is that you do not have to pay the employer payroll taxes on your salary. you just pay the employee half. And you can make a profit, it just called a "surplus". The insurance companies in the city where i live are all 501s and they make "surpluses" of millions. it is considered retained earning that are not subject to corporate (or self employment) taxes.

[Maggi315]

I agree with pp that you can definitely make money as a nonprofit. We have a friend who works for a larger nonprofit and all of them take very large salaries. heck, I forget how much the CEO of united way makes, but it's in the millions! So if I became nonprofit, I would still make the same amount, but even more given that I wouldn't have all those taxes to pay.

I would love to find a midwife who did this and how she went about it. Several birth centers are nonprofits and the midwives are paid a salary. So it can be done. then you could do fundraisers for equipment, free stuff to hand out, etc.

I guess the biggest downside is all the paperwork and giving up some control, because you need a board of directors, minutes for the meetings, and articles that need to be written. Which aren't hard to find off the internet, there's even books on how to go about doing them that are pretty much paste and cut.

[Black Orchid]

Originally Posted by Maggi315

I guess the biggest downside s all the paperwork and giving up some control, because you need a board of directors, minutes for the meetings, and articles that need to be written.

Not afraid of paper work here! considering that i acted as our lawyer and accountant for dh's business this year...

can you elaborate on the need for a board? i wasn't aware that this was requirement.

[Maggi315]

just got back from an all day birth (to a house full of sick kids), so I will look it up for you tomorrow. There's detail on the irs webpage about nonprofits and boards, I guess the thought is you need more than one person to make sure the money is well spent (although we all know that doesn't mean much). But I know people who have had nonprofits, who have the board consist of them, their spouse, and another relative or friend. I'll look on the IRS website for the information, though, because I'm interested in what it has to say.

I have to confess to hating paperwork, not being good at it, and would rather do anything else in the world, I think!!! So, if I decided to go that route, someone else would have to do that part!

[Black Orchid]

oh please don't look it up for me... I will do it. you get some rest

i'll do it at work tomorrow evening and post as much as i can.

thanks. i'm glad i'm not the only one thinking of doing this... i'm just not sure if a childbirth education, lc or doula service would be included in the "health services" category.

[Maggi315]

I would think it could be considered until health services if you did some stuff for free, had a sliding scale, offered free education, etc. The birth centers operate as nonprofits and they offer all those services in addition to births, so I am thinking it would qualify.

[Maggi315]

I would think it could be considered until health services if you did some stuff for free, had a sliding scale, offered free education, etc. The birth centers operate as nonprofits and they offer all those services in addition to births, so I am thinking it would qualify.

[Maggi315]

I would think it could be considered until health services if you did some stuff for free, had a sliding scale, offered free education, etc. The birth centers operate as nonprofits and they offer all those services in addition to births, so I am thinking it would qualify.

[Maggi315]

sorry for the doublepost above, not sure how I managed to do that?

Here's a page I found that explains a bit about nonprofits. I wonder if the fees we receive for the services would be tax-deductible or not? Not sure if the birth centers are able to have people claim their births on their taxes as donations to charity or not.

Note: This is a company that does this, so it has their particular information on there, but when I went to the IRS site, you can do it yourself, I guess going through a company makes it easier.

Incorporate a Nonprofit Organization
A nonprofit corporation is formed for purposes other than generating a profit and no part of the organization's income is distributed to its directors or officers. Examples of common nonprofit corporations are churches, schools, charities, museums, hospitals, volunteer organizations, homeless shelters and civic associations. Nonprofit corporations are formed to carry out a charitable, educational, religious, literary, scientific or other purpose authorized by the IRS.
The most common federal tax exemption for nonprofits comes from Section 501(c)(3) of the Internal Revenue Code, which is why nonprofits are sometimes called 501c3 corporations.

Incorporating your nonprofit organization will help you establish the legal protection that separates your personal assets from the activities of the corporation. Do not leave your personal wealth exposed!

Benefits of Incorporating your Nonprofit Association
Tax exempt status. Organizations that meet the requirements of Internal Revenue Code section 501(c)(3) are exempt from federal income tax as charitable organizations. Obtaining tax-exempt status can amount to significant savings.
Grant eligibility. A 501(c)(3) nonprofit is eligible to receive both public and private grants.
Personal asset protection. The responsibility of debts and liabilities of the corporation are not personally held against the officers, directors, trustees or members of the corporation.
Tax-deductible donations. Contributions given to a 501(c)(3) nonprofit corporation are tax-deductible by the donor. Continuity. The corporation's duration does not depend upon its members. A nonprofit corporation can continue to exist and do business if an owner dies or wishes to sell their interest.
Special postage rates. Nonprofits can apply for and receive a mailing permit that gives them a special reduced nonprofit rate for mailings. This is especially helpful for organizations that will do a lot of solicitation by mail.
Property tax exemptions. In addition to an exemption from income taxes, nonprofits are usually exempt from paying property taxes on real estate and other property. Contact your county assessor's office for more information on property tax exemption, which is often called a "welfare exemption."
Characteristics of a Nonprofit Corporation
Qualifications for membership are defined in the bylaws.
There are no owners or stockholders in a nonprofit corporation.
Classes of membership can include voting and non-voting members.
Nonprofit corporations are managed by a board of directors elected by the voting members.
Benefit of membership is the only allowable personal gain.
Steps to Start a Nonprofit Corporation
Choose a business name.
Incorporate online or by phone with CorpAmerica.
Apply for your IRS tax exemption.
Order a Business License Compliance Package from CorpAmerica and obtain any necessary licenses and permits.
Apply for a state tax exemption.
Draft bylaws.
Appoint directors.
Hold a meeting of the board.