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This is NOT an advertisement for business, but I have to explain briefly to ask my question.<img alt="" class="inlineimg" src="http://www.mothering.com/discussions/images/smilies/redface.gif" style="border:0px solid;" title="Embarrassment"><br><br>
I am trying to start a small cottage-type school on my mini-farm; essentially, it would be me and five full-time students, and then possibly another ten part-time students. I am not at this time truly attempting to form a school, although that may happen in the future. I am also not trying to get rich, but I am charging tuition.<br><br>
My question is this: should I form a non-profit? I know I need to form an LLC to protect my personal self, but should I go one step farther and file for non-profit (and then eventual 501(c)3 status)? I would like for parents to be able to get a tax deduction if they donate, or for us to fundraise for large projects (e.g., travel) or school expenses (not home improvements; I know there is a line!!); additionally, if vouchers ever go through in our state (Georgia), parents could use them for tuition if I am a non-profit.<br><br>
What are the pros and cons? I have done some research, but it is really Greek to me, with the language you have to add in to set up to become tax exempt and just the hoops.<br><br>
TIA<img alt="" class="inlineimg" src="http://www.mothering.com/discussions/images/smilies/thumb.gif" style="border:0px solid;" title="thumbs up">
 

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<div>Originally Posted by <strong>Marsupialmom</strong> <a href="/community/forum/post/15414438"><img alt="View Post" class="inlineimg" src="/community/img/forum/go_quote.gif" style="border:0px solid;"></a></div>
<div style="font-style:italic;">If your business qualifies I would! Do you know how much money your company could save if you can also get taxed exempted?</div>
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It should qualify as an educational enterprise. I am confused, though. Does that mean that if we get tax-exempt status, the tuition that gets paid is not taxed at all?<br><br>
And why, exactly, would I save so much money as a non-profit? I am truly clueless.
 

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Discussion Starter #4
I find it hard to believe that of all of the mamas on this board, none have any advice about a non-profit!!!! I need some help, here. Anybody?
 

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I only know a little bit. I understand tax-exempt governmental agencies and through part of my job (grant writing) I deal a lot with non-profits, but don't know the code well.<br><br>
With a non-profit, the money that comes in has to directly go back into the agency to improve it, sustain it, give scholarships to attend your classes, etc. I know a person can't profit from it, so I don't know how paying yourself a salary would work. Obviously 501(c)(3) corps have people on payroll to conduct their business, so it can't all be "volunteer" work. I'm just not sure how that works. The benefit is that you won't pay business taxes on your corporation that you form. You are exempt from paying any taxes and that's where you save the money. A lot of money. I do know that it *can* take years to get the exemption.<br><br>
501(c)(3) is the federal tax code that exempts most NP from taxes, by the way, which is where it gets its name. We're under a different code, so I'm not as familiar with it. That's the extent of what I know and even some of that may not be spot on. I hope you get some better info. Good luck!<br><br>
ETA: I forgot to finish my thought above. You can look up the tax code on the IRS website and read through it to see if you qualify. I think you just go to irs.gov and then search for 501(c)(3).
 
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