Developing a non profit organization is not as non profitable as it may seem. Non profit organizations have to produce enough money to pay for its employees as well. In this article, we are going to discuss the development of a non profit with regards to the benefit of being a recognized 501 c3 organization and receiving donations. We will also discuss the difference between an LLC vs an LLP, protecting your trademark, and adding entities to your business such as fictitious names or assumed names.

Non Profit Organizations

How to Develop Your Non Profit Organization

You have sat on the park bench thinking how much good you can do by creating a non-profit organization to help the children you know with autism. Your son was diagnosed with autism when he was 6 years old.  Your child will need more work than the average child. If something isn’t done soon, your child may get left behind.

When speaking to the school, they have told you repeatedly that there are just not enough funds in their district to slow the classes down for him.  This is when you develop your non profit organization. It’s not much; just a part-time organization that teaches the children life skills so that they are capable of surviving if you, the parent/guardian, are not around.

What is the process to structure your non profit organization?

First, you need to register the business as a non profit organization.  Once you have received your articles of incorporation, it is important that you apply with the Internal Revenue Service as soon as possible for your tax-exempt status. You may ask, why so fast? This is because the questioning of the tax-exempt application is long and tedious. The quicker you get to the questions from the start of your business, the less explanation you will have to give for each. Limited information is available for each question.

Now that you have your 501 c3 tax-exempt status, what benefits do you have?

Depending on the business, and location, you may be eligible for sales tax exemption. You may have eligibility to receive grants or loans for your organization to hire specialists or equipment for your kids. You may receive public recognition for your business being a non profit organization. Government organizations may offer you discounts such as the post office.

Is it possible to make money while running  a non-profit organizations?

A non profit organization is a business.  It carries out charity work and raise money to help the community.  Because of this, resources are needed to carry out their work.  You will need to hire lepers, specialist and a management team.  Your business is going to require that you put the majority of your time into it and you will need to receive a paycheck too.   For your business model, you need to consider how money is going to be received  and plan accordingly.

Should I protect my non profit registered trademark?

All of the city knows about your program and it has grown bigger than ever expected. Donations have poured in, and you want to create a trademark for your organization’s  name and logo.

 

What is a trademark and how does it work?

A Federal Trademark is a word, name, symbol, phrase, slogan, or combination of these items which is used to mark and distinguish goods or services to indicate their source or origin throughout the United States. Federal Trademark rights may be used to prevent others from using the same or a similar Mark in the United States.

• A name or logo in many cases overtime becomes a company’s most valuable asset.
• It prevents others from adopting your name or design and gives you very favorable enforcement powers throughout the United States.
•  You will recieve no or only limited protection in a local geographic region.
• It Allows you to put everyone on notice with the Federal Trademark symbol “®” once the Federal Trademark process is complete.
• The business may advertise and promote your mark and build name recognition and goodwill for your business with out fear of losing the Mark to another.
• The Federal Trademark or Federal Service mark may subject the copycat to injunction, statutory treble damages, profit disgorgement and attorney’s fees if litigation is necessary to prevent such a copycat from using your Mark.

We can help you register your trademark at www.AmeriLawyer.com

Which is better for my new company; Limited Liability Partnership (LLP) or Limited Liability Company (LLC)?

You have spoken to a local barber to assist your children with their daily grooming routine. Joe and his wife Mary, have showed great interest in joining your group. Joe would like to help with the boys. Mary would like to make a salon/ spa for the girls. Which type of entity should they create; an LLP or and LLC?

Limited Liability Partnership (LLP)

A strong feature of the Limited Liability Partnership is that obligations of the limited liability partnership, whether arising in contract, tort, or otherwise, are solely partnership obligations so that none of the partners are personally liable. The only reason for the use of the mere limited partnership form, rather than limited liability partnership, is when a limited partnership is required by lenders or other creditors. Understandably, because of liability protection, the limited liability partnership form of partnership is preferred over the other types of limited partnerships.

Limited Liability Company (LLC)

The main advantage of the LLC is that it is not burdened with the ownership restrictions imposed on a small business corporation (also known as a Sub Chapter S Corporation). An LLC may have more than 100 Members or as few as one. Its interests are held by corporations, partnerships, Non-Resident Aliens, trusts, pension plans and charitable organizations; the LLC may make special allocations, thereby avoiding the single class of stock requirement applicable to an S corporation; and it may own more than 80% of the stock of a corporation and, therefore, may be a member of an affiliated group.

How do we decide which is better for us?

Joe and Mary may also want to test the waters before forming one of these entities. They can form a contract between each other to agree on all the aspects of the business. They may also want to create a primary business for Joe, and then create a fictitious name for Mary’s salon. This contract needs to establish who is responsible for the liability of Mary’s salon and spa.  If she takes a loan to create this Eden for the girls and cannot pay the costs of the loan, who would be the person liable? If the salon fails any unpaid items, could affect Joe’s barbershop.

Spiegel and Utrera can help you decide the best entity for your business.

You can hear more details about starting a non-profit organization and much more by visiting our YouTube channel.

 

Final Thought:

It is in an entrepreneurs best interest to go to the local library, and look in trade association journals.  These journals can assist you with developing your business plan, or expand your business.

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Not Ready? Have More Questions?
If you are a member of Spiegel & Utrera, P.A.’s General Counsel Club and have business related questions, call (800) 734-9900 or ClubAssist@AmeriLawyer.com for assistance. As a member of the  General Counsel Club, you receive unlimited legal, business, credit and tax advice all year long.

Spiegel & Utrera, P.A. is a corporate law firm with its main offices located in Miami, Florida with offices throughout the United States. As a law firm, we do more than just help you form your business entity. We stand ready to help with the maintenance of your legal business entity! We will assist you with Incorporation Service, Trademarks, Copyrights, Estate Planning, Legal Counsel, Wills,Trusts, Agreements & Leases, Corporate & Company