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Should we set up as a not for profit, a for profit corp or neither?

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About 10 years ago my wife and I had a Gospel music ministry. We mainly did church service, revivals and special services. Occasionally we would do an actual concert. We always just ran everything through our own taxes at the end of the year. We have decided to get this ministry back up and running and want to make sure we do everything by the book. We are wondering rather than running it on our own social if we should actually set it up as it's own entity. That then opens up the question as to for profit or not for profit corp. In our minds, this has always been a ministry and when we did this back then we for sure put more money into it than we ever got back. I looked over the different categories under IRS 501(C)3 and none of them actually fit in with our idea of what a Gospel music ministry is. Should we just continue to do this under our own ID's, make it a for profit corp (and hope we make more than we spend) or set it up as a 501 (c) 3 so that the IRS knows we aren't really doing this for profit? Maybe someone can help us figure all this out. Thanks in advance.

Attorney Answers

2
Kaye Willi ·
The main reason why many organizations become a 501(c)(3) is so that donations to them will be tax-exempt. In other words, they believe it will encourage donations by persons who might otherwise not give. Since the passage of the Tax Cuts and Jobs Act, most individuals do not get any tax benefit from charitable donations, as most people no longer take itemized deductions on Schedule A. So there is little tax benefit to forming a 501(c)(3). Also, by forming a 501(c)(3), you may have additional reporting requirements, which would require hiring a CPA familiar with 990 tax returns. That having been said, there may be some advantages to forming a 501(c)(3), such as exemption from sales tax. You should sit down with an attorney who specializes in non-profit tax issues and ask him/her what is best for accomplishing your objectives. Expect to pay for the consultation.
0 upvotes
Marina Alexandrovich ·
Set up a corporation and obtain the S status for it.
0 upvotes

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