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<!DOCTYPE html><html lang="en" prefix="og: http://ogp.me/ns# article: http://ogp.me/ns/article#"><head><meta charSet="utf-8"/><style> #lanyard_root * { font-family: var(--fontG), var(--fallbackFontG) !important; } </style><meta http-equiv="content-type" content="text/html; charset=utf-8"/><meta http-equiv="X-UA-Compatible" content="IE=edge,chrome=1"/><meta name="msvalidate.01" content="9451CA04ABC9D1D5C6419C73B4C4F7B7"/><meta name="viewport" content="width=device-width, initial-scale=1.0"/><meta name="HandheldFriendly" content="true"/><meta name="format-detection" content="telephone=no"/><meta name="twitter:dnt" content="on"/><meta property="fb:pages" content="105702905593,307851324523,12852567813,480760515417232,288240529145,316774245761,984197758297116,7457442370,207033189701,207346283795,222959748728,207042068180,72983690774,339413234035,343689323559,345828366626,234821559861394,335699426867,10150105039485602,338983127562,364516539001,337922332042,115637335153191,372011535931,333376634908,127590790608884,141923885872653,655037391286291,320774811368833,1740489152861748,469700473093040,386754203367,556449374478585,340999853450,350771491032,1120648627959218,342017778245,338463361591,138772706196968,1641688532739111,326312697536,353120110016,343366744658,335009494554,347261603104,350924013892,257724773860,361203926417,367174215398,284154645394,334501182354,350279743224,154340691263654,147848678611852,361381078011,362831597677,10150095255780118"/><meta name="referrer" content="no-referrer-when-downgrade"/><meta name="apple-mobile-web-app-title" content="chron"/><meta name="id" content="article-19700906-wcm"/><meta id="internalEid" name="internal:eid" content="article-19700906"/><link rel="canonical" href="https://smallbusiness.chron.com/profit-vs-not-for-profit-organization-4158.html"/><meta name="date.release" content="2010-08-05 07:00:00"/><meta name="time.release" content="2010-08-05 07:00:00"/><meta name="subject" content="Not-for-Profit Organization, Internal Revenue Service, Business Entity Creation Whether, Texas, EIN, Tax-Exempt Status, IRS Exempt Organization Status Check, IRS Code 501, Nonprofit Organizations FAQs Residual Rewards: Non Profit, Girl Scout Cookies"/><meta name="news_keywords" content="Not-for-Profit Organization, Internal Revenue Service, Business Entity Creation Whether, Texas, EIN, Tax-Exempt Status, IRS Exempt Organization Status Check, IRS Code 501, Nonprofit Organizations FAQs Residual Rewards: Non Profit, Girl Scout Cookies"/><meta name="sections" content="Business Models & Organizational Structure, Not for Profit Organizations"/><meta name="eyebrows" content="[{"url":"/business-models-organizational-structure/","title":"Business Models & Organizational Structure"},{"url":"/not-for-profit-organizations/","title":"Not for Profit Organizations"}]"/><meta property="article:published_time" content="2010-08-05 07:00:00"/><meta property="article:content_tier" content="free"/><meta property="article:modified_time" content="2019-02-07T03:01:55Z"/><meta name="twitter:card" content="summary_large_image"/><meta name="twitter:image" content="https://s.hdnux.com/photos/01/41/75/31/25679444/3/rawImage.jpg"/><meta name="twitter:description" content="For Profit vs. Not-for-Profit Organization. A nonprofit organization is formed for the..."/><meta name="twitter:site" content="@chron"/><meta property="fb:app_id" content="314935171989989"/><meta property="fb:admins" content="100006394927810"/><meta name="author" content="Kimberlee Leonard"/><meta name="author.name" content="Kimberlee Leonard"/><title>For Profit vs. Not-for-Profit Organization</title><meta name="description" content="For Profit vs. Not-for-Profit Organization. A nonprofit organization is formed for the common good of the public. Nonprofit organizations are usually formed for some specific religious, charitable or educational purpose. 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A nonprofit organization is formed for the common good of the public. Nonprofit organizations are usually formed for some specific religious, charitable or educational purpose. A for-profit organization may be f"/><meta property="og:datePublished" content="2010-08-05 07:00:00"/><meta name="og:locale" content="en_US"/><script type="application/ld+json" id="page-json-ld-0">{"@context":"https://schema.org","@type":"NewsArticle","mainEntityOfPage":"https://smallbusiness.chron.com/profit-vs-not-for-profit-organization-4158.html","url":"https://smallbusiness.chron.com/profit-vs-not-for-profit-organization-4158.html","headline":"For Profit vs. Not-for-Profit Organization","articleSection":"Business Models & Organizational Structure/Not for Profit Organizations","publisher":{"@type":"NewsMediaOrganization","name":"Chron - Small Business","logo":{"@type":"ImageObject","width":600,"height":60,"url":"https://smallbusiness.chron.com/img/ldjson_logo.png"},"location":{"@type":"Place","name":"Chron - Small Business","address":{"@type":"PostalAddress","addressLocality":"Houston","addressRegion":"TX"}},"url":"https://smallbusiness.chron.com","sameAs":["https://www.facebook.com/chroncom","https://twitter.com/chron","https://www.instagram.com/chron_com/","https://www.linkedin.com/company/chron-com/"]},"description":"For Profit vs. Not-for-Profit Organization. A nonprofit organization is formed for the common good of the public. Nonprofit organizations are usually formed for some specific religious, charitable or educational purpose. A for-profit organization may be f","image":{"@type":"imageObject","width":2048,"height":1367,"url":"https://s.hdnux.com/photos/01/41/75/31/25679444/3/rawImage.jpg","thumbnailUrl":"https://s.hdnux.com/photos/01/41/75/31/25679444/3/square_small.jpg"},"articleBody":"For-profit and not-for-profit organizations share many qualities but also have some distinct differences. At face value, the term \"for-profit\" suggests a company seeking to make money (and usually as much as possible), while the term \"not-for-profit\" suggests a company that doesn't make money. Actually, not-for-profit organizations seek to generate revenues to serve a specific organization mission, transferring a lot of the profit to defined community efforts. Examples of not-for-profits might be charities, clubs or community organizations. For-profit organizations are everyday businesses. Business Entity Creation Whether a for-profit or a not-for-profit, the early stages of the entity are the same. The early stages begin with filing for a business entity in the state in which the organization opens its operations. Business entity types include: corporations, limited liability companies, partnerships or sole proprietors. Entities are initially filed with the secretary of state. There are different tax benefits with these entities that suit different business owners of for-profit companies. Most not-for-profits start as corporations. Applying for an聽 Employer Identification Number Once a business entity is formed, it then applies for an Employer Identification Number (EIN) with the Internal Revenue Service (IRS). This is the official tax number any business entity needs to open bank accounts, to apply for loans and to file tax returns. Once the EIN is obtained, a not-for-profit must apply for \"tax exempt status\" with the IRS, using Form 1024 seeking exempt status under IRS Code 501(c). Tax-Exempt Status Once an organization is given tax-exempt status, it is considered a not-for-profit or charity type of business. Even though these are tax-exempt organizations, they still file annual tax returns like for-profit companies. Tax-exempt organizations must adhere to public disclosure requirements, and must make meeting minutes and financial documents of the previous three years publicly available upon request by any one in the public. The IRS Exempt Organization Status Check is a database that maintains the current exempt status for all tax-exempt organizations. Methods of Generating Revenues A significant distinction between a for-profit and a not-for-profit is how each type of organization generates revenues. For-profit companies generally sell a product or provide a service. A not-for-profit organization usually operates fundraising efforts with donations, events and corporate sponsors. Not-for-profits might still sell products. Girl Scout Cookies are a prime example of a product that's produced and sold by a not-for-profit that generates revenues to support the mission of the organization. Organization Oversight and Management As business entities, both for-profit and not-for-profit organizations maintain a separation of assets and liabilities between employees and executives. Both entities must vote for an annual board of directors that holds regular meetings to review the progress and direction of the company. Not-for-profits usually have larger boards of directors that might be voluntary members bringing in resources to help expand the organization's community outreach and fundraising efforts. The volunteer labor force is distinct to the not-for-profit organization, whereas for-profits have paid employees and contractors that perform duties. Larger not-for-profits, including some local agencies, do have payrolled employees running the organization. References Strategic CFO: What \"Non-profit\" organizations have in common with \"For-profit\" companies IRS.gov: Application for recognition of exemption Resources Texas Secretary of State: Nonprofit Organizations FAQs Residual Rewards: Non Profit vs. Profit Business Plans","datePublished":"2010-08-05T07:00:00Z","dateModified":"2019-02-07T03:01:55Z","author":[{"@type":"Person","name":"Kimberlee Leonard"}],"inLanguage":"en"}</script><script type="application/ld+json" id="page-json-ld-1">{"@context":"https://schema.org","@type":"WebPage","breadcrumb":{"@type":"BreadcrumbList","itemListElement":[{"@type":"ListItem","position":1,"item":{"@type":"WebSite","url":"https://smallbusiness.chron.com/","@id":"https://smallbusiness.chron.com/","name":"Chron - Small Business"}},{"@type":"ListItem","position":2,"item":{"@type":"WebSite","url":"https://smallbusiness.chron.com/business-models-organizational-structure/","@id":"https://smallbusiness.chron.com/business-models-organizational-structure/","name":"Business Models & Organizational Structure"}},{"@type":"ListItem","position":3,"item":{"@type":"WebSite","url":"https://smallbusiness.chron.com/not-for-profit-organizations/","@id":"https://smallbusiness.chron.com/not-for-profit-organizations/","name":"Not for Profit Organizations"}}]},"publisher":{"@type":"NewsMediaOrganization","name":"Chron - Small Business","url":"https://smallbusiness.chron.com/","address":{"@type":"PostalAddress","addressLocality":"Houston","addressRegion":"TX"},"logo":{"@type":"ImageObject","url":"https://smallbusiness.chron.com/img/ldjson_logo.png","width":"600","height":"60"},"sameAs":["https://www.facebook.com/chroncom","https://twitter.com/chron","https://www.instagram.com/chron_com/","https://www.linkedin.com/company/chron-com/"]}}</script><script data-newrelic="true">window.NREUM||(NREUM={});NREUM.info = {"agent":"","beacon":"bam.nr-data.net","errorBeacon":"bam.nr-data.net","licenseKey":"NRJS-bef5859a29fb3c538c2","applicationID":"584873719","agentToken":null,"applicationTime":140.311965,"transactionName":"M11VbURXX0NXAUdbWgoXYFxUcENRWwdEXUcPbUVQGXhUSEIIQB1yIWwYFm0YHx5XDl9v","queueTime":0,"ttGuid":"45cf1ef077abce51"}; (window.NREUM||(NREUM={})).init={privacy:{cookies_enabled:true},ajax:{deny_list:[]},session_replay:{sampling_rate:0.001,mask_text_selector:"*",block_selector:"",mask_input_options:{},mask_all_inputs:true,enabled:true,error_sampling_rate:0.5},session_trace:{sampling_rate:0.0,mode:"FIXED_RATE",enabled:true,error_sampling_rate:0.0},distributed_tracing:{enabled:true}};(window.NREUM||(NREUM={})).loader_config={agentID:"594374097",accountID:"3540744",trustKey:"41019",xpid:"VwMDUVFXDBAFXFVaAAIAV10=",licenseKey:"NRJS-bef5859a29fb3c538c2",applicationID:"584873719"};;/*! 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var(--fontE), var(--fallbackFontE);--article-weight: var(--fontE-weight);--article-style: var(--fontE-style);--article-size: 1.125rem;--article-letterspacing: 0px;--highlight-lineheight: 1.2em;--highlight-font: var(--fontC), var(--fallbackFontC);--highlight-weight: var(--fontC-weight);--highlight-style: var(--fontC-style);--highlight-lg-size: 2.281rem;--highlight-md-size: 2.281rem;--highlight-sm-size: 2rem;--highlight-letterspacing: 0.75px;--latestNews-lineheight: 1.2em;--latestNews-font: var(--fontB), var(--fallbackFontB);--latestNews-weight: var(--fontB-weight);--latestNews-style: var(--fontB-style);--latestNews-size: 2rem;--latestNews-letterspacing: 0.75px;--buyArea-lineheight: 1.2em;--buyArea-font: var(--fontB), var(--fallbackFontB);--buyArea-weight: var(--fontB-weight);--buyArea-style: var(--fontB-style);--buyArea-lg-size: 1.25rem;--buyArea-md-size: 1.25rem;--buyArea-sm-size: 1.125rem;--buyArea-letterspacing: 0px;--mostPopular-lineheight: 1.2em;--mostPopular-font: var(--fontB), var(--fallbackFontB);--mostPopular-weight: var(--fontB-weight);--mostPopular-style: var(--fontB-style);--mostPopular-lg-size: 2.887rem;--mostPopular-md-size: 2.887rem;--mostPopular-sm-size: 2rem;--mostPopular-letterspacing: 0.75px;--nameplate-lineheight: 1.1em;--nameplate-font: var(--fontB), var(--fallbackFontB);--nameplate-weight: var(--fontB-weight);--nameplate-style: var(--fontB-style);--nameplate-lg-size: 4.624rem;--nameplate-sm-size: 1.8125rem;--nameplate-letterspacing: 0.75px;--nameplateSubsection-lineheight: 1.3em;--nameplateSubsection-font: var(--fontD), var(--fallbackFontD);--nameplateSubsection-weight: var(--fontD-weight);--nameplateSubsection-style: var(--fontD-style);--nameplateSubsection-size: 1.125rem;--nameplateSubsection-letterspacing: 0px;--abstract-lineheight: 1.3em;--abstract-font: var(--fontF), var(--fallbackFontF);--abstract-weight: var(--fontF-weight);--abstract-style: var(--fontF-style);--abstract-size: 1rem;--abstract-letterspacing: 0px;--subCardAbstract-lineheight: 1.2em;--subCardAbstract-font: var(--fontF), var(--fallbackFontF);--subCardAbstract-weight: var(--fontF-weight);--subCardAbstract-style: var(--fontF-style);--subCardAbstract-lg-size: 0.8125rem;--subCardAbstract-md-size: 0.8125rem;--subCardAbstract-sm-size: 0.6875rem;--subCardAbstract-letterspacing: 0px;--smallTimestamp-lineheight: 1.2em;--smallTimestamp-font: var(--fontF), var(--fallbackFontF);--smallTimestamp-weight: var(--fontF-weight);--smallTimestamp-style: var(--fontF-style);--smallTimestamp-size: 0.889rem;--smallTimestamp-letterspacing: 0px;--cardByline-lineheight: 1.3em;--cardByline-font: var(--fontE), var(--fallbackFontE);--cardByline-weight: var(--fontE-weight);--cardByline-style: var(--fontE-style);--cardByline-size: 0.889rem;--cardByline-letterspacing: 0.5px;--largeTag-lineheight: 1.2em;--largeTag-font: var(--fontA), var(--fallbackFontA);--largeTag-weight: var(--fontA-weight);--largeTag-style: var(--fontA-style);--largeTag-size: 0.889rem;--largeTag-letterspacing: 4px;--smallBoldTag-lineheight: 1.2em;--smallBoldTag-font: var(--fontA), var(--fallbackFontA);--smallBoldTag-weight: var(--fontA-weight);--smallBoldTag-style: var(--fontA-style);--smallBoldTag-size: 0.889rem;--smallBoldTag-letterspacing: 1px;--smallTag-lineheight: 1.2em;--smallTag-font: var(--fontA), var(--fallbackFontA);--smallTag-weight: var(--fontA-weight);--smallTag-style: var(--fontA-style);--smallTag-size: 0.889rem;--smallTag-letterspacing: 1px;--authorTitle-lineheight: 1.2em;--authorTitle-font: var(--fontG), var(--fallbackFontG);--authorTitle-weight: var(--fontG-weight);--authorTitle-style: var(--fontG-style);--authorTitle-size: 0.889rem;--authorTitle-letterspacing: 0px;--authorName-lineheight: 1.2em;--authorName-font: var(--fontF), var(--fallbackFontF);--authorName-weight: var(--fontF-weight);--authorName-style: var(--fontF-style);--authorName-size: 0.889rem;--authorName-letterspacing: 0px;--credit-lineheight: 1.2em;--credit-font: var(--fontH), var(--fallbackFontH);--credit-weight: var(--fontH-weight);--credit-style: var(--fontH-style);--credit-lg-size: 1rem;--credit-sm-size: 0.889rem;--credit-letterspacing: 0px;--featureAbstract-lineheight: 1.2em;--featureAbstract-font: var(--fontF), var(--fallbackFontF);--featureAbstract-weight: var(--fontF-weight);--featureAbstract-style: var(--fontF-style);--featureAbstract-lg-size: 1.8125rem;--featureAbstract-md-size: 1.4375rem;--featureAbstract-sm-size: 1.125rem;--featureAbstract-letterspacing: 0px;--featureByline-lineheight: 1.2em;--featureByline-font: var(--fontD), var(--fallbackFontD);--featureByline-weight: var(--fontD-weight);--featureByline-style: var(--fontD-style);--featureByline-size: 1.125rem;--featureByline-letterspacing: 0px;--featureHeadline-lineheight: 1.1em;--featureHeadline-font: var(--fontD), var(--fallbackFontD);--featureHeadline-weight: var(--fontD-weight);--featureHeadline-style: var(--fontD-style);--featureHeadline-lg-size: 3.625rem;--featureHeadline-md-size: 3.25rem;--featureHeadline-sm-size: 2.5625rem;--featureHeadline-letterspacing: 0.75px;--featureDeck-lineheight: 1.2em;--featureDeck-font: var(--fontG), var(--fallbackFontG);--featureDeck-weight: var(--fontG-weight);--featureDeck-style: var(--fontG-style);--featureDeck-lg-size: 1.4375rem;--featureDeck-md-size: 1.4375rem;--featureDeck-sm-size: 1.125rem;--featureDeck-letterspacing: 0px;--featureBreadcrumb-lineheight: 1.2em;--featureBreadcrumb-font: var(--fontD), var(--fallbackFontD);--featureBreadcrumb-weight: var(--fontD-weight);--featureBreadcrumb-style: var(--fontD-style);--featureBreadcrumb-lg-size: 1.125rem;--featureBreadcrumb-md-size: 1.125rem;--featureBreadcrumb-sm-size: 1rem;--featureBreadcrumb-letterspacing: 0.5px;--featureHomeButton-lineheight: 1.2em;--featureHomeButton-font: var(--fontE), var(--fallbackFontE);--featureHomeButton-weight: var(--fontE-weight);--featureHomeButton-style: var(--fontE-style);--featureHomeButton-size: 1.125rem;--featureHomeButton-letterspacing: 0px;--featureDropcap-lineheight: 1.1em;--featureDropcap-font: var(--fontB), var(--fallbackFontB);--featureDropcap-weight: var(--fontB-weight);--featureDropcap-style: var(--fontB-style);--featureDropcap-size: 4.11rem;--featureDropcap-letterspacing: 0px;--featureTag-lineheight: 1.2em;--featureTag-font: var(--fontA), var(--fallbackFontA);--featureTag-weight: var(--fontA-weight);--featureTag-style: var(--fontA-style);--featureTag-size: 1rem;--featureTag-letterspacing: 0px;--standardHeadline-lineheight: 1.1em;--standardHeadline-font: var(--fontD), var(--fallbackFontD);--standardHeadline-weight: var(--fontD-weight);--standardHeadline-style: var(--fontD-style);--standardHeadline-lg-size: 2.875rem;--standardHeadline-md-size: 2.281rem;--standardHeadline-sm-size: 1.802rem;--standardHeadline-letterspacing: 0.75px;--deck-lineheight: 1.3em;--deck-font: var(--fontG), var(--fallbackFontG);--deck-weight: var(--fontG-weight);--deck-style: var(--fontG-style);--deck-lg-size: 1.25rem;--deck-md-size: 1.125rem;--deck-sm-size: 1rem;--deck-letterspacing: 0px;--breadcrumb-lineheight: 1.2em;--breadcrumb-font: var(--fontA), var(--fallbackFontA);--breadcrumb-weight: var(--fontA-weight);--breadcrumb-style: var(--fontA-style);--breadcrumb-lg-size: 1rem;--breadcrumb-md-size: 0.889rem;--breadcrumb-sm-size: 0.889rem;--breadcrumb-letterspacing: 2px;--byline-lineheight: 1.2em;--byline-font: var(--fontD), var(--fallbackFontD);--byline-weight: var(--fontD-weight);--byline-style: var(--fontD-style);--byline-lg-size: 1rem;--byline-sm-size: 0.889rem;--byline-letterspacing: 0px;--largeTimestamp-lineheight: 1.2em;--largeTimestamp-font: var(--fontG), var(--fallbackFontG);--largeTimestamp-weight: var(--fontG-weight);--largeTimestamp-style: var(--fontG-style);--largeTimestamp-size: 1rem;--largeTimestamp-letterspacing: 0px;--photoCaption-lineheight: 1.2em;--photoCaption-font: var(--fontG), var(--fallbackFontG);--photoCaption-weight: var(--fontG-weight);--photoCaption-style: var(--fontG-style);--photoCaption-size: 0.889rem;--photoCaption-letterspacing: 0px;--photoCredit-lineheight: 1.2em;--photoCredit-font: var(--fontG), var(--fallbackFontG);--photoCredit-weight: var(--fontG-weight);--photoCredit-style: var(--fontG-style);--photoCredit-size: 0.8125rem;--photoCredit-letterspacing: 0px;--primaryInlineHeader-lineheight: 1.1em;--primaryInlineHeader-font: var(--fontE), var(--fallbackFontE);--primaryInlineHeader-weight: var(--fontE-weight);--primaryInlineHeader-style: var(--fontE-style);--primaryInlineHeader-lg-size: 2rem;--primaryInlineHeader-sm-size: 1.8125rem;--primaryInlineHeader-letterspacing: 0px;--secondaryInlineHeader-lineheight: 1.2em;--secondaryInlineHeader-font: var(--fontE), var(--fallbackFontE);--secondaryInlineHeader-weight: var(--fontE-weight);--secondaryInlineHeader-style: var(--fontE-style);--secondaryInlineHeader-size: 1.4375rem;--secondaryInlineHeader-letterspacing: 0px;--tertiaryInlineHeader-lineheight: 1.2em;--tertiaryInlineHeader-font: var(--fontE), var(--fallbackFontE);--tertiaryInlineHeader-weight: var(--fontE-weight);--tertiaryInlineHeader-style: var(--fontE-style);--tertiaryInlineHeader-size: 1.125rem;--tertiaryInlineHeader-letterspacing: 0px;--articleBody-lineheight: 1.8em;--articleBody-font: var(--fontJ), var(--fallbackFontJ);--articleBody-weight: var(--fontJ-weight);--articleBody-style: var(--fontJ-style);--articleBody-size: 1.125rem;--articleBody-letterspacing: 0px;--moduleBody-lineheight: 1.5em;--moduleBody-font: var(--fontG), var(--fallbackFontG);--moduleBody-weight: var(--fontG-weight);--moduleBody-style: var(--fontG-style);--moduleBody-size: 1rem;--moduleBody-letterspacing: 0px;--pullquote-lineheight: 1.3em;--pullquote-font: var(--fontE), var(--fallbackFontE);--pullquote-weight: var(--fontE-weight);--pullquote-style: var(--fontE-style);--pullquote-lg-size: 2rem;--pullquote-md-size: 2rem;--pullquote-sm-size: 1.25rem;--pullquote-letterspacing: 0px;--pullquoteAttribution-lineheight: 1.2em;--pullquoteAttribution-font: var(--fontG), var(--fallbackFontG);--pullquoteAttribution-weight: var(--fontG-weight);--pullquoteAttribution-style: var(--fontG-style);--pullquoteAttribution-lg-size: 1.25rem;--pullquoteAttribution-md-size: 1.25rem;--pullquoteAttribution-sm-size: 1.125rem;--pullquoteAttribution-letterspacing: 0px;--blockquote-lineheight: 1.3em;--blockquote-font: var(--fontH), var(--fallbackFontH);--blockquote-weight: var(--fontH-weight);--blockquote-style: var(--fontH-style);--blockquote-size: 1.125rem;--blockquote-letterspacing: 0px;--dropcapCharacter-lineheight: 1.1em;--dropcapCharacter-font: var(--fontB), var(--fallbackFontB);--dropcapCharacter-weight: var(--fontB-weight);--dropcapCharacter-style: var(--fontB-style);--dropcapCharacter-size: 5.852rem;--dropcapCharacter-letterspacing: 0px;--numeral-lineheight: 1.2em;--numeral-font: var(--fontE), var(--fallbackFontE);--numeral-weight: var(--fontE-weight);--numeral-style: var(--fontE-style);--numeral-lg-size: 2rem;--numeral-md-size: 2rem;--numeral-sm-size: 1.25rem;--numeral-xs-size: 0.889rem;--numeral-letterspacing: 0px;--button-lineheight: 1.5em;--button-font: var(--fontE), var(--fallbackFontE);--button-weight: var(--fontE-weight);--button-style: var(--fontE-style);--button-lg-size: 1rem;--button-md-size: 1rem;--button-sm-size: 0.79rem;--button-letterspacing: 0px;--standardButton-lineheight: 1.5em;--standardButton-font: var(--fontE), var(--fallbackFontE);--standardButton-weight: var(--fontE-weight);--standardButton-style: var(--fontE-style);--standardButton-lg-size: 1rem;--standardButton-md-size: 1rem;--standardButton-sm-size: 0.8125rem;--standardButton-letterspacing: 0px;--underlinedButton-lineheight: 1.5em;--underlinedButton-font: var(--fontE), var(--fallbackFontE);--underlinedButton-weight: var(--fontE-weight);--underlinedButton-style: var(--fontE-style);--underlinedButton-lg-size: 1rem;--underlinedButton-md-size: 1rem;--underlinedButton-sm-size: 0.8125rem;--underlinedButton-letterspacing: 0px;--alertBarHeadline-lineheight: 1.3em;--alertBarHeadline-font: var(--fontD), var(--fallbackFontD);--alertBarHeadline-weight: var(--fontD-weight);--alertBarHeadline-style: var(--fontD-style);--alertBarHeadline-lg-size: 1.25rem;--alertBarHeadline-md-size: 1.25rem;--alertBarHeadline-sm-size: 1rem;--alertBarHeadline-letterspacing: 0px;--alertBarKicker-lineheight: 1.2em;--alertBarKicker-font: var(--fontD), var(--fallbackFontD);--alertBarKicker-weight: var(--fontD-weight);--alertBarKicker-style: var(--fontD-style);--alertBarKicker-size: 0.889rem;--alertBarKicker-letterspacing: 0px;--sponsorLabel-lineheight: 1.2em;--sponsorLabel-font: var(--fontG), var(--fallbackFontG);--sponsorLabel-weight: var(--fontG-weight);--sponsorLabel-style: var(--fontG-style);--sponsorLabel-lg-size: 1.125rem;--sponsorLabel-md-size: 1.125rem;--sponsorLabel-sm-size: 1rem;--sponsorLabel-xs-size: 0.889rem;--sponsorLabel-letterspacing: 1px;--collectionHeaderTag-lineheight: 1.2em;--collectionHeaderTag-font: var(--fontA), var(--fallbackFontA);--collectionHeaderTag-weight: var(--fontA-weight);--collectionHeaderTag-style: var(--fontA-style);--collectionHeaderTag-size: 0.6875rem;--collectionHeaderTag-letterspacing: 1px;--videoTitle-lineheight: 1.2em;--videoTitle-font: var(--fontE), var(--fallbackFontE);--videoTitle-weight: var(--fontE-weight);--videoTitle-style: var(--fontE-style);--videoTitle-lg-size: 1.25rem;--videoTitle-sm-size: 1rem;--videoTitle-letterspacing: 0px;--hamburgerMenuSection-lineheight: 1.2em;--hamburgerMenuSection-font: var(--fontD), var(--fallbackFontD);--hamburgerMenuSection-weight: var(--fontD-weight);--hamburgerMenuSection-style: var(--fontD-style);--hamburgerMenuSection-size: 1.25rem;--hamburgerMenuSection-letterspacing: 0px;--hamburgerMenuSubsection-lineheight: 1.3em;--hamburgerMenuSubsection-font: var(--fontG), var(--fallbackFontG);--hamburgerMenuSubsection-weight: var(--fontG-weight);--hamburgerMenuSubsection-style: var(--fontG-style);--hamburgerMenuSubsection-size: 1.125rem;--hamburgerMenuSubsection-letterspacing: 0px;--title-lineheight: 1.2em;--title-font: var(--fontE), var(--fallbackFontE);--title-weight: var(--fontE-weight);--title-style: var(--fontE-style);--title-size: 1.125rem;--title-letterspacing: 0px;--time-lineheight: 1.3em;--time-font: var(--fontE), var(--fallbackFontE);--time-weight: var(--fontE-weight);--time-style: var(--fontE-style);--time-size: 0.889rem;--time-letterspacing: 0px;--dateAndPrice-lineheight: 1.3em;--dateAndPrice-font: var(--fontG), var(--fallbackFontG);--dateAndPrice-weight: var(--fontG-weight);--dateAndPrice-style: var(--fontG-style);--dateAndPrice-size: 0.889rem;--dateAndPrice-letterspacing: 0px;--uiLabel1-lineheight: 1.2em;--uiLabel1-font: var(--fontD), var(--fallbackFontD);--uiLabel1-weight: var(--fontD-weight);--uiLabel1-style: var(--fontD-style);--uiLabel1-size: 1.125rem;--uiLabel1-letterspacing: 0px;--uiLabel2-lineheight: 1.2em;--uiLabel2-font: var(--fontD), var(--fallbackFontD);--uiLabel2-weight: var(--fontD-weight);--uiLabel2-style: var(--fontD-style);--uiLabel2-size: 0.889rem;--uiLabel2-letterspacing: 0px;--uiHeader1-lineheight: 1.1em;--uiHeader1-font: var(--fontA), var(--fallbackFontA);--uiHeader1-weight: var(--fontA-weight);--uiHeader1-style: var(--fontA-style);--uiHeader1-size: 2.887rem;--uiHeader1-letterspacing: 0px;--uiHeader2-lineheight: 1.2em;--uiHeader2-font: var(--fontA), var(--fallbackFontA);--uiHeader2-weight: var(--fontA-weight);--uiHeader2-style: var(--fontA-style);--uiHeader2-size: 2.281rem;--uiHeader2-letterspacing: 0px;--uiHeader3-lineheight: 1.2em;--uiHeader3-font: var(--fontA), var(--fallbackFontA);--uiHeader3-weight: var(--fontA-weight);--uiHeader3-style: var(--fontA-style);--uiHeader3-size: 2rem;--uiHeader3-letterspacing: 0px;--uiHeader4-lineheight: 1.2em;--uiHeader4-font: var(--fontE), var(--fallbackFontE);--uiHeader4-weight: var(--fontE-weight);--uiHeader4-style: var(--fontE-style);--uiHeader4-size: 1.4375rem;--uiHeader4-letterspacing: 0px;--uiHeader5-lineheight: 1.2em;--uiHeader5-font: var(--fontA), var(--fallbackFontA);--uiHeader5-weight: var(--fontA-weight);--uiHeader5-style: var(--fontA-style);--uiHeader5-size: 1.4375rem;--uiHeader5-letterspacing: 0px;--uiHeader6-lineheight: 1.2em;--uiHeader6-font: var(--fontE), var(--fallbackFontE);--uiHeader6-weight: var(--fontE-weight);--uiHeader6-style: var(--fontE-style);--uiHeader6-size: 1.25rem;--uiHeader6-letterspacing: 0px;--uiHeader7-lineheight: 1.2em;--uiHeader7-font: var(--fontB), var(--fallbackFontB);--uiHeader7-weight: var(--fontB-weight);--uiHeader7-style: var(--fontB-style);--uiHeader7-size: 1.125rem;--uiHeader7-letterspacing: 0px;--uiHeader8-lineheight: 1.2em;--uiHeader8-font: var(--fontE), var(--fallbackFontE);--uiHeader8-weight: var(--fontE-weight);--uiHeader8-style: var(--fontE-style);--uiHeader8-size: 1.125rem;--uiHeader8-letterspacing: 0px;--uiHeader9-lineheight: 1.2em;--uiHeader9-font: var(--fontE), var(--fallbackFontE);--uiHeader9-weight: var(--fontE-weight);--uiHeader9-style: var(--fontE-style);--uiHeader9-size: 1rem;--uiHeader9-letterspacing: 0px;--uiHeader10-lineheight: 1.2em;--uiHeader10-font: var(--fontD), var(--fallbackFontD);--uiHeader10-weight: var(--fontD-weight);--uiHeader10-style: var(--fontD-style);--uiHeader10-size: 1rem;--uiHeader10-letterspacing: 0px;--uiHeader11-lineheight: 1.2em;--uiHeader11-font: var(--fontE), var(--fallbackFontE);--uiHeader11-weight: var(--fontE-weight);--uiHeader11-style: var(--fontE-style);--uiHeader11-size: 0.8125rem;--uiHeader11-letterspacing: 0px;--uiHeader12-lineheight: 1.2em;--uiHeader12-font: var(--fontE), var(--fallbackFontE);--uiHeader12-weight: var(--fontE-weight);--uiHeader12-style: var(--fontE-style);--uiHeader12-size: 0.6875rem;--uiHeader12-letterspacing: 0px;--successMessage-lineheight: 1.2em;--successMessage-font: var(--fontE), var(--fallbackFontE);--successMessage-weight: var(--fontE-weight);--successMessage-style: var(--fontE-style);--successMessage-lg-size: 1rem;--successMessage-md-size: 0.889rem;--successMessage-sm-size: 0.8125rem;--successMessage-letterspacing: 0px;--bigSubheader-lineheight: 1.2em;--bigSubheader-font: var(--fontE), var(--fallbackFontE);--bigSubheader-weight: var(--fontE-weight);--bigSubheader-style: var(--fontE-style);--bigSubheader-lg-size: 1.6875rem;--bigSubheader-sm-size: 1.125rem;--bigSubheader-letterspacing: 0px;--bigItalic1-lineheight: 1.2em;--bigItalic1-font: var(--fontH), var(--fallbackFontH);--bigItalic1-weight: var(--fontH-weight);--bigItalic1-style: var(--fontH-style);--bigItalic1-size: 1.8125rem;--bigItalic1-letterspacing: 0px;--bigItalic2-lineheight: 1.2em;--bigItalic2-font: var(--fontH), var(--fallbackFontH);--bigItalic2-weight: var(--fontH-weight);--bigItalic2-style: var(--fontH-style);--bigItalic2-size: 1.125rem;--bigItalic2-letterspacing: 0px;--bigButton1-lineheight: 1.2em;--bigButton1-font: var(--fontD), var(--fallbackFontD);--bigButton1-weight: var(--fontD-weight);--bigButton1-style: var(--fontD-style);--bigButton1-size: 2rem;--bigButton1-letterspacing: 0px;--bigButton2-lineheight: 1.2em;--bigButton2-font: var(--fontD), var(--fallbackFontD);--bigButton2-weight: var(--fontD-weight);--bigButton2-style: var(--fontD-style);--bigButton2-size: 1.125rem;--bigButton2-letterspacing: 0px;--uiTextExtraLarge-lineheight: 1.3em;--uiTextExtraLarge-font: var(--fontG), var(--fallbackFontG);--uiTextExtraLarge-weight: var(--fontG-weight);--uiTextExtraLarge-style: var(--fontG-style);--uiTextExtraLarge-size: 1.125rem;--uiTextExtraLarge-letterspacing: 0px;--uiTextLarge-lineheight: 1.3em;--uiTextLarge-font: var(--fontG), var(--fallbackFontG);--uiTextLarge-weight: var(--fontG-weight);--uiTextLarge-style: var(--fontG-style);--uiTextLarge-size: 1rem;--uiTextLarge-letterspacing: 0px;--uiTextMedium-lineheight: 1.3em;--uiTextMedium-font: var(--fontG), var(--fallbackFontG);--uiTextMedium-weight: var(--fontG-weight);--uiTextMedium-style: 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srcSet="https://s.hdnux.com/photos/01/41/75/31/25679444/3/ratio3x2_720.webp"/><source type="image/webp" media="(min-width: 480px)" srcSet="https://s.hdnux.com/photos/01/41/75/31/25679444/3/ratio3x2_640.webp"/><source type="image/webp" media="(min-width: 360px)" srcSet="https://s.hdnux.com/photos/01/41/75/31/25679444/3/ratio3x2_480.webp"/><source type="image/webp" media="(min-width: 240px)" srcSet="https://s.hdnux.com/photos/01/41/75/31/25679444/3/ratio3x2_360.webp"/><source type="image/webp" media="(max-width: 239px)" srcSet="https://s.hdnux.com/photos/01/41/75/31/25679444/3/ratio3x2_240.webp"/><img alt="" loading="eager" srcSet="https://s.hdnux.com/photos/01/41/75/31/25679444/3/ratio3x2_80.jpg 80w, https://s.hdnux.com/photos/01/41/75/31/25679444/3/ratio3x2_160.jpg 160w, https://s.hdnux.com/photos/01/41/75/31/25679444/3/ratio3x2_240.jpg 240w, https://s.hdnux.com/photos/01/41/75/31/25679444/3/ratio3x2_360.jpg 360w, https://s.hdnux.com/photos/01/41/75/31/25679444/3/ratio3x2_480.jpg 480w, https://s.hdnux.com/photos/01/41/75/31/25679444/3/ratio3x2_640.jpg 640w, https://s.hdnux.com/photos/01/41/75/31/25679444/3/ratio3x2_720.jpg 720w, https://s.hdnux.com/photos/01/41/75/31/25679444/3/ratio3x2_960.jpg 960w, https://s.hdnux.com/photos/01/41/75/31/25679444/3/ratio3x2_1080.jpg 1080w, https://s.hdnux.com/photos/01/41/75/31/25679444/3/ratio3x2_1440.jpg 1440w, https://s.hdnux.com/photos/01/41/75/31/25679444/3/ratio3x2_1920.jpg 1920w" sizes="" style="aspect-ratio:3 / 2" class="x100 y100 opc bgpc ofcv bgscv block bg-gray200 mnh0px fill"/></picture></div><figcaption id="mediaCaptionAria" class="f fdc g2 rel pt8 px20 sm:px0"><span class="photoCredit c-gray600 block mr48"><span>Getty</span></span></figcaption></figure><div class="r1udwkp5 d1uy5mhj articleBody mb32" data-block-type="text" data-dropcap="false"><p>For-profit and not-for-profit organizations share many qualities but also have some distinct differences. At face value, the term "for-profit" suggests a company seeking to make money (and usually as much as possible), while the term "not-for-profit" suggests a company that doesn't make money. Actually, not-for-profit organizations seek to generate revenues to serve a specific organization mission, transferring a lot of the profit to defined community efforts.</p></div><div data-eid="item-102648" id="" class="mb32 ar16-9"><img src="https://cdn-channels-pixel.ex.co/events/0012000001fxZm9AAE?integrationType=DEFAULT&template=design%2Farticle%2Fplatypus_two_column.tpl" alt="" class="x1px y1px vh abs" aria-hidden="true" width="1" height="1"/><div id="138e0bb9-ef62-44ec-94fd-4fd92da90c41"></div></div><div class="r1udwkp5 d1uy5mhj articleBody mb32" data-block-type="text" data-dropcap="false"><p>Examples of not-for-profits might be charities, clubs or community organizations. For-profit organizations are everyday businesses.</p></div><div class="r1udwkp5 d1uy5mhj articleBody mb32" data-block-type="text" data-dropcap="false"><h2>Business Entity Creation</h2></div><div class="r1udwkp5 d1uy5mhj articleBody mb32" data-block-type="text" data-dropcap="false"><p>Whether a for-profit or a not-for-profit, the early stages of the entity are the same. The early stages begin with filing for a business entity in the state in which the organization opens its operations. Business entity types include: corporations, limited liability companies, partnerships or sole proprietors.</p></div><div class="pt16 sy16 bb bt b-gray300 mb32"><div class=""><p class="uiHeader11 f aic jcc ttu">Advertisement</p><p class="uiTextSmall f aic jcc">Article continues below this ad</p></div><div data-block-type="ad" data-small-id="A300" data-large-id="Inline-1" data-unit="hnp-chron.com/article_leaf"></div></div><div class="r1udwkp5 d1uy5mhj articleBody mb32" data-block-type="text" data-dropcap="false"><p>Entities are initially filed with the secretary of state. There are different tax benefits with these entities that suit different business owners of for-profit companies. Most not-for-profits start as corporations.</p></div><div data-block-type="inlinerecirculation" class="pb32"><div class="f fdc sy0"><span><div class="ttc f aic sx16 mb16"><h2 class="wsn article">More For You</h2><div class="bb bw2 x100 b-black"></div></div></span><div><div class="fdc jcb"><article class="grid col1-min"><div class="f fdc sy8 mr8 col1 row1 jce"><h2 class="owa c-black tertiary fs16 sm:fs18"><a href="/interest-income-subject-tax-nonprofit-corporation-70213.html" data-link="native" class="tdn hover:o70 td300">Is Interest Income Subject to Tax in a Non-Profit Corporation?</a></h2></div><div class="grid sy8 row2 col1span2"><a href="/interest-income-subject-tax-nonprofit-corporation-70213.html" data-link="native" class="c-gray700 m0 abstract fs16 lh13 none tdn hover:o70 td300"><div data-block-type="text" data-server-side-rendered="true" class="r12zgbl0">Is Interest Income Subject to Tax in a Non-Profit Corporation?. 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A charity organization operates under...</div></a></div><div class="block col2 row1 ml8 x90px xs:x120px sm:x180px lg:x88px"><a href="/register-establish-charity-organization-3847.html" data-link="native" class=""><div class="rel x100 block"><picture><source type="image/webp" media="(min-width: 1048px)" srcSet="https://s.hdnux.com/photos/01/41/71/36/25663411/3/ratio3x2_80.webp"/><source type="image/webp" media="(max-width: 1047px)" srcSet="https://s.hdnux.com/photos/01/41/71/36/25663411/3/ratio3x2_160.webp"/><img alt="You can start a nonprofit charity on your own, but you'll need to get the IRS' blessing soon afterward." loading="lazy" srcSet="https://s.hdnux.com/photos/01/41/71/36/25663411/3/ratio3x2_80.jpg 80w, https://s.hdnux.com/photos/01/41/71/36/25663411/3/ratio3x2_160.jpg 160w" sizes="160px" style="aspect-ratio:3 / 2" class="x100 y100 opc bgpc ofcv bgscv block bg-gray200 mnh0px fill"/></picture></div></a></div></article><div class="b-gray400 bb pen my16"></div></div><div class="fdc jcb"><article class="grid col1-min"><div class="f fdc sy8 mr8 col1 row1 jce"><h2 class="owa c-black tertiary fs16 sm:fs18"><a href="/advantages-running-business-nonprofit-organization-22621.html" data-link="native" class="tdn hover:o70 td300">The Advantages of Running a Business as a Nonprofit Organization</a></h2></div><div class="grid sy8 row2 col1span2"><a href="/advantages-running-business-nonprofit-organization-22621.html" data-link="native" class="c-gray700 m0 abstract fs16 lh13 none tdn hover:o70 td300"><div data-block-type="text" data-server-side-rendered="true" class="r12zgbl0">The Advantages of Running a Business as a Nonprofit Organization. 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A corporation's status can refer to its standing...</div></a></div><div class="block col2 row1 ml8 x90px xs:x120px sm:x180px lg:x88px"><a href="/status-incorporation-mean-61566.html" data-link="native" class=""><div class="rel x100 block"><picture><source type="image/webp" media="(min-width: 1048px)" srcSet="https://s.hdnux.com/photos/01/41/71/72/25665159/3/ratio3x2_80.webp"/><source type="image/webp" media="(max-width: 1047px)" srcSet="https://s.hdnux.com/photos/01/41/71/72/25665159/3/ratio3x2_160.webp"/><img alt="A culture audit requires determining the desired culture, assessing the current culture and developing plans to close the gap." loading="lazy" srcSet="https://s.hdnux.com/photos/01/41/71/72/25665159/3/ratio3x2_80.jpg 80w, https://s.hdnux.com/photos/01/41/71/72/25665159/3/ratio3x2_160.jpg 160w" sizes="160px" style="aspect-ratio:3 / 2" class="x100 y100 opc bgpc ofcv bgscv block bg-gray200 mnh0px fill"/></picture></div></a></div></article><div class="b-gray400 bb pen my16"></div></div><div class="fdc jcb"><article class="grid col1-min"><div class="f fdc sy8 mr8 col1 row1 jce"><h2 class="owa c-black tertiary fs16 sm:fs18"><a href="/establish-501c4-20178.html" data-link="native" class="tdn hover:o70 td300">How to Establish a 501(c)(4)</a></h2></div><div class="grid sy8 row2 col1span2"><a href="/establish-501c4-20178.html" data-link="native" class="c-gray700 m0 abstract fs16 lh13 none tdn hover:o70 td300"><div data-block-type="text" data-server-side-rendered="true" class="r12zgbl0">How to Establish a 501(c)(4). A 501(c)(4) organization is established for the betterment...</div></a></div><div class="block col2 row1 ml8 x90px xs:x120px sm:x180px lg:x88px"><a href="/establish-501c4-20178.html" data-link="native" class=""><div class="rel x100 block"><picture><source type="image/webp" media="(min-width: 1048px)" srcSet="https://s.hdnux.com/photos/01/41/73/07/25670083/3/ratio3x2_80.webp"/><source type="image/webp" media="(max-width: 1047px)" srcSet="https://s.hdnux.com/photos/01/41/73/07/25670083/3/ratio3x2_160.webp"/><img alt="A 501(c)(4) organization is meant to better the community." loading="lazy" srcSet="https://s.hdnux.com/photos/01/41/73/07/25670083/3/ratio3x2_80.jpg 80w, https://s.hdnux.com/photos/01/41/73/07/25670083/3/ratio3x2_160.jpg 160w" sizes="160px" style="aspect-ratio:3 / 2" class="x100 y100 opc bgpc ofcv bgscv block bg-gray200 mnh0px fill"/></picture></div></a></div></article></div></div></div></div><div class="r1udwkp5 d1uy5mhj articleBody mb32" data-block-type="text" data-dropcap="false"><h2>Applying for an聽 Employer Identification Number</h2></div><div class="r1udwkp5 d1uy5mhj articleBody mb32" data-block-type="text" data-dropcap="false"><p>Once a business entity is formed, it then applies for an Employer Identification Number (EIN) with the Internal Revenue Service (IRS). This is the official tax number any business entity needs to open bank accounts, to apply for loans and to file tax returns. Once the EIN is obtained, a not-for-profit must apply for "tax exempt status" with the IRS, using Form 1024 seeking exempt status under IRS Code 501(c).</p></div><div class="pt16 sy16 bb bt b-gray300 mb32"><div class=""><p class="uiHeader11 f aic jcc ttu">Advertisement</p><p class="uiTextSmall f aic jcc">Article continues below this ad</p></div><div data-block-type="ad" data-small-id="Inline-1" data-large-id="Inline-2" data-unit="hnp-chron.com/article_leaf"></div></div><div class="r1udwkp5 d1uy5mhj articleBody mb32" data-block-type="text" data-dropcap="false"><h2>Tax-Exempt Status</h2></div><div class="r1udwkp5 d1uy5mhj articleBody mb32" data-block-type="text" data-dropcap="false"><p>Once an organization is given tax-exempt status, it is considered a not-for-profit or charity type of business. Even though these are tax-exempt organizations, they still file annual tax returns like for-profit companies. Tax-exempt organizations must adhere to public disclosure requirements, and must make meeting minutes and financial documents of the previous three years publicly available upon request by any one in the public. The IRS Exempt Organization Status Check is a database that maintains the current exempt status for all tax-exempt organizations.</p></div><div class="r1udwkp5 d1uy5mhj articleBody mb32" data-block-type="text" data-dropcap="false"><h2>Methods of Generating Revenues</h2></div><div class="r1udwkp5 d1uy5mhj articleBody mb32" data-block-type="text" data-dropcap="false"><p>A significant distinction between a for-profit and a not-for-profit is how each type of organization generates revenues. For-profit companies generally sell a product or provide a service. A not-for-profit organization usually operates fundraising efforts with donations, events and corporate sponsors. Not-for-profits might still sell products. Girl Scout Cookies are a prime example of a product that's produced and sold by a not-for-profit that generates revenues to support the mission of the organization.</p></div><div class="pt16 sy16 bb bt b-gray300 mb32"><div class=""><p class="uiHeader11 f aic jcc ttu">Advertisement</p><p class="uiTextSmall f aic jcc">Article continues below this ad</p></div><div data-block-type="ad" data-small-id="Inline-2" data-large-id="Inline-3" data-unit="hnp-chron.com/article_leaf"></div></div><div class="r1udwkp5 d1uy5mhj articleBody mb32" data-block-type="text" data-dropcap="false"><h2>Organization Oversight and Management</h2></div><div class="r1udwkp5 d1uy5mhj articleBody mb32" data-block-type="text" data-dropcap="false"><p>As business entities, both for-profit and not-for-profit organizations maintain a separation of assets and liabilities between employees and executives. Both entities must vote for an annual board of directors that holds regular meetings to review the progress and direction of the company.</p></div><div class="r1udwkp5 d1uy5mhj articleBody mb32" data-block-type="text" data-dropcap="false"><p>Not-for-profits usually have larger boards of directors that might be voluntary members bringing in resources to help expand the organization's community outreach and fundraising efforts. The volunteer labor force is distinct to the not-for-profit organization, whereas for-profits have paid employees and contractors that perform duties. Larger not-for-profits, including some local agencies, do have payrolled employees running the organization.</p></div><div class="r1udwkp5 d1uy5mhj articleBody mb32" data-block-type="text" data-dropcap="false"><hr/></div><div class="r1udwkp5 d1uy5mhj articleBody mb32" data-block-type="text" data-dropcap="false"><h2>References</h2></div><div class="r1udwkp5 d1uy5mhj articleBody mb32" data-block-type="text" data-dropcap="false"><ul> <li><a href="https://strategiccfo.com/non-profits-organizations-common-profit-companies/" data-link="native" target="_blank" rel="nofollow" class="">Strategic CFO: What "Non-profit" organizations have in common with "For-profit" companies</a></li> <li><a href="https://www.irs.gov/charities-non-profits/application-for-recognition-of-exemption-1" data-link="native" target="_blank" rel="nofollow" class="">IRS.gov: Application for recognition of exemption</a></li> </ul></div><div class="pt16 sy16 bb bt b-gray300 mb32"><div class=""><p class="uiHeader11 f aic jcc ttu">Advertisement</p><p class="uiTextSmall f aic jcc">Article continues below this ad</p></div><div data-block-type="ad" data-small-id="Inline-3" data-large-id="Inline-4" data-unit="hnp-chron.com/article_leaf"></div></div><div class="r1udwkp5 d1uy5mhj articleBody mb32" data-block-type="text" data-dropcap="false"><hr/></div><div class="r1udwkp5 d1uy5mhj articleBody mb32" data-block-type="text" data-dropcap="false"><h2>Resources</h2></div><div class="r1udwkp5 d1uy5mhj articleBody mb32" data-block-type="text" data-dropcap="false"><ul> <li><a href="http://www.sos.state.tx.us/corp/nonprofitfaqs.shtml" data-link="native" target="_blank" rel="nofollow" class="">Texas Secretary of State: Nonprofit Organizations FAQs</a></li> <li><a href="http://www.residual-rewards.com/non-profit-vs-profit-business-plan.html" data-link="native" target="_blank" rel="nofollow" class="">Residual Rewards: Non Profit vs. Profit Business Plans</a></li> </ul></div><div class="y1px x100 abs bgn top"></div><div style="top:25%" class="y1px x100 abs bgn"></div><div style="top:50%" class="y1px x100 abs bgn"></div><div style="top:75%" class="y1px x100 abs bgn"></div><div class="y1px x100 abs bgn bottom"></div></article></div><div class="package"><div><div class="py16"><div class="grid template-row2a temp-col-60px-1fr mnh100 g16 sm:g24"><div class="f fdc jcc xs:jcs xs:pt6 col1span3"><div class="primarySm mb2 xs:mb8"><a href="https://www.weekand.com/author/kimberlee-leonard/" data-link="native" class="tdu tuo2px">Kimberlee Leonard</a></div><div class="cardByline ttu c-gray600">Contributor</div></div><div class="row3 col1Span xs:row2 xs:col1span4 sm:col1Span xs:mt8 sm:mt0"><h2 data-server-side-rendered="true" class="r12zgbl0 deckSm fs16 c-gray700 sy16"><p>Kimberlee Leonard lived in the Bay Area while going to school at the University of San Francisco. Before becoming a full-time writer, she worked for major financial institutions such as Wells Fargo and State Farm. She has developed content for brands such as Trupanion, Live Your Aloha, Neil Patel and Home To Go. 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A nonprofit organization is formed for the common good of the public. Nonprofit organizations are usually formed for some specific religious, charitable or educational purpose. A for-profit organization may be f","image":{"@type":"imageObject","width":2048,"height":1367,"url":"https://s.hdnux.com/photos/01/41/75/31/25679444/3/rawImage.jpg","thumbnailUrl":"https://s.hdnux.com/photos/01/41/75/31/25679444/3/square_small.jpg"},"articleBody":"For-profit and not-for-profit organizations share many qualities but also have some distinct differences. At face value, the term \"for-profit\" suggests a company seeking to make money (and usually as much as possible), while the term \"not-for-profit\" suggests a company that doesn't make money. Actually, not-for-profit organizations seek to generate revenues to serve a specific organization mission, transferring a lot of the profit to defined community efforts. Examples of not-for-profits might be charities, clubs or community organizations. For-profit organizations are everyday businesses. Business Entity Creation Whether a for-profit or a not-for-profit, the early stages of the entity are the same. The early stages begin with filing for a business entity in the state in which the organization opens its operations. Business entity types include: corporations, limited liability companies, partnerships or sole proprietors. Entities are initially filed with the secretary of state. There are different tax benefits with these entities that suit different business owners of for-profit companies. Most not-for-profits start as corporations. Applying for an聽 Employer Identification Number Once a business entity is formed, it then applies for an Employer Identification Number (EIN) with the Internal Revenue Service (IRS). This is the official tax number any business entity needs to open bank accounts, to apply for loans and to file tax returns. Once the EIN is obtained, a not-for-profit must apply for \"tax exempt status\" with the IRS, using Form 1024 seeking exempt status under IRS Code 501(c). Tax-Exempt Status Once an organization is given tax-exempt status, it is considered a not-for-profit or charity type of business. Even though these are tax-exempt organizations, they still file annual tax returns like for-profit companies. Tax-exempt organizations must adhere to public disclosure requirements, and must make meeting minutes and financial documents of the previous three years publicly available upon request by any one in the public. The IRS Exempt Organization Status Check is a database that maintains the current exempt status for all tax-exempt organizations. Methods of Generating Revenues A significant distinction between a for-profit and a not-for-profit is how each type of organization generates revenues. For-profit companies generally sell a product or provide a service. 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Larger not-for-profits, including some local agencies, do have payrolled employees running the organization. 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