5 Reasons to Incorporate Your Nonprofit

If you’re involved in a nonprofit organization, you may wonder if you should incorporate. The benefits of nonprofit status often outweigh the complications. Here are five circumstances that make it worth considering incorporation.

1. Your association makes a profit.

If your group will make a profit from its activities, incorporating as a nonprofit corporation can yield a great benefit. As long as the money you make is related to your charitable activities, your nonprofit corporation won’t pay income tax.

2. You want to apply for grant money.

Without tax-exempt status, your group is unlikely to qualify for many public and private grants. It’s generally easier to get the IRS to approve a tax exemption for a nonprofit corporation.

3. You want to solicit tax-deductible contributions.

If your organization becomes a tax-exempt nonprofit corporation, donors can deduct their gifts to your group on their tax returns.

4. You want protection from personal liability.

Incorporation can provide peace of mind in the face of a lawsuit. Nonprofit corporations can be sued, but their members and directors are generally protected from personal liability.

5. Your advocacy efforts might provoke legal quarrels.

Incorporating can support directors and officers in defending lawsuits and protect them from personal liability.

Additional benefits of organizing a nonprofit include special postage rates and property tax exemptions.

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