Difference between Non-Profit & For-Profit

Difference between Non-Profit & For-Profit

Not all is equal when it comes to the business world. There are very big differences between owning and running a non-profit and a for-profit business. Some differences may be obvious, others a little less. Here are some of the differences between a for profit business and a non-profit.

A for profit business is typically started for the financial benefit of the owners and shareholders. Profit is the biggest goal for private businesses. Businesses pay taxes on the profits they take in, in a fiscal year. Any money given to the business must be reported as a profit and only some monies going out may be written off as business expenses. But also, any profits made may be spent however the company sees fit. When a for-profit decided for whatever reason to cease operations, the business assets can be liquidated and the monies distributed among the owners and shareholders.

In a non-profit, the main mission is to benefit the greater good of the community. This is usually done through products or services made available to the community at no cost to the individual. Non-profits don’t just benefit the individual, but also the community, society and the world. Non-profits do not pay taxes on these contributions and services rendered to individuals. For a non-profit, the monies collected cannot be spent on anything but the mission for which it was formed. Though non-profits can, and do make a profit, it is used solely for the operation of the non-profit. If the non-profit is a foundation, then the money given out goes to other non-profits to help with their mission. In the case of a non-profit going out of business, the assets cannot be distributed through the owners. The remaining assets must be given to another non-profit company or foundation. Non-profits can also file for tax exemption if they meet and follow the required criteria.

As you can see, there are great differences between for profit businesses and non-profit organizations and foundations. If you are going to start a business or non-profit, make sure you know all the pros and cons of each entity before getting started.

Stephanie Z. is a writer for http://www.articles-r-us.net
Article Research & Revisions Funded by:
Roger Bryan
National Charity Services

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