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Ask GWarren For Business & Nonprofits...

GWarren For Business & Nonprofits
GWarren For Business & Nonprofits, Attorney
Category: Business Law
Satisfied Customers: 355
Experience:  30 yrs Counsel, AVP Corp Governance Fortune 100 finance/ins, Nonprofit Bds, law firm. OH NJ license
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Starting a business that will provide various services. Primary

Resolved Question:

Starting a business that will provide various services. Primary focus are churches, secondary focus is the commercial sector. Will be seeking grants for some of the services (youth development programs etc). What is the best legal structure to consider between an LLC and a non-profit? Also, if the work with the youth is under a sub company, should that be designated a non profit and the "parent" company an LLC or all maintained together as one? Hope this makes sense. Trying to be as brief as possible. Thanks!

Andrea
Submitted: 4 years ago.
Category: Business Law
Expert:  GWarren For Business & Nonprofits replied 4 years ago.
Thank you for contacting justanswer.

If you will be seeking grants, a non-profit organization should typically be your choice for a corporate form. Most grant providers (charitable organizations, private and public foundations) will not give grants to for profit companies. Churches may also be more inclined to work with a non-profit organization than a for profit business. That does not mean you could not be paid a reasonable salary for your work with the non-profit and non-profits can contract with for profit organizations.

An LLC can be either a domestic non-profit or for profit company by filing the proper forms as detailed below. You would also need to file for an Employer Identification Number with the IRS and a Form 1023 to achieve recognition from the IRS for your 501(c)(3) non-profit organization.

Following is the Michigan state government link to form a corporation:

http://www.michigan.gov/dleg/0,1607,7-154-35299_35413_35429---,00.html

Whether you need a subsidiary company should be closely considered due to the cost and oversight efforts that would involve. Unless there is a need to separate the companies to protect assets or to have a separate for profit company to contract with the non-profit company, there may be no advantage to separate companies.

SCORE, Counselors to America's Small Business, at http://www.score.org offers free face to face or online counseling to assist you with your business by experienced volunteer business entrepreneurs, including start-up formation, legal structures, business plans, etc.

Following are public domain links to form non-profit and for profit corporations respectively, in Michigan:

http://www.citmedialaw.org/legal-guide/michigan/forming-nonprofit-corporation-michigan

http://www.citmedialaw.org/legal-guide/michigan/forming-corporation-michigan

I hope this is responsive to your question. If you would like further clarification, please let me know.
GWarren For Business & Nonprofits, Attorney
Category: Business Law
Satisfied Customers: 355
Experience: 30 yrs Counsel, AVP Corp Governance Fortune 100 finance/ins, Nonprofit Bds, law firm. OH NJ license
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