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Marvin,EA
Marvin,EA, Enrolled Agent
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Experience:  Enrolled to Represent Taxpayers Before The IRS
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Whats better..file as an LLC and donate $ to many charitable

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What's better..file as an LLC and donate $ to many charitable groups or become a 501c3 and donate $ to many charitable groups? I have a revenue generating idea, but want to push 90% or more of the proceeds to multiple charitable organizations..
Submitted: 6 years ago.
Category: Tax
Expert:  Marvin,EA replied 6 years ago.
Hello and thank you for using Just Answer. Is this a business donating the profit to charity or a group of people donating to charity?
Customer: replied 6 years ago.
it would be a business or a 501c3..not a group of people..a website, generating revenue, with 90% of revenue going to charity..should i form an llc or try to become a 501c3, knowing high% must be given away...
Expert:  Marvin,EA replied 6 years ago.

In order to be a 501(c)(3)- No part of the net earnings of which inures to the benefit of any private shareholder or individual, no substantial part of the activities of which is carrying on or otherwise attempting to influence legislation, and which does not attempt to participate or intervene in any political campaign.

 

It might be to your advantage to start a business (C Corp., S Corp, Sole-Proprietor LLC), pay taxes on the gross profits and give 90% of the net profits to charity.

Customer: replied 6 years ago.
Would I be able to deduct the donations from my gross profit? Example..make $100k in gross revenue, donate $90k..pay taxes on $10k?
Expert:  Marvin,EA replied 6 years ago.

It all depend on the type of business entity you have. If you have a sole proprietor and file Sch. C you will report your gross revenue on your Form 1040 and if you donate to qualify nonprofit organizations you can donate up to 50% of your total AGI. If you have a corporation you can only donate 10% of your gross profit before taxes, pay Federal taxes on the 90 % gross profit, receive the net income from the corporation in the form of a dividend, report the amount on your 1040 and donate up to 50% of you AGI before personal income tax.

 

It would be better to form a LLC Sole Proprietor if you have no partners.

Customer: replied 6 years ago.
If I become a 501c3, can I pay myself a salary, cover advertising and admin costs, and give away the rest? (no owner dividend or profit)
Expert:  Marvin,EA replied 6 years ago.

The 503(3)(c) cannot have business income not related to its exempt purpose. What type of a business will you have?

Customer: replied 6 years ago.

its a website..simple example...an ad is placed on site, visitor clicks on ad for nike and goes to nike.com..they buy a $100 pair of shoes..I get $10 commission on sale. I then want to donate 90-100% of the $10 to the charity of choice of the visitor...the purpose is to raise money for charitable organizations...that's it..so all the money raised will either be donated or pay my salary/admin expenses..would that qualify as a 501c3? ..sorry for the confusion

Expert:  Marvin,EA replied 6 years ago.
Your website will not qualify for 501(c)(3) statue. Internal Revenue Code 501(c)(3)- Corporations, and any community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sport competition, or for the prevention of cruelty to children or animals, on part of the net earnings of which inures to the benefit of any private shareholder or individual, no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation, and which does not participate in, or intervene in, any political campaign on behalf of any candidate for public office.
Marvin,EA, Enrolled Agent
Category: Tax
Satisfied Customers: 1663
Experience: Enrolled to Represent Taxpayers Before The IRS
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Marvin,EA
Marvin,EA
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Enrolled to Represent Taxpayers Before The IRS