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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29800
Experience:  Taxes, Immigration, Labor Relations
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I have a client who started a business that is for profit llc

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I have a client who started a business that is for profit llc at this point. It is located in NJ and is looking at different options of how to treat itself for tax purposes. the main business focus is donating goods to schools, military etc... but also makes a profit. I know there is a 501c-3, but are there other ways they can be registered that would help them. If so where can I find info on this. I am a tax person, not a lawyer. Thx.
Submitted: 5 years ago.
Category: Tax
Expert:  Lev replied 5 years ago.

Hi and welcome to Just Answer!

I would suggest your client to separate for profit and not for profit activities into two separate legal entities.

"Donating goods" is not the business focus because there is no profit motive - without proper non-for-profit classification - it may be a hobby - but when we come to deduct expenses for tax purposes - many deductions would be disallowed.

To avoid confusions and disappointments with taxes - you client better to separate business activities and personal activities (including hobby activities) and track them on separate books.

Let me know if you need any help.

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