Can I Operate My Business as a Non-Profit?

By Jeffrey Steinberger of Entrepreneur.com



People own and operate various business entities. Some organizations operate as non-profits. What is a non-profit? Can you conduct your business as one?

The answer is that a business organization cannot be operated as a non-profit, although some non-profits may look like businesses. Generally, the purpose of a business entity is to benefit the owners or principals of the business by earning them a financial profit.

A for-profit business organization can take any of the common legal forms, such as corporations, limited liability companies, partnerships and joint ventures. Thus, a for-profit corporation exists to financially benefit its stockholders by the payment of dividends, and an unincorporated entity, such as a partnership, exists to financially benefit its members by the distribution of income.

Rather than earning a profit for its owners, a non-profit is an organization that has no owners and that has as its purpose the promotion, advancement and achievement of a specific mission. Like a business, a non-profit can take the form of a corporation or an unincorporated group of persons banded together to achieve their mission.

The missions of non-profits can be as varied as the human experience. For example, non-profits are formed to advance local, national or international missions such as charitable work, disease prevention, humanitarian relief and environment goals.

Non-profits also can be as simple as a group of concerned citizens who want to fund a neighborhood watch or parents who have bake sales, car washes, or pancake breakfasts to earn money to finance their children's little league teams or scout troops. In each of these cases, the mission is not to enrich the operators of the charities or the involved parents, but to accomplish a mission.