1. For-Profit or Non-Profit?
I’m inclined to form a non-profit for this project. But perhaps we should give some more thought before making this decision. Below I’ve outlined some advantages and disadvantages of each type of corporation and some questions that I have that could use researching.
- For-Profit
Pros: cash from advertising, potential sale of company.
Cons: No tax benefits for donors. Cannot receive capital unless we are paying interest (which is unlikely considering we have not identified how this can make $$) or allow equity investment, which dilutes control. We would pay corporate taxes, but would if form as LLC could flow-through losses in the beginning.
- Non-Profit
Pros: Tax Benefits, The idea just seems like it shouldn’t be about the $. While most successful non-profits generate some revenue to keep their organization funded, we won’t have to worry about not making cash in the earlier months when we are working on marketing and development.
Cons: Jason has a mortgage and needs a salary. Skype or another company may want to acquire the non-profit org. – we may not be able to sell it — see questions below.
- Unanswered Questions: Can we sell the non-profit or its assets (intellectual property) to a for-profit corp? What happens to the money from the sale? Can we re-invest it into a new non-profit? Do we have to donate it to a similar organization? Can we pay bonuses to the employees?
2. Creating a Non-Profit Organization
- Filing Process: Information Required. Fees. Board Structure.
3. Choose a Name
- Determine if already trademarked.
- If not, register the trademark.
- Buy Domain Name.
4. Other Legal Questions
