To profit or not to profit

… Hamlet fans will agree, this is not the question.

Tomorrow, I will be meeting with my lawyer and old friend,  who due to her less important professional responsibilities must at present remain veiled in mystery.  I will here forth refer to her by her code name: Blue.

In preparation for this rendezvous, she has given me some homework: Read up on the forming of nonprofit corporations and think about my finances for this adventure.

Well, I did my homework, and although a lot of what I read was over my head, this is what I gather:

To Form a Nonprofit Corporation

1.  There are some preliminary matters, namely:

a. Develop a mission that identifies a societal need that I would like to satisfy.  Then, outline how I will go about satisfying this need.

b. Figure out a fundraising plan.  It explains, “organizations that inspire confidence in donors:

– Are able to communicate who they are and what they do.

– Define reasonable and attainable short term and long term goals.

– Show financial acumen in how to fulfill these goals.

– Can chart progress made toward the goal.

– Have programs that clearly speak to the organization’s mission.

– Keep accurate and up to date accounting books and corporate records.

– Are professionally and efficiently run.

– Have 501(c)(3) status so that donations are tax deductible.”

c. Plan the annual budget.  The operating budget outlines planned revenue and expenses broken down by these categories:

– Personnel (salaries and benefits)

– Administrative (computer equipment and office supplies)

– Fundraising (marketing and soliciting donations)

d. Reassess the decision to incorporate.  At this point, after thinking all of these things through, does a nonprofit still seem like the best route?  Other options include:

– Sole proprietor

– Informal Group

– Partnership

– LLC

– Corporation

– Fiscal Sponsorship

If you decide to continue with a nonprofit …

2.  Incorporate your nonprofit.

a. Choose a business name for the corporation and check for availability

b. Recruit and/or appoint directors.

c. Prepare and file articles of incorporation.

d. Create the bylaws.

e. Hold an organizational meeting to:

– Appoint directors (if not already named in the articles)

– Appoint corporate officers

– Adopt the bylaws

– Set the nonprofit corporations budget for the fiscal year

– Designate a bank

– Select a corporate seal

f. Keep a records book

3.  Get your Employer Identification Number

4.  Apply for tax exemptions.  (Federal, state, and local)

5.  Other steps to take:

a. Register with your state’s Attorney General

b. Open a bank account for your business

c. Obtain any required local licenses or permits

d. Apply for a Nonprofit Postal Permit

e. Insurance

And baddaboom!  You have a nonprofit.

… Not really.

I have been thinking a lot about whether I wanted this to be a for profit or a not for profit venture, but that is really the wrong question to ask.  What I need to be asking is How do I make this happen? Does The Schooba Academy have a better chance of being successful if I charge a tuition or if it is tuition free? As I see it, the worst case scenario for The Schooba Academy is that it does not exist.

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