Nuances of Incorporating You Ministry as an S Corporation, LLC or Non-Profit

Nuances of Incorporating You Ministry as an S Corporation, LLC or Non-Profit

Frequently I get called to help those setting up a new entity striving to learn whether their ministry should be a 501(c) or S Corporation. A recent statistic indicated there were approximately 640,000 of active domestic entities in Georgia and 58,000 which are foreign (incorporated in other states). Of those, 303,000 of the domestic corporations are for profit, 65,000 are non-profits, and 246,000 are Limited Liability Companies. LLC's continue to be very popular since their becoming possible in Georgia approximately fifteen years ago and continue to be used more than ever before. Due to their ease of formation, the lack of a need for a formal Board of Directors, and that there is no requirement for owner/active members to take a salary, the administrative burden of operating an LLC makes it an attractive choice when considering corporate structure.

If you believe you will be raising a substantial portion of funds from those seeking to make charitable contributions to a qualifying organization or a 501(c) would generally be a prudent choice. However, if your new venture or ministry will be predominantly self-funding from business operations, then an S Corporation might be a wiser choice. It is prudent to keep in mind predominantly and measure the amount of additional tax and administrative responsibilities of having a non-profit against the potential funds/monies raised through contributions versus operations.

An S Corporation has the added advantage (as opposed to an LLC) of not requiring FICA/Medicaid taxes to be paid on shareholder distributions as long as a fair and reasonable salary is paid. As your results and how you plan to utilize your corporate entity can vary substantially from that of others, be sure to consult with your CPA for all of the possible tax/operational consequences which you will be facing as your proceed with your business. An LLC or LLP might be a much better choice for those who are doctors, lawyers, engineers, renting or developing commercial or residential real estate, have more than 100 shareholders or have investor/owners who are not U.S. citizens or resident aliens.

To read more and see which entity type is best for you visit http://www.hiscpa.com/article2.html

John Dillard is an Christian Speaker/Author and Certified Public Accountant. To See how he takes Christ along with him to work visit http://www.hiscpa.com/  and for his latest book Overcoming Life's 9/11's: Job's Journey visit http://www.john-dillard.com/  Dare to Attempt Something so Great for the Kingdom of God that it is doomed to failure, lest Christ be in it!