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Tax-exempt status

Khaos_Mage
Posts: 23,214
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6/14/2013 1:12:23 AM
Posted: 3 years ago
Can anyone explain why it is such a big deal to be a tax-exempt business? I mean, if you don't make a profit, you aren't taxed...
My work here is, finally, done.
darkkermit
Posts: 11,204
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6/14/2013 1:23:32 AM
Posted: 3 years ago
Is that what a tax-exempt business is? Thought it was that even if you make a profit you don't have to pay taxes.
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Khaos_Mage
Posts: 23,214
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6/14/2013 1:31:19 AM
Posted: 3 years ago
At 6/14/2013 1:23:32 AM, darkkermit wrote:
Is that what a tax-exempt business is? Thought it was that even if you make a profit you don't have to pay taxes.

Actually, a tax-exempt (often called non-profit) is not allowed to maintain a profit without express purposes for retaining it. This is why they often give to charities at the end of the year and treat their employees better, IME.

The only reason they can have a profit is if they have a plan for it, like saving to build a new building or offer new services.
My work here is, finally, done.
Khaos_Mage
Posts: 23,214
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6/14/2013 1:32:56 AM
Posted: 3 years ago
At 6/14/2013 1:27:41 AM, FREEDO wrote:
The big deal, my friend, is being a subsidized business.

They can be, but not all of them.
How is a charity subsidized? If I were to not have a profit at the end of the year without being designated as a non-profit, what good is the tax-exempt status?
My work here is, finally, done.
darkkermit
Posts: 11,204
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6/14/2013 1:41:16 AM
Posted: 3 years ago
At 6/14/2013 1:31:19 AM, Khaos_Mage wrote:
At 6/14/2013 1:23:32 AM, darkkermit wrote:
Is that what a tax-exempt business is? Thought it was that even if you make a profit you don't have to pay taxes.

Actually, a tax-exempt (often called non-profit) is not allowed to maintain a profit without express purposes for retaining it. This is why they often give to charities at the end of the year and treat their employees better, IME.

The only reason they can have a profit is if they have a plan for it, like saving to build a new building or offer new services.

Oh, non-profit. That's different then.
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Khaos_Mage
Posts: 23,214
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6/14/2013 1:48:21 AM
Posted: 3 years ago
At 6/14/2013 1:41:16 AM, darkkermit wrote:
Oh, non-profit. That's different then.

Not sure why it is, but okay.

So, why is it so important to have a non-profit status, when if you strive for no profits, you pay no taxes?
My work here is, finally, done.
darkkermit
Posts: 11,204
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6/14/2013 1:50:42 AM
Posted: 3 years ago
At 6/14/2013 1:48:21 AM, Khaos_Mage wrote:
At 6/14/2013 1:41:16 AM, darkkermit wrote:
Oh, non-profit. That's different then.

Not sure why it is, but okay.

So, why is it so important to have a non-profit status, when if you strive for no profits, you pay no taxes?

Less paperwork I suppose. Also a non-profit company can still make a profit, however it just has to reinvest it into the company. A for-profit company still has to pay the tax, even if its reinvested.
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wrichcirw
Posts: 11,196
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6/14/2013 11:21:17 AM
Posted: 3 years ago
At 6/14/2013 1:48:21 AM, Khaos_Mage wrote:
At 6/14/2013 1:41:16 AM, darkkermit wrote:
Oh, non-profit. That's different then.

Not sure why it is, but okay.

So, why is it so important to have a non-profit status, when if you strive for no profits, you pay no taxes?

The reason may be related to gifting and gift taxes. If you gift to a for-profit corporation, it's subject to taxation...which is why no one gifts to corporations (not 100% on this). If you gift to a non-profit, it's typically seen as a tax exempt donation, befitting since the non-profit itself is never taxed.
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?
LooneyS
Posts: 1
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6/17/2013 7:26:30 AM
Posted: 3 years ago
The tax preparation industry has a standing of bringing in scam artists and incompetent opportunists. The IRS had planned to apply brand new rules that would have forced them to higher standards. Some in the industry, tired of its bad rap, were welcoming the changes. However, the Internal Revenue Service was shot done in its plans by a judge's ruling last month. Still, consumers need to know the best way to discern a great tax pro from a poor one. Source of article:https://personalmoneynetwork.com...
Khaos_Mage
Posts: 23,214
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6/18/2013 12:40:12 AM
Posted: 3 years ago
At 6/17/2013 7:26:30 AM, LooneyS wrote:
The tax preparation industry has a standing of bringing in scam artists and incompetent opportunists. The IRS had planned to apply brand new rules that would have forced them to higher standards. Some in the industry, tired of its bad rap, were welcoming the changes. However, the Internal Revenue Service was shot done in its plans by a judge's ruling last month. Still, consumers need to know the best way to discern a great tax pro from a poor one. Source of article:https://personalmoneynetwork.com...

If you are referring to what I think you are referring, it wasn't a scam, it was an overreach. The continueing education requirements were disallowed for tax preparers, though are required for CPA's and enrolled agents.
My work here is, finally, done.