Should it be for-profit or non-profit? (Full Version)

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caleb.motupalli -> Should it be for-profit or non-profit? (6/21/2008 6:45:21 AM)

Dear ones in the Lord,

I am at a critical dilemma whether to make our ecumenical global Church, which is partly technologically driven, with a specific brand for its local manifestation, a for-profit venture paying taxes to Uncle Sam or to keep it as a non-profit venture. It is too premature to reveal the details of the technology. However where necessary for resolving my dilemma, I am willing to reveal.

The advantage I see in making it a for-profit venture is that I can quickly expand by pumping capital into it whereas my growth may be limited if it is a non-profit.

If I am pumping capital into it, I am really “taking a risk.” Am I not? Another way of saying the same thing is: “I am making a step of faith with the talents that I have to show dividends at the return of Christ.” No doubt I have to remember the Lord’s Words: “What profit is there if a man gains the whole world and yet loses his own soul?”

Your valuable suggestions will be well received.

Thank you.



peace77 -> RE: Should it be for-profit or non-profit? (6/21/2008 8:28:48 AM)

Where is this church located?

If it is located in India, you would not owe taxes to the U.S.


If the church is located in the U. S., and you desire to run a business unrelated to the operation of the church, you could possibly do so and pay tax only on the business portion portion of the church's income. The church would then owe UBIT (Unrelated Business Income Tax)
(See publication 598 http://www.irs.gov



Anne



caleb.motupalli -> RE: Should it be for-profit or non-profit? (6/21/2008 10:49:38 AM)

quote:

ORIGINAL: peace77

Where is this church located?


It is primarily located on the "net." But she has franchises (local manifestations) all over the world (hopefully).

quote:


If it is located in India, you would not owe taxes to the U.S.

If the church is located in the U. S., and you desire to run a business unrelated to the operation of the church, you could possibly do so and pay tax only on the business portion portion of the church's income. The church would then owe UBIT (Unrelated Business Income Tax)
(See publication 598 http://www.irs.gov

Anne


Just as i am paying UBIT taxes to Uncle Sam can i also pay dividends to shareholders on the parts of the church business that seem unrelated to the operation of the church? As to the ethics of giving suitable dividends to shareholders is there any sort of tangible instrument like stock-rights and stock-options (which can be claimed at the return of Christ) that can be created in order to reward investors and employees (members)? I do know many churches and ministries have some sort of souvenirs for the purpose. But can we design souvenirs, which may be encashed if the member or investor deems fit to move on to other pastures?



peace77 -> RE: Should it be for-profit or non-profit? (6/21/2008 10:36:08 PM)

quote:

can i also pay dividends to shareholders on the parts of the church business that seem unrelated to the operation of the church?


No. No part of the earnings of a non-profit organization can directly benefit the members or those in control.
The only exception is that staff may be paid a reasonable salary.


Peace,
Anne



caleb.motupalli -> RE: Should it be for-profit or non-profit? (6/22/2008 9:18:27 AM)

quote:

ORIGINAL: peace77

quote:

can i also pay dividends to shareholders on the parts of the church business that seem unrelated to the operation of the church?


No. No part of the earnings of a non-profit organization can directly benefit the members or those in control.
The only exception is that staff may be paid a reasonable salary.


Peace,
Anne


That is a funny double standard. Even though it could be an "unrelated" business, Uncle Sam can walk away with his money, while the investors are left high and dry.

I see that in the some churches donors are not given their due recognition for their sacrifices and in other churches the servants of God fall head over heals to recognize them. Can we design a standard by which we may recognize them, giving "honor to whom honor is due, fear to whom fear, tax to whom tax, custom to whom custom?"

Thanks for your help.



Row1 -> RE: Should it be for-profit or non-profit? (6/23/2008 10:16:08 AM)

hi-
If you pump capital into any endeavor, including a church-related endeavor, your lender is taking a financial risk. You are not taking a risk in the same way. All you are risking might be risking a waste of your time, compared to what you could have done with the time you put into this endeavor.

Borrowing money is not a Biblical principle. Failing to keep up your end of a business agreement is not a Biblical principle.

Yes, you need to take risks to figure out what God has planned for you. But this does not necessarily mean borrowed-money risk.

It means: work your day job, but take all the time and resources you can and build up your idea. Or, have family provide some support for you to live upon -- whether you have success or failure -- because they are willing to help you pursue your idea. For example, rely on wife's income, help from parents, etc. for a few months as you get this idea working.

If I were you, I would find a mentor to guide you through this. A mentor who has done something similar.

If you decide you are not going to borrow money, it will make you design the business part of your plan better - because every crucial aspect of the whole endeavor will become clear.



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