zlacker

>>modele+(OP)
There is a lot in here but turning a non-profit into a for-profit definitely should be challenged. Otherwise why wouldn't everyone start as a non-profit, develop your IP, and then switch to 'for-profit' mode once you got something that works? You don't pay income taxes and your investors get write offs.

>>silico+z11
I'm not at all clear on what a "not for profit" status even does, tax wise. In any jurisdiction.

They are still able to actually make a profit (and quite often will, because careful balancing of perfect profit and loss is almost impossible and loss is bad), and I thought those profits were still taxed because otherwise that's too obvious as a tax dodge, it's just that profit isn't their main goal?

>>ben_w+u41
Well, you're confused because of your erroneous determination that they're "able to make a profit." They are not. They are able to have positive cash flow but the money can only be reinvested in the nonprofit rather than extracted as profit.

>>emoden+061
OK, so for me "positive cash" and "profit" are synonyms, with "[not] extracted" meaning "[no] dividends".

>>ben_w+J61
As the government sees it, you realize "profit" when you, as an owner of the business, take the money it makes for yourself.

>>emoden+p71
That's not the case in the US. Depending on corporate structure, if your business makes more revenue than expenses, even if none of it is paid out and it's all kept in the business, you will either owe corporate taxes on that amount (C-Corp or non-pass through LLC) or the full personal income tax rate (pass through LLC).

>>danena+Af1
Not saying you can't owe tax on it but isn't that unrealized profit?

>>emoden+qh1
"Unrealized profit" is a term used for investments or assets afaik, when the paper value has increased but the gains haven't been realized by selling.

For a business, revenue minus expenses in a given accounting period is considered profit. The only question is whether it gets treated as corporate profit or personal income.