What Is A Non Profit Business
What Is A Non Profit Business. There are lots of misunderstandings, on what a non profit is. Let’s walk you through what a non profit business really is. This is Bizpremi
When we say non profit, it does not mean the business, or the organization does not make money. In fact I have seen a lot of non profit businesses, ,make more money than a profitable business. Being a non profit, does not typically mean not getting profits.
What a Non Profit simply means, is not operating or running for the sole purpose of just making money. Having said this, doesn’t still mean money won’t enter even being a non profit.
Now What is Non Profit Business? Non Profitable Business, is a type of business organization or structure, that does not use excess or surplus money for personal use. It means, should there be surplus money in flow, it’s not shared among shareholders, or the owner of the business. It is basically put back into the business, or cause.
Making the business even grow larger, widening the reach of the business. For example, if I build an hospital, and I declare it as non profit, the meaning is that, I shouldn’t use the money that the business is making for myself. Instead putting it back, either to build more hospitals, bring in more doctors and things like that.
So being a non profit, you’ll still have to pay staffs or workers. If the business is not making any money at all, how do you expect to pay the workers. Read here on How Can You Make Money From A Non Profit Business.
How Do You Know A Business Is Non profit
There are key features of non profit business. There is something that you actually see, and say yes this is a non profitable organization. What are these key features?
Mission Driven:
The main goal or objective of a non profit business, is to serve a purpose, fill a gap. Solve a problem by proving working solutions. It can be in terms of education, poverty relief, community development, health, environmental protection, or empowerment. A good example of a non profit school in education, is providing affordable tuition fees. So instead of focusing on making large profits, they concerned on how each person can be educated. Its’s a non profit doesn’t mean it should not be well organized. See why you may need to hire a business writer.
No Profit Shares:
As said earlier, non profit doesn’t mean no profits, it just means profits are not being shared amongst each other. That is, extra profits is put back into the business. In terms of health, the hospitals can use the extra profit to either fund a new research, buy new equipment or employ more doctors and nurses.
Source Of Funds:
Non profit organizations or businesses, mostly get their funds from grants, events, donation, fundraising or membership fess. It can also get from selling products or services. Profitable can get money too, but most time it’s from investors and they expect payback that is ROI. But that’s different for a non profit.
Volunteers And Staffs:
A lot of persons believe that if a business is tagged as a non profit, It only has volunteers and no paid staffs. But that’s not true. Yes there are volunteers, but it can run alone on volunteers. Not everyone wants to volunteer. So in this case the staffs are needed to be paid. Although the salaries are reasonable so it aligns with purpose of the business.
Legal structure:
If a non profit business, should meet certain criteria, they are mostly granted tax exemption. Considered they are registered and recognized by law. And of course meets the requirements needed to be tax exempted.
Why Is Non Profit Businesses Important?
Non profit businesses are very important in the society or environment because they are driven by goals and missions. Filling and solving problems, that the government might be able to. Or gaps that even profitable businesses would not fill even if they can, if it doesn’t bring in more profits.
So a non profit organization is actually important and needed. Do you want to run a non profit organization? If yes, do not hesitate. Being a non profit does not mean there is no profit inclined, just that it’s not focused on that. Check here for more business related articles. Bizpremi Business
