Houston, TX asked in Consumer Law, Business Formation and Business Law for Texas

Q: Do I need to incorporate as a nonprofit to market my business as one when I won't be accepting donations or grants?

Hello!

I want to convert my marketing business into a nonprofit organization.

My mission is to utilize economic development to improve the conditions of local communities, creating successful small businesses that give back to the community.

That mission is obviously different from that of a normal marketing agency that does and says whatever it needs to get a client, and does the same to help their clients get customers.

I want that difference to be immediately obvious.

Tax exemption, donations, grants, all of that doesn't matter, I simply want potential clients to know that I'm committed to my mission first and foremost.

Is it necessary or recommended I setup a nonprofit in that situation?

--Thanks!

2 Lawyer Answers
Kacie Marie Czapla
Kacie Marie Czapla
PREMIUM
Answered
  • Tyler, TX
  • Licensed in Texas

A: If you want to hold yourself out as a non-profit, then yes, you must be a non-profit. To become a non-profit, you must (1) create an entity with the Secretary of state and (2) file a 501(c)(3) application with the IRS. You cannot do this without an attorney and/or a CPA. Try to find an attorney who is also a CPA. That makes the process easier.

Allison Higgins
Allison Higgins
Answered
  • Helotes, TX
  • Licensed in Texas

A: Hi there! Great question. There are multiple ways that you can accomplish your goals. While being a non-profit does have a certain reputation, it also has several business and tax implications that need to be explored before making a final decision.

Another option is to use another business formation type, whether that is an LLC, corporation, etc. and use your marketing strategy to get your message across. There are many businesses out there that have a charitable mission, but are structured as other business types.

I would highly suggest reaching out to a Texas business attorney to discuss your business plan and decide the best course of action. Your best choice would be an attorney that has small business and marketing experience so that you can get a knowledgable answer from both the legal and the marketing perspectives.

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