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I have a non profit organization. What can I do, and what can't I do without the 501c3 tax exempt status?

Merritt Island, FL |

I just started a non profit organization for the rehabilitation and well being of dogs in Brevard county FL. I have to wait to file for 501c3 status due to financial reasons.

Can I still operate as an Non-profit, even though I haven't received my 501c3 yet.

Can I take in donations?

Pay salaries? Should salaries be under fees for service, or should I say payroll/salaries paid to staff

What can I do, and what can't I do without the 501c3 tax exempt status?

Please let me know


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Filed under: Employment Tax law
Attorney answers 1


All entities, including non-profits, are subject to taxes unless specifically excluded under the Internal Revenue Code.

So even though a non-profit can attempt to reach its charitable goals, without being classified as a 501(c)(3) entity the entity's income will be taxable income. In addition, whatever donations you do receive would not be deductible by the donors, which would likely inhibit your ability to raise funds.

If you hire employees, you must pay them wages, subject to payroll withholding taxes. The only exception to this is if they are considered "independant contractors." The IRS looks at about 20 factors to determine if a person is an employee or independant contractor, but generally, if a person provides services and controls the manner and means of performing the services he would likely be an independant contractor. Reaching an incorrect determination would be a costly mistake.

Disclaimer: This answer does not create an attorney-client relationship and is meant solely to provide a general response. In order to comply with Treasury Regulations, be advised that tax advice, if any, included in this communication is not intended, and cannot be used, for the purpose of avoiding any federal tax penalty or for recommending, promoting or marketing any transaction or matter to any person.