pooker314
join:2005-04-12
Brush Prairie, WA
| Re: shareholders Non-profits have "profits" very frequently. If they didn't, they typically wouldn't survive. However, that profit (usually called "operating margin" to avoid confusion), cannot be distributed to the corporation's members (sort of like shareholders). Instead, the money must be used for tax exempt purposes. This usually involves plowing it back into the business somehow (including capital development, higher salaries, etc.).
In the for-profit world, certain smaller corporations (s corps) can get into very big trouble with the IRS if they retain all of their profits for shareholder distributions in lieu of paying their owner/employees a reasonable salary (because shareholder distributions can avoid employment taxes like FICA/FUTA). |
