Veteran needs help with simple business plan - profir or non profit

[baker]

hello guys. Ive been reading all night trying to make the best decision on my business plan. There is a lot of info out there. I hope you can give me some advice and I can do more research.

Here is my business plan: I want to create an organization to send soldiers in Afghanistan care packages and homemade items (pendants and necklaces) from bronze, and leather gun slings. I make these in my shop to pass the time.

I am disabled by the VA so I can't make any income because I could lose my compensaiton. I have a bad brain injury, sometimes forget things and black out, and am in a wheel chair.

I dont want to make any money for myself at all, I just want to put a donate button on my website to cover the cost of the materials it takes to run the business and ongoing postage to afghan which wont be cheap. I have already paid to have the website created. I want to put up a donate button through paypal but i read to donate you need to be a non profit and 3 people ( a board of trustee), and people need to be able to deduct contributions. I also read if you quit, you may ahve to pass the business to someone else. I might be hospitalized at anytime. I did not know I had to go though all this trouble just for a donation button and since I cant file any money on my income taxes, I was thinking about this instead.

Is it illegal to run my organization as for-profit orginization, My wife would own it and it goes on her w2 form, maybe a llc or sole propitership but instead of a donation button, explain on the website why I cant put one up there due to he rules of non profit but still offer to sell people my homemade necklaces for any price they choose to pay. It's kind of the sane as a donation. Is that legal? I believe I read as long as I dont sell over 200 transactions I dont need to fill out that new "k" something form they created. Do I only pay a lot of taxes this way as well. My wife is good with quickbooks but most of the recipts so faR are in my name. We are 1500 in the hole so far buying the materials.

Am I totally lost here. Any suggestions beside go see a lawyer? This business means a lot to me to help change some lives. I know im not as smart as you guys but any help or ideas?

[tmerrill]

I think either of those options work. You can have your wife own the business. I would not worry too much about the receipts being in your name. Just be aware that in the future you should have the business buy things. If the business needs money you should invest money in the business and then purchase things from a business account.

You can also make this a non-profit. You would need to follow the rules to qualify as a non-profit. But, you would still be able to pay yourself or your wife for your time working the business.

I would also suggest you get a mentor. Try using SCORE. These are retired business executives who volunteer their time. They offer in person and online mentoring. Check them out at Free Small Business Advice | How-to Resources | Tools | Templates | SCORE (http://www.score.org).

I hope that helps.

[vangogh]

I agree. If your wife owns the business then she's the one earning the money and it's hard to see how that affects your compensation. With the non-profit route I'd think your compensation would depend more on any money you earn than how much the organization itself earns. I don't know the regulations behind your compensation though. Assuming it's about how much you personally earn then probably any set up works as long as you personally aren't making any money.

This is really something you'll have to check with your compensation package. It's hard to know what is and isn't allowed without knowing how that works.

As an aside, good for you wanting to send care packages to our soldiers in Afghanistan.

[BP Writer]

Establishing a 501(c)3 nonprofit is not worth the admin time, energy, hassle, etc. for a venture the size of what you want to do. The best option for smaller nonprofit ventures like yours is to team up with an existing nonprofit whose mission is similar to what you want to do.

This group looks like they can get you packages to Afghanistan: Packages From Home -- Supporting the Troops by Sending Care and Comfort Packages Overseas (http://www.packagesfromhome.org/), and there is a list of other organizations here: Support Our Troops | Military.com (http://www.military.com/spouse/military-life/military-resources/how-to-support-our-troops.html).

As far as donations for materials, you should look for a "fiscal sponsor" - this article explains it and has a link to a directory of fiscal sponsors: How to create social change without becoming a 501(c)(3) | NetSquared, an initiative of TechSoupGlobal.org (http://www.netsquared.org/blog/tudiabetes/how-create-social-change-without-becoming-501c3)

[Pss]

I agree it's not worth setting up a 501 c3 for this, and your donors probably don't care about their small donations being tax deductible.

But, just because paypal doesn't allow for donations except for 501c3 doesn't mean that there aren't other merchant solutions that wouldn't work for you. I would check google wallet and others to see what makes the most sense.

I don't know the VA rules, but if you have a for profit business that just breaks even (or loses a little money) because everything that you get in is being spent to go out, it sure doesnt seem like you should be penalized, but don't take my word for it.

Probably safer to go that route but have it in your wife's name (if that's allowed) as it doesn't seem like it's worth jeopardizing your healthcare.

One more thought: for small businesses, it is almost always better to be an S-Corp than a C-Corp, as an S-Corp doesn't have double taxation and income is just passed down to you directly. BUT, in your situation, you might ask an accountant if having a C-Corp might be a good option. The company could make money, and you wouldn't show any income unless the corporation paid a dividend or a salary.

But any legal entity you set up will likely cost hundreds of dollars to do and maintain, so again, probably not worth it for such a small enterprise. I agree with others that you should consider partnering with another organization.