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I'm founding a startup, but I'm not sure if I want it to be a nonprofit, not-for-profit, or for-profit. Should I figure this out before registering as a business?

I'm based in New York State, and I'm planning to hire a lawyer to do the paperwork. But I don't want to do any fundraising until I have a bank account (which requires an EIN). Do I need to decide on a profit model before registering? Any advice is helpful - I'm new to the startup world!

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Katherine’s Answer

Yes, look into explanations of the difference between LLCs, C corporations, S corporations, etc., as well as non-profits. The best structure for what I and others in my family have wanted to do is an S corp, but you may decide to do something different. Yes, after that, the first step is obtaining an EIN, and then other things in a rough order of what to take care of would include:


-Set up a separate bank account(s) for business? (Go with some bank or credit union that gives interest or not, has parameters that you can live with based on the size of your business, and has requirements to open a business account that are easy/doable/etc. for you; there are tons of options--then just get done whatever they say you'll have to get done to open an account with them, and that will help you remember stuff you had to do anyway)
-See about setting up separate business email, phone number, social media, etc.?
-Look and see if your state has a general checklist for starting a business: (general stuff that may or may not apply to you)
-Figure out tax filing and payment dates, dates for renewing licenses or filing reports, etc. during the next 18 months and put them on your calendar so you can just do them when the time arrives--put on your calendar a day when you'll look over the 18 months after that and put more dates on, so you can just keep the deadlines rolling
-Look into getting a license from whatever town or city you're in or will operate from as applicable
-See about doing whatever's necessary for the state level of taxation etc.
-See about setting up to pay whatever unemployment insurance or taxes, and then see about setting up for worker's compensation requirements or to set up to decline worker's comp
-Make sure you've done everything applicable in the checklist for your state if there was one
-See if you need to do anything with the State Directory of New Hires or a similar organization
-Get set up with SocialSecurity.gov's Business Services Online
-Figure out which federal tax forms you'll need to file (pages like this can help: https://smallbusiness.chron.com/llc-need-separate-tax-return-17556.html), and then read the instructions for all those forms and look at how the info would fit into the tax forms, and you'll get an idea of which things you want to take deductions for, what ever you'll need to depreciate, and so on
-And then look into exit strategies for someday 🙂

I also would keep a document on my computer to refer to every quarter that says: Every quarter, first file the federal form(s) I need to and pay anything I need to along with that; next, file state taxes at [the appropriate site for that]; then, take care of state unemployment, then make sure my personal taxes are taken care of for the quarter...

Yearly, make sure I've done everything I should have each quarter, and then submit W-2s and W-3s to the SSA, next, file federal unemployment tax, after that then file the normal federal business return and schedules.
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Anthony’s Answer

Hello,
Please, note the following, concerning the start-up issue :-
1. Identify the type of business.
2. Think of whether it could be non-profit business, or otherwise.
3. The basis of your interest and extent of your knowledge in the business.
4. Finances/Capital.

Best regards.
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Deborah’s Answer

Hello there! It's essential to decide the kind of business model you'd like to pursue. If your revenue stream will be from grants and philanthropy, it guides you towards a specific path. On the other hand, if venture capital or profit generation is your goal, then you're looking at a different model.

There's a wealth of information available about the various types of businesses and the registration process for each. Here's a helpful article that provides a comprehensive overview of different business structures: https://www.nerdwallet.com/article/small-business/business-entity.


Best of luck on this exciting journey!
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david’s Answer

Hire the lawyer NOW. That is an important question and too complex to rely on volunteers here. There are many talented people here, but every situation is different, and that is the role of the attorney. All the best to you.
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Jerome’s Answer

Highly recommend starting a business plan. As part of that, you can identify what your core values are, mission statement, etc. Through that process, you might be able to answer your question.

I like to imagine that I am getting an award for my efforts in the future (lifetime achievement) and I try to imagine what the speaker is saying about me. Give that a shot. Are they praising your non-profit work? Maybe you are a B-Corp that makes money while being a great community partner.

Wishing you luck in determining your path.
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