Employment Law 101: Tax-Exempt Status for Nonprofits

A nonprofit organization is is typically a corporation organized under special provisions of state law that prohibit issuance of shares and the payment of dividends. Nonprofits have no shareholders, and they don’t distribute earnings to owners. They aren’t required to operate at a loss. The point here is that any surplus of revenues over expenses must be retained or applied to nonprofit purposes and cannot be distributed to members of the nonprofit.
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