Got An LLC But Need A 501c3

Some people already have a for-profit (or an LLC) organization set up and want to know if they can convert it to a 501c3 non-profit organization. Unfortunately, an LLC cannot be a 501c3; However, you can still setup the 501c3 organization.


An LLC Cannot be a 501c3

The LLC organization can’t be a 501c3 nonprofit organization for two main reasons. The first main reason is that a for-profit organization has an owner or multiple owners. Nonprofit organizations do not have any owners because they are established for the public. So the original paperwork filed for the organization is not compliant with the IRS requirements for 501c3 nonprofit organizations.

Another reason is that a for-profit organization is usually set-up in order to obtain a profit for the owner(s). Nonprofit organizations are set-up for charitable, educational, or religious purposes. This will also be reflected in the original paperwork filed, and thus, LLCs will not be compliant with the IRS requirements for 501c3 nonprofit organizations.


Setting-up the 501c3

In order to set-up a 501c3, the best option is always to start from scratch for the nonprofit organization you are wanting to set-up.

On the other hand, if you have already set up an LLC; and you really like the name of the LLC; and you want to use this name for your 501c3 organization, then you have to take an additional step before setting up the 501c3. You will need to dissolve the LLC first before you can start the new process of setting up the 501c3 nonprofit organization. Also, depending on the state you are setting up the 501c3 in, there could be additional complexities when going this route.

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