We are proud to announce our NEW community destination. Engage with resident experts and fellow entrepreneurs, and learn everything you need to start your business. Check out the new home of StartupNation Community at startupnation.mn.co

NonProft Catering Business Model?

Fusion7Fusion7 subscriber Posts: 1
edited June 2011 in Business Planning
We do a fair amount of volunteering for various charities, but we love to compete in cooking competitions.   We see an opportunity to sell food products (online and retail), to cater events, and vend at various locations; so we planned to open an LLC or S-Corp as a Food Service Group.  When we started talking very seriously about our business model we decided two things: 
1) We want to create great food products and sell them at the bottom tier of their fair market value; low markup offset by sales volume only.  There is way too many food-service business out there charging way too much for their product.
2) All net proceeds and donations to our team will be used to purchase supplies for charity projects throughout Michigan.  Our clients would be able to view an online video diary of exactly how their money is used to bring supplies to charities (shelters, etc).
So, here`s my question/issue:
It seems like we ought to establish ourselves as non-profit, or at least not-for-profit; our clients money is working for the greater good of the community. 
However, shouldn`t we really be establishing ourselves as corporation regardless of our intent? 
It seems that though we can prove that we are passing through our net proceeds to charities, we are not the same as Habitat For Humanity or COTS, we really are selling products and donating the profit, plan and simple.


  • Options
    vwebworldvwebworld subscriber Posts: 40
    Definitely consult an attorney or at least your State`s attorney general or Secretary of State to determine what it means to be a not-for-profit in your State.
    For example, if you are a non-profit public charity in Massachusetts You do not own the corporation or have any equity in it. If it is sold the State gets the proceeds of the sale.
    From what you describe, being a not-for-profit can help you get "donations" (from people looking for tax deductions). A non-profit can still make a profit.
  • Options
    Fusion7Fusion7 subscriber Posts: 1

     Is it your passion to just do this for others, or a way to make money by doing this?

    Yes, it`s simply something we feel passionately about.  We have good day jobs and have spent a fair amount of time with other side jobs that have generated decent income, but we really want to have a model that is designed to benefit those who need it most.
  • Options
    robertjrobertj subscriber Posts: 0 Member
    The process for setting up a not-for -profit business is straight forward.
    1. establish a corporation - usually in your "home" state
    2. File with the IRS for approval of not -for-profit status.
    However, there at least 30 not-for-profit categories in the tax code, so you should probably get professional advice.
  • Options
    infinique3infinique3 subscriber Posts: 0 Member
    Business model needs to be sound. The most crucial is your cash flow projections.
Sign In or Register to comment.