tax-law health non-profit
What are the restrictions for sales to raise revenue for non-profits?
<p>We are located in New Jersey USA and are considering forming a non-profit for Internet based on-line health care and consulting.  We are not involved in politics and will not be making any political contributions.  What are the restrictions in sales of services and diagnostic products if any?  Also, what are the restrictions on salaries, benefits, and bonuses?  We are thinking of 501c3 but are flexible.</p>

<p>While this isn't meant to be a complete answer, I'll point out a couple of things you may want to pay attention to.</p>

<p>The first has to do with unrelated business income, which may be taxable despite your nonprofit status.  In particular, using a volunteer workforce tends to exempt you from this under Sec 513(a)(1).  Selling only donated items also works under Sec 513(a)(3).  These methods may be used for things not exempt under the more general rules of Sec 513(a) &amp; (a)(2):</p>

<p><a href="https://www.law.cornell.edu/uscode/text/26/513" rel="nofollow noreferrer">https://www.law.cornell.edu/uscode/text/26/513</a></p>

<p>In terms of generating revenue, you may also want to avoid private foundation status by making sure that you receive more than 1/3 of your support from public sources (including sales of merchandise relative to activities that are not unrelated trades or businesses).  Sec 509(a)(2).</p>

<p><a href="https://www.law.cornell.edu/uscode/text/26/509" rel="nofollow noreferrer">https://www.law.cornell.edu/uscode/text/26/509</a></p>

<p>Of course, if you're serious about this, you'll want to get a qualified tax professional on board as to your specifics.  Forming an entity with the requisite articles in its governing document will be a good start, as not only are such provisions required to obtain nonprofit status in general, they will provide some guidance on an overall level as to what the entity may or may not do.</p>
