“For-profit companies are taxed in several ways, depending on their form of organization. Small businesses, for example, are usually sole proprietorships and partnerships. The IRS treats the income from proprietorships and partnerships as personal income, and the owners are held personally liable for all business debts. Nonprofit organizations can register for income-tax exemption under section 501(c)3 of the tax code. Contributors to nonprofit organizations are offered tax incentives for their donations as well. Per the Service Corps of Retired Executives (SCORE), nonprofit organizations are treated as legal entities for tax purposes, leaving company founders not liable for organizational debts” (Ingram 2017). Noting that an incorporated organization which exists for educational or charitable reasons, and from which its shareholders or trustees do not benefit financially.
