Can Non Profits File Bankruptcy And Still Operate ?
A non profit organization is a type of company that carries out work for social causes or giving grants for example and their main idea for conducting business is not for making profit. Also, such organizations are mostly run by trustees and also through grants and donations. For example, a church can be a non profit organization. They function mainly for the benefit of the society, and do not have any deeper cause for making profits. |
Sponsored Links :
|
Such companies have to pay lower taxes than the commercial companies. However, just like any other organization even a non profit organization can go bankrupt. This typically happens when they stop receiving donations and their expenses are higher than their income. In such a case, even a NGO can apply for bankruptcy.
Filing for bankruptcy does not mean that a business has to shut down. The non profit organization can still operate but they can reduce the level of activities they can do. There are two kinds of bankruptcies that individuals and organizations can file for, one is the Chapter 7 and another is Chapter 11. For individuals, there is also the Chapter 13.
However, only a good tax lawyer can guide as to which category the individual or the company can fit into. A non profit organization may not be able to benefit if they file for Chapter 11. A good lawyer will always examine which would be the best method to file for bankruptcy. In case the non profit organization has any loans against their company then filing for bankruptcy can help their situation a bit. However, which type should they file for solely depends on their individual needs.
More Articles :
|
