[chatmasta]

There is a place for this sort of cynicism, for example when looking at Zuckerberg’s structure of his “family trust.”

But in this case it’s really an absurd implication. There is literally no personal benefit to founders making their company a non-profit. Yes they can pull salary from it, but they could do that in a for-profit company too. Not only that, but it’s impossible to sell a 501c3 non-profit because there are no shares. It can only dissolve, in which case the board must distribute any remaining assets to another non-profit.

[a_imho]

I don't understand what's absurd about it, you can keep more money if you save on your taxes (both the company's and personal? I don't know how the US system works).

I don't argue being a non-profit is a cause for suspicion in case of a saas, I just don't see why would it be noble.

[chatmasta]

It’s absurd because if you sit down and do the math, you’ll find there are basically no monetary advantages to paying yourself out of a 501c3 vs LLC/SCorp/CCorp. And even if you did find an advantage, there is no way it saves more money than you could make by selling your company. You cannot sell a non profit.

[a_imho]

Still don't understand, when your organization pays less tax, you have more money to pay yourself, thus your salary will be higher.

Conversely, there is little to no reason for being setup as a non-profit in Ghost's case.

[1]https://www.upcounsel.com/llc-vs-nonprofit

[chatmasta]

You do have a point, but it’s a marginal gain at best. Unless you’re operating on razor thin profit margins, it’s not going to make a significant difference in how much you have available to pay yourself. And when you do pay yourself, you and the company need to pay taxes, even if the company is exempt from some income tax.

But really the important point is you cannot sell your company. How many years of 10% extra salary is worth sacrificing your ability to liquidate all the blood sweat and tears you put into your company?

[nuggien]

the only advantage i could see in creating a non-profit vs a for-profit, specifically in this case, is that you get the free publicity and goodwill of customers at the start. "i'm creating a wordpress competitor" doesn't sound nearly as good as "i'm creating a wordpress competitor that can never be taken away from you because we are a non-profit". If you create a crappy product, it doesn't matter in the long run, of course.

[johnonolan]

We pay full corporation taxes and receive no tax benefits of any kind.

As mentioned several times in this thread, our company is based in Singapore, not the US. The structures, laws and taxes are not equivalent.

I wrote a post about this a while back here: https://john.onolan.org/what-it-means-to-be-non-profit/

[harveynick]

They're a non-profit, not a charity. In the podcast linked to in this post they say quite specifically that being a non-profit doesn't give them tax advantages.

[wolco]

Is the salary information public?

Because one can cash out through a 500k a year salary

[chatmasta]

Or one could just incorporate as a for-profit in the first place, and pay a $500k salary. There is basically no advantage to paying yourself $500k at a 501c3 vs a for-profit, and certainly not one that outweighs the many disadvantages. Employees need to pay taxes just as they would at any corporation, and the company needs to pay their withholdings. The only payroll tax a 501c3 is exempt from is FUTA (federal unemployment tax).

Seriously, looking for nefarious motivation here is really grasping at straws.

[j16sdiz]

... 501c3 ..

They are a Singapore non-profit. https://blog.ghost.org/moving-to-singapore/