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I am starting a for-profit online donation platform. My company currently is an LLC and I have gotten conflicting reports on whether or not I need to convert to a 501(c)(3) so that the passthrough funds are still tax-deductible. I don't think I should but one CPA said yes and the other no. This is a US-based company. I'm so confused!

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As far as I know the 501c3 is only for Not For Profit organisations. See http://www.irs.gov/charities/charitable/article/0,,id=96099,00.html for eligablity criteria.

If your a for profit organisation then you are an LLC or similar variant.

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Yes I understand that, but should I disband my LLC and form a 501c3 in order the for end donors to receive their tax donation receipts from the nonprofit they donate to or can they still receive them if they donate through myt LLC (a pass-through)? – tesmar Jun 12 '11 at 11:36
I think it comes down to "Are YOU for profit, or not for profit?". How are you getting your money? from the end user or the organisations? If your "for profit" then registering as a 501c3 means you can't make a profit yourself. – Robin Vessey Jun 12 '11 at 12:22
I understand that I cannot make profit as a 501c3. I am willing to change if it is necessary, but is it? When someone donates money to a 501c3 online through VISA, VISA takes a chunk of that and the 501c3 does not get the whole bit, but VISA itself is not a 501c3. It is just the cost of doing business. – tesmar Jun 12 '11 at 17:58
Huh? An LLC can have 501c3 tax-exempt status the same as a "regular" corporation. – Ask Bjørn Hansen Mar 26 '12 at 4:27
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In my experience and IANAL, it depends mostly on the purpose to which the funds will be put.

Contact the CPA that does your company's books (you have one, right?) and follow her advice. That way, if you are advised incorrectly and the Fed come calling, you have some recourse.

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