A commercial business is a for-profit organization that operates with the goal of bringing in money and increasing shareholder or owner profits. These companies can be small sole proprietorships or huge conglomerates, among other configurations. They can work in a variety of sectors, including manufacturing, retail, banking, and technology.
A non-commercial business, on the other hand, is a not-for-profit organization that exists to further a certain cause or objective. These groups can include charitable organizations, foundations, social clubs, and other groups that are exempt from paying taxes. Non-commercial enterprises are typically more concerned with achieving their objective than they are with making money or making a profit.
A 501c3 is a category of non-commercial business that is exempt from paying federal income taxes, therefore let’s move on to some relevant questions. It is a non-profit organization that is exempt from taxes and was founded for philanthropic, religious, academic, scientific, or literary objectives. On the other hand, a S corporation is a kind of commercial enterprise that is taxed similarly to a partnership. It permits pass-through taxes, in which case the business’s gains and losses are distributed to the shareholders and disclosed on their individual tax returns.
An S corporation cannot be a 501c3, however a non-profit may have a for-profit subsidiary that is a S corporation. This subsidiary would be required to submit its own tax return and be liable to corporate income tax.
Last but not least, a 501c3 should type “Exempt” in the field for the federal tax classification on a W-9 form. They should also include the name and address of the company, as well as their Employer Identification Number (EIN). The name of the parent company must also be entered if the form is being completed for a subsidiary or affiliate.
In summary, the primary distinction between commercial and non-commercial enterprises is their goal. Non-commercial enterprises exist to further a particular cause or goal, whereas commercial firms exist to generate a profit. An S corporation cannot be a 501c3, however a non-profit may have a for-profit subsidiary that is a S corporation. A 501c3 must declare their tax-exempt status, as well as their EIN and organization details, on a W-9 form.