Can I Pay Myself A Salary In A Nonprofit

The most important part of the legal structure of your 501c3 nonprofit will come in the form of the completion of the Form 1023 Application for Tax Exempt Status. The Application for Tax Exempt Status is the application you are required to complete (with some exceptions) if you want 501c3 tax-exempt status for your nonprofit. The way that you choose to complete this form and structure your nonprofit will make a difference to your ability to qualify for major grant funding, ability to pay staff, ability to pay yourself a salary, etc. Like most regulatory agencies, the I.R.S. has priorities when it comes to evaluating your nonprofit’s Application for Tax Exempt status. In my years of successfully filing the form and obtaining approvals for my clients, I believe the main concerns of the I.R.S. involve (1) avoiding conflicts of interest; and (2) avoiding nonprofits that only benefit the directors or officers. In this chapter, I will share how these two priorities are reflected in the various aspects of the Form 1023 Application for Tax Exempt status as well as ways that you can overcome scrutiny. For purposes of this chapter, we will focus on the long form but many of these principles apply to the expedited Form 1023 form as well.