Comment by superturkey650 | Hacker News Reader

Comment by superturkey650 | Hacker News Reader

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You can still receive a salary, and as far as I know there are no limits on what you can pay yourself. However, you must have a predefined salary and you are audited regularly to ensure there isn't fraud. However, outside of the overhead (salaries, office, servers, etc) any further profits have to be reinvested into the business. This means that if they get 5 million dollars and only spend 4 million, no one gets to take home the extra million. It has to go back into the business.

This is in contrast to for-profit companies where that money can go to the owner (private company), or to shareholders (public company).

The Wikipedia link posted above probably has a better explanation, this is just my understanding due to my SO working at one.

> This means that if they get 5 million dollars and only spend 4 million, no one gets to take home the extra million. It has to go back into the business.

I wonder where the line is drawn on that.

For example, can the CEO buy a house to live in and then claim it's investing in the business because that's where he works remotely once in a while?

Also on the salary itself, do you pay regular income tax on that (separate from the company, but as an individual receiving a salary)?

Yes, you pay income tax.

Yes, each salary is taxed normally. Then, there are laws against non-profit executives enriching themselves[0]. The government watches this very closely.

Also, public non-profits must release regular reports on their finances. So, contributors can decide for themselves whether the funds are being used appropriately. That's the basis for sites like https://www.charitynavigator.org [1] and https://www.guidestar.org

One particularly important metric is how much the organization spends on overhead vs how much is spent directly furthering their cause.

[0] Religious organizations seem to play by a different set of rules, but thats neither here nor there.

[1] A non-profit is not necessarily a charity, but this gives you an idea of how both can be evaluated.

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