Financial Difference Between For-Profit And Non-Profit Organization

Financial Difference between For Profit and Non- Profit Organization
When an entrepreneur wants to start a business he or she has a wide range of decisions to make before beginning. One of the basic or first decision is if the business is for profit or non- profit organization. A profit organization priority goal is to make a profit while non- profit is a business whose priority is rendering services to the community, such as food, health, shelter, education and environmental needs. However, is does not imply that a non-profit organization does not make a profit. These two organizations have similarities and differences. Similarly, they need good leadership, money for the business to flourish, a have goals and mission that affect the growth of the society. The differences between these two organizations are types of ownership, how they record their financial activities and the different goals that the organization aspire to. This essay will shed more light on the financial differences between these two types of organization. …show more content…
Non-profit organization’s income mostly comes from donations and sales of their goods and services while for profit organizations get their income from sales of goods or services. It was mentioned that both organizations make profits, but the use of the profits are different. For profit organizations used their profits as they deem fit, either to pay debts, shareholders, suppliers and personal incurred expenses. On the other hand non-profit organizations profits made are put back into the business, donated to other non-profit organization or utilized at the donors’