With the current variety of online platforms available for sales and fundraising, it has become increasingly popular for non-profit organizations to sell goods online. But, there are four important legal and tax considerations to explore when expanding your activities to the World Wide Web, including:

1. Unrelated Business Income

Organizations exempt under 501(c)(3) generally are not required to pay income tax on their revenues. However, these organizations may be required to pay tax on income derived from regularly carried on trade or business activities if the activity is not substantially related to the organization's exempt purpose. Unrelated business income can become a complex issue to navigate. As such, non-profits that conduct online sales must analyze the sales to determine if they are related to, and further, their exempt purpose. If not, tax may need to be paid on the revenues generated from the sales. While exempt organizations are not prohibited from having unrelated sales, generating too much unrelated business income may jeopardize tax-exempt status.

Read the other three major matters you should consider before conducting online sales for your non-profit.

Continue reading about the four frequent misconceptions about state tax with non-profit organizations.