Can a non-profit church have a profit making business renting out space in their facility?

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Can a non-profit church have a profit making business renting out space in their facility?

I want to start a bakery and need a kitchen to do so. My church has large kitchen but I don’t want to run into any legal issues. And if I just sell to church members do I really need to be in a kitchen, or can I use my home kitchen?

Asked on September 5, 2011 under Business Law, Alaska

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Your church most likely is a tax exempt organization under Internal Revenue Service regulations. A tax exempt organization can generate income to support itself. Its purpose, however to have tax exempt status under federal guidelines is for charitable purposes.

As such, your church can rent out space in its facility to generate income. If you want to run a bakery most states require the use of a commercial kitchen to generate your product. If all of your cutomers are going to be church members for your product, most likely you can just make your bakery products out of your home as opposed to using a commercial Kitchen. However, if things start expanding for your business, you will need to have a commercail kitchen.

Good luck.


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