In many ways, starting a non-profit business is like starting a for-profit business, and to treat it otherwise might actually hurt you in the long run.

Non-profit organisations operate like businesses in that the goal is in fact to make money: The difference is that all profits are re-invested into the non-profit company, rather than distributed to shareholders, which don’t exist in not-for-profit organisations.

The similarities and differences between for-profit businesses and nonprofits are crucial to understand before starting a non-profit business. In large part, the way you define and manage your non-profit business comes down to finances: How you make and spend money, how you keep track of income and expenses, and how you report your finances to governing bodies are all factors that affect the success of your business.

So, before you start a non-profit, here are three essential points you need to consider in order to set yourself up for a successful – and, yes, profitable – not-for-profit business.

1. There are various types of non-profit businesses, and each has it’s own particular restrictions and rules to follow.

Charities, for example, are just a type of non-profit: Not all non-profit businesses are charities, which must comply to much stricter rules. For example, charities usually cannot pay their trustees salaries, so they rely heavily and volunteers and donations; they are more closely audited by governing bodies and are quite restricted to acting only in ways that directly benefit the public. They do, however, receive large tax breaks in return for complying to such heavy restrictions.

Knowing your options as to what type of non-profit business you’ll be operating, is a vital first step, as the limitations set upon your organisations – and the benefits you’ll receive accordingly – will greatly affect the way you manage your non-profit business. Furthermore, the way you approach your finances and accounting strategies will depend on the type of not-for-profit you choose to start.

To qualify as a non-profit organisation, you are legally obligated to choose a board of trustees who will manage your business. This structure divides specified roles and legal responsibilities amongst a group of individuals who are, for the majority, not familially related. A board of trustee differs from a group of owners or shareholders, as they do not own any part of the company. They do, however, undertake similar duties, such as secretarial responsibilities, financial accounting and planning, and team management.

Depending on the limitations set for the type of non-profit organisation you establish, it is possible that your board of trustees can be full-time employees of your non-profit. However, as your board shifts and changes with the comings and goings of trustees, no one will leave the board with any share of the company nor with any profit – beyond what they might have earned through their salary.

3. You must define your business’s charitable purpose to qualify for the financial benefits that non-profit organisations receive.

Another requirement for a certified non-profit business that receives the tax reliefs and exemptions associated is a clear mission statement. Though this seems like an obvious step when it comes to forming a non-profit business, the importance of creating a clear and strong mission statement should not be overlooked.

When applying for your non-profit status, it is necessary to communicate your non-profit’s purpose, the community you intend to serve, and how you intend to serve them, in an organised and effective way. Your business plan will hinge upon your non-profit’s mission statement, as you design a strategy that will help you meet your goals.

After you achieve non-profit status, your mission statement continues to act as a guide for the decisions that follow. Your board of trustees will look to your mission statement regularly to navigate through obstacles and take steps toward growth. So, consider your mission statement as a crucial step that will affect your non-profit not only in the immediate future, but for years to come.

As you begin to take steps toward founding a non-profit business, take the time to consider thoroughly these three points, so that you can set-up your non-profit business for both short-term and long-term success.