There are several important differences between nonprofit and for-profit entities. Ownership: No one owns a nonprofit. Instead, a group of individuals oversees and manages the nonprofit. However, no one owns any of the nonprofit's assets. In contrast, people or businesses own a for-profit. The for-profit owners also own the business's assets. Governance: The individuals managing nonprofits and for-profits act in the best interest of the organization. However, a nonprofit is held to some additional standards. For example, individuals with decision-making authority must be careful to avoid conflicts of interest and, when they occur, follow certain practices to ensure a fair decision is made. Further, individuals with decision-making authority have a legal obligation to act in the best interest of the nonprofit even if the decision may not be in the best interest of the individual or his or her family members. Assets: A nonprofit organization is an organization that reinvests its profit back into its charitable purposes. It is not permitted to distribute the profits to its directors, managers, and members. However, a nonprofit may use its operating income to pay for reasonable expenses, such as rent, employee wages, insurance, supplies, equipment, and advertising. By contrast, a for-profit business exists to generate profit for its owners and may lawfully distribute its profit to its owners. Taxes: Most, but not all nonprofits, are exempt from most state and federal income taxes. Depending on state law, nonprofits may also be exempt from paying sales tax, real estate tax, occupancy tax, and franchise tax. However, like a for-profit business, all nonprofits must pay payroll taxes, local business occupation taxes, state unemployment taxes. All nonprofits must pay unrelated business income tax. Dissolution: Every nonprofit and for-profit eventually comes to the end. Often this is due to the lack of interest by volunteers or the public, the lack of money, or the nonprofit accomplished its purpose. Since a nonprofit is not owned by anyone, when it wants to stop operating, it must distribute its assets to another nonprofit. In contrast, a for-profit will distribute its assets to its owners. In addition, many states require a nonprofit to notify the state Attorney General before dissolving the nonprofit and distributing the assets to another nonprofit.