A nonprofit business is a business whose owners do not receive distributions of profits—and any money remaining after payment of the business’s expenses must be retained and used for its own expenses and for charitable purposes. Nonprofit businesses are often charitable foundations and exempt from federal income tax under Internal Revenue Code section 501(c)(3). A tax-exempt 501(c)(3) is a charitable organization that is formed for religious, charitable, educational, literary, artistic, or scientific purposes, or for preventing cruelty to animals and children, fostering amateur sports competition (locally and internationally), or testing for public safety. These charitable organizations are distinct from not-for-profit social or recreational clubs that may be exempt from federal income taxation if they meet the requirements of Internal Revenue Code section 501(c)(7).

In Nevada, a nonprofit business is typically organized as a nonprofit corporation under Nevada Revised Statutes (NRS) Chapter 82, which governs Nonprofit Corporations. These entities are designed to operate without the primary goal of making profits for owners or shareholders. Instead, any surplus funds after expenses are reinvested into the organization's mission or for charitable purposes. Nonprofits in Nevada may apply for federal income tax exemption under Internal Revenue Code section 501(c)(3) if they are organized and operated exclusively for religious, charitable, educational, scientific, or other purposes outlined in the statute. To maintain this tax-exempt status, they must adhere to certain regulations, such as not engaging in political campaigns or distributing earnings to private individuals. Additionally, Nevada nonprofits must comply with state regulations, including annual filing requirements with the Nevada Secretary of State. Nonprofit social or recreational clubs may qualify for tax exemption under section 501(c)(7) if they are organized for pleasure, recreation, and other nonprofitable purposes and no part of the net earnings inures to the benefit of any private shareholder.