A non-stock corporation is a corporation

Corporation

A corporation is created under the laws of a state as a separate legal entity that has privileges and liabilities that are distinct from those of its members. There are many different forms of corporations, most of which are used to conduct business. Early corporations were established by charter...

 that does not have owners represented by shares of stock

Stock

The capital stock of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors...

. That type of corporation is called a stock corporation

Stock corporation

A stock corporation is a for-profit corporation which the ownership of the corporation is expressed by shares of stock. This allows for the ownership of the corporation to be readily determined, as shares are property, and are transferrable as any other property such as money, subject to any...

. Instead, a non-stock corporation typically has members, who are the functional equivalent of stockholders in a stock corporation (they have the right to vote, etc.) Non-stock corporations may also choose to have no members. All not-for-profit corporations are non-stock corporations. While rare, it is possible for a for-profit corporation

For-profit corporation

A for-profit corporation is a corporation that is intended to operate a business which will return a profit to the owners. A for-profit corporation, depending on the jurisdiction to which it is incorporated, may be operated either as a stock corporation or as a non-stock corporation.A non-profit...

 to be a non-stock corporation.

Types

There are potential reasons for forming a non-stock, for profit corporation.

• A corporation created solely to act as nominal owner of some property might not need to have shares of stock because all of the directors or members would have been co-owners. For example, owning a safe deposit box in a corporate name: if the corporation is non-stock, the directors of the corporation are not its owners, and thus have no personal ownership of shares of stock of the corporation, and as the safe deposit box is in a corporate name, it is not listed as belonging to the directors either.
• By not filing as a non-profit, it is not necessary to obtain IRS
  Internal Revenue Service
  The Internal Revenue Service is the revenue service of the United States federal government. The agency is a bureau of the Department of the Treasury, and is under the immediate direction of the Commissioner of Internal Revenue...
  
   registration and fees. For corporations being operated for short-term purposes, this may be adequate.
• While members of a non-stock corporation are not entitled to dividend
  Dividend
  Dividends are payments made by a corporation to its shareholder members. It is the portion of corporate profits paid out to stockholders. When a corporation earns a profit or surplus, that money can be put to two uses: it can either be re-invested in the business , or it can be distributed to...
  
  s, if it is a for-profit corporation, they are entitled to share in the proceeds in the event the corporation is liquidated; this is not available if the corporation is non-profit; if a non-profit is liquidated, all the proceeds must either be donated to another surviving non-profit or escheat
  Escheat
  Escheat is a common law doctrine which transfers the property of a person who dies without heirs to the crown or state. It serves to ensure that property is not left in limbo without recognised ownership...
  
  ed to the government.
• In the event of a for-profit corporation being formed for a single business purpose such as a one-shot transaction
  Financial transaction
  A financial transaction is an event or condition under the contract between a buyer and a seller to exchange an asset for payment. It involves a change in the status of the finances of two or more businesses or individuals.-History:...
  
  , i.e. construction of an apartment building, at the end of the transaction (when the apartment
  Apartment
  An apartment or flat is a self-contained housing unit that occupies only part of a building...
  
  s are sold) the corporation can be "wound up and dissolved" (liquidated) and the profits paid to the members or directors without deduction. But if it is a stock corporation, it may be necessary to pay taxes on the profits, then pay the benefits as dividend
  Dividend
  Dividends are payments made by a corporation to its shareholder members. It is the portion of corporate profits paid out to stockholders. When a corporation earns a profit or surplus, that money can be put to two uses: it can either be re-invested in the business , or it can be distributed to...
  
  s, which are taxable to the recipients. (This problem is often referred to as "double taxation
  Double taxation
  Double taxation is the systematic imposition of two or more taxes on the same income , asset , or financial transaction . It refers to taxation by two or more countries of the same income, asset or transaction, for example income paid by an entity of one country to a resident of a different country...
  
  .") A payback of the assets of a corporation would generally be tax-free until all of the original capital
  Financial capital
  Financial capital can refer to money used by entrepreneurs and businesses to buy what they need to make their products or provide their services or to that sector of the economy based on its operation, i.e. retail, corporate, investment banking, etc....
  
   invested in the corporation were returned. Thus use of a for profit non-stock could be used to legally avoid certain taxes.
• While stock in a corporation is considered an asset
  Asset
  In financial accounting, assets are economic resources. Anything tangible or intangible that is capable of being owned or controlled to produce value and that is held to have positive economic value is considered an asset...
  
   and reportable (and could be seized in the case of a lawsuit or a government confiscation
  Confiscation
  Confiscation, from the Latin confiscatio 'joining to the fiscus, i.e. transfer to the treasury' is a legal seizure without compensation by a government or other public authority...
  
   or nationalization
  Nationalization
  Nationalisation, also spelled nationalization, is the process of taking an industry or assets into government ownership by a national government or state. Nationalization usually refers to private assets, but may also mean assets owned by lower levels of government, such as municipalities, being...
  
  ), being a member of a corporation or a director is not an asset and thus is not subject to seizure or reporting for asset purposes. Thus it may be used to hide or obscure assets without doing anything illegal
  Law
  Law is a system of rules and guidelines which are enforced through social institutions to govern behavior, wherever possible. It shapes politics, economics and society in numerous ways and serves as a social mediator of relations between people. Contract law regulates everything from buying a bus...
  
  .
• Someone is incorporating a business for liability protection, but is not really interested initially in being able to sell the business. A company can always switch from stock to non-stock and vice-versa at any time, usually by paying a small fee to change the articles of incorporation
  Articles of Incorporation
  The Articles of Incorporation are the primary rules governing the management of a corporation in the United States and Canada, and are filed with a state or other regulatory agency.An equivalent term for LLCs in the United States is the Articles of Organization...
  
  , and potentially a stock fee if the corporation changes from non-stock to stock. (Changing from non-profit to for-profit is generally not allowed absent special permission.) Generally the renewal fees on a non-stock corporation can be substantially less than a stock corporation. For example, the fee for incorporating any non-stock or incorporating a stock corporation up to a small number of shares, say 40,000 might be $200, but a year later, at renewal, the renewal fee for a non-stock corporation would be $50, while the stock corporation would have a renewal fee of $50 plus a stock fee of perhaps another $200 or so.
• Some jurisdictions (Maryland, for example, charges $300 a year) impose a fee for an annual report filed by stock corporations, and in some states impose this fee on LLCs, but do not impose this fee on non-stock corporations. Generally, most for-profit companies are stock corporations, this thus allows charities and churches to incorporate without paying this fee, as a non-profit is always a non-stock corporation. Note this fee is in addition to the fee charged for the yearly renewal of the corporation's charter
  Articles of Incorporation
  The Articles of Incorporation are the primary rules governing the management of a corporation in the United States and Canada, and are filed with a state or other regulatory agency.An equivalent term for LLCs in the United States is the Articles of Organization...
  
  .

It is interesting to note in many jurisdictions the yearly renewal fees imposed on corporations can be higher than the initial filing fee.