Forming a Non-Profit

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bandmama
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Forming a Non-Profit

Post by bandmama » Tue Sep 01, 2009 11:38 am

I am looking for info on forming a Non-profit for our Boosters. If anyone has done this for their Booster Organization I would be interested in hearing how easy/difficult the process was and if you have any pointers.

Thanks!

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Re: Forming a Non-Profit

Post by Chaporch » Tue Sep 01, 2009 11:56 am

first step is to get the book "Forming A Non-Profit" by Anthony Mancuso. Published by Nolo Press. If you are in California, he has one specifically for California.

I would suggest paying the extra money and get the book with the disk of all the forms.

It is not a difficult process. I have done it three times in the past. If you have a parent who is a non-profit lawyer, see if they will consult with you pro-bono.

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Re: Forming a Non-Profit

Post by bandsupporter » Wed Sep 02, 2009 10:00 pm

I got the book but it was not any better then just downloading the on-line instructions from the IRS. Download a sample Art of Inc and By-laws and modify them to reflect you organization structure. Start your organization effective the current band year so you don't have to show any tax forms just current projection or you might have to go back and pay taxes! If you project over 10,000 in revenue over the next 3 years it will cost you 750 to file. Takes 60 days to process but you can request it be expedited.

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Re: Forming a Non-Profit

Post by 8-ball » Thu Sep 03, 2009 8:27 am

Once you get 501c3 status, you will not have to pay taxes. That should be the next step. It is costly ($900 I think) but worth it.

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Re: Forming a Non-Profit

Post by fieldshowqueen » Fri Sep 04, 2009 12:00 pm

8-ball wrote:Once you get 501c3 status, you will not have to pay taxes. That should be the next step. It is costly ($900 I think) but worth it.
You MAY have to pay taxes and ALL 501(c)(3)'s have to file an annual return. And yes, Valley View had their own Non-Profit for over 10 years. There are pluses and minuses to this route including having your own insurance (you aren't part of the School District anymore), your own city business license (if you are selling anything this is a necessity), and your own payroll and accounting (no relying on ASB). Some Districts like this set up, others don't or put restrictions down (like reviewing and approving insurance).
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Re: Forming a Non-Profit

Post by 8-ball » Fri Sep 04, 2009 3:04 pm

501c3 status makes you tax exempt, where do you get the "may have to pay taxes" from? That is the entire point of getting this status.

Filing a return is easy if you don't make more than $25,000 a year. If you do, then it gets a bit more difficult.

And yes, insurance is a necessity. It is pretty easy (and inexpensive) to get though. I do understand that if you are associated with a school or district, there may be addition hoops to jump through...unfortunately.

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Re: Forming a Non-Profit

Post by fieldshowqueen » Mon Sep 14, 2009 2:17 pm

8-ball wrote:501c3 status makes you tax exempt, where do you get the "may have to pay taxes" from? That is the entire point of getting this status.
Where I "get it from" is the returns we had to file every year (plus catching up on the 5 returns we did not file because our treasurer did not feel it necessary because "we are a non-profit"). Unfortunately if you have money left over from the prior year AND you do not declare that money correctly, the IRS sees it as "income" despite the 501(c)(3) status. There are ways around it, but because our previous booster treasurer was unaware of those, we had to pay a "minimum corporate tax" of $800 one year.

My statement was issued as a warning to make certain that if you do establish a 501(c)(3), you fully understand 1) how and when to file a non-profit return and 2) what steps the treasurer and president must take to avoid penalties or taxes like this example.
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Re: Forming a Non-Profit

Post by 8-ball » Mon Sep 14, 2009 3:15 pm

I have not run into that yet (or heard of it), thank you for the heads up!

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Re: Forming a Non-Profit

Post by fieldshowqueen » Tue Sep 15, 2009 11:34 am

Good points with respect to the OP's request for problems vs. ease of creating a non-profit:
8-ball wrote:Filing a return is easy if you don't make more than $25,000 a year. If you do, then it gets a bit more difficult.
Our income from 125 band members plus fund raisers and hosting competitions was about $150,000. Make sure your bookkeeping is up-to-date and you have a complete audit trail. I suggest a Non-Profit Accounting program. There's a lot of info on this at http://www.muridae.com/nporegulation/accounting.html
8-ball wrote:And yes, insurance is a necessity. It is pretty easy (and inexpensive) to get though. I do understand that if you are associated with a school or district, there may be addition hoops to jump through...unfortunately.
We had to have the Risk Management Department at district office approve the policy, which took them over a month, so plan your renewal accordingly to avoid a lapse in coverage. They required additional limitations on property and personal injury, plus several "Additional Insured" additions. Since we also had a city business license we had several other Additional Insureds there too. AND if the band owns a trailer, you should purchase insurance for any drivers, property in the trailer during transport, etc. The policy ran about $700 per year for property and another $1000 for auto, and was from AIM (https://www.aim-companies.com/public/gr ... cd=booster). We got additional insurance for our officers each year too which ran about $50 more.
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Re: Forming a Non-Profit

Post by 8-ball » Tue Sep 15, 2009 3:24 pm

This is all great information, thank you!

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