Financial Account for "Nonprofits"

[Vilandil Tasardur]

Hey guys, very unusual question here that I'm wondering if anyone has insight for.

 

I have recently started teaching martial arts through a church. I teach entirely for free, and collect fees only for equipment and exams. Equipment fees are passed on to the student "at cost", without me taking any off of the top. Exam fees are built up to make large equipment purchases for the school as a whole (like mats, kick bags, etc).

 

So, in that sense, I suppose I am operating as a "non-profit". I'm certainly not making any income, nor am I interested in doing so. I want to run it as a volunteer and collect only enough money to keep things moving. However, I have not established myself as a 501c3. So therein lies my problem.

 

In a perfect world, we just wouldn't deal with money at all, ever. But no matter what we are going to have expenses. I'd really like to keep them separate from my personal finances, if nothing else to be transparent. Does anyone have suggestions on the best way to do that? I could open a separate checking account just for the dojo finances, but I'd have to meet minimum balances to avoid fees. I wouldn't be adverse to establishing as a nonprofit 501c3, especially because I'd like people to feel like donations are tax deductible, but from the little research I've done that seems more than I'd thought. 

 

Am I missing any options? How do people handle things like adult sports leagues and such, where you have finances to manage but aren't large enough to be your own nonprofit? Everyone deals in cash and trusts a point person with the money? If I'm not missing any option, does anyone have advice on either option?

[LadySkinsFan]

Are you going to continue to operate through the church? If so, approach the church board and see if they are willing to work with you to develop a project within the church structure. That way, there's already a 501(c)3 structure in place.

 

Write up a plan just like you did here, what expenses are and they are used, fees the same. Plus parents of the students can write off the fees they are charged. 

 

You can easily keep the books for the church for your project, just use some software, that they can use to roll it all into their books. This will take the stress of bookkeeping from them. 

 

Good luck with this approach.

 

If you need to do something else, there are books and articles that will take you through the steps of incorporation and setting up the non-profit. Also get a CPA that works with non-profit companies.

[Vilandil Tasardur]

12 minutes ago, LadySkinsFan said:

Are you going to continue to operate through the church? If so, approach the church board and see if they are willing to work with you to develop a project within the church structure. That way, there's already a 501(c)3 structure in place.

 

Write up a plan just like you did here, what expenses are and they are used, fees the same. Plus parents of the students can write off the fees they are charged. 

 

You can easily keep the books for the church for your project, just use some software, that they can use to roll it all into their books. This will take the stress of bookkeeping from them. 

 

Good luck with this approach.

 

If you need to do something else, there are books and articles that will take you through the steps of incorporation and setting up the non-profit. Also get a CPA that works with non-profit companies.

Nice. Thanks a lot. This is definitely one option I left out. Our parent organization has two other schools in Maryland. One of them follows this structure (operating as part of the church), the other basically operated without a 501c3. Aside from a few issues surrounding moving from one church to another, or timely release of funds when necessary, I don't think there is a big down side to doing it this way. 

 

Of course, while I do foresee myself operating out of this church or the near future, I could also see myself moving in the 2-4 year time span. In that sense, it may be beneficial to have operated as my own entity. One of my questions related to taxes; it sounds like what I'm hearing is that it is complex enough to need a CPA. That alone makes me want to steer clear of doing a non-profit. 

[Vilandil Tasardur]

Alrighty guys, I'm bumping this because I have a little bit of additional information.

 

As far as I can tell, the IRS seems to have made allowances for these type of organizations. Apparently, I can apply for an EIN, specify that I am a "Sports or social club/community" and declare that my EIN is for "banking purposes only". Then, apparently, because our net receipts will be under 5K annual, the IRS just doesn't really care. Apparently that's how university clubs and such are able to get bank account for their gardening clubs, chess clubs, etc.

 

The bigger question now is...does anyone know of a bank that still does free checking? My personal bank doesn't appear to, and I really don't want to park 500$ of my own cash in the account. If I have to, I will, but then I'm mildly concerned about "taking it back" if I ever chose to do so. Again, we're talking about a gross income of maybe 300$ a year max, primary goal here is just to open a damn bank account so I can track it separate from my finances.

[Fight for ole DC]

Try a credit union that is community-based.