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Old 11-04-2012, 02:55 PM
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iacas iacas is offline
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Default Setting Up a Non-Profit, Bank Accounts, Etc. for DG Club

I'm beginning to make some headway in getting disc golf course(s) built in Erie, PA (the county, not the city itself ). Soon I'll be soliciting donations from area businesses and individuals.

The first step is, I imagine, to set up a local checking account, probably as a "DBA" account with something like "Erie Disc Golf Club" as the official name. I believe we'll first need to get about $6k for a local nine-hole course (baskets to start, tee pads and signs to follow once we're sure we like the layout and lengths), so it will be nice for donators to be able to write checks to "Erie Disc Golf Club" and not to me personally or something. It will also provide a clean balance sheet, etc.

Now, obviously eventually the goal would be to have enough turnover in the account (money coming in from tournaments, money paid out to build or enhance new courses, etc.) but that's a few years away at least... but eventually, yes, we'd probably want to and need to form an actual non-profit business.

But for the first few years, when we have no large amount of money coming in or going out, and no members of the club are drawing a salary or doing anything (which may always be true), I'm assuming we can kind of get away with simply doing business under a DBA and leave it at that, no? We can change the people who can access the account if I hand it over to another treasurer, and so on, yes?

It may not be the "official" best 100% IRS-approved way of doing things, but it should suffice, no?

I'm just trying to avoid spending $2000 or whatever (and waiting six months, perhaps) when our entire first year's turnover might be $10k or less - and almost all money that comes in will go back out to pay for baskets or teepads or whatever.

Are there any thoughts on this? What have other local clubs done? Perhaps I'm wrong and for considerably less than $2000 I could "officially" create a non-profit or something?
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Old 11-04-2012, 03:13 PM
JRW III JRW III is offline
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Even though it is a small organization, I would still recommend setting up a non-profit organization. When you set up a bank account, you are going to need a tax ID. If you do not have an organization set up, you will have to use someones personal social secruity number.

There are several options as to what type of non-profit organization you set up. A 501c3 would be expensive and take a long time like you said, but it will allow the individuals/corporations donating money to you to count it as a tax deductible donation. However, there are other non-for profit entity structures that are much easier to set up and can be done much quicker and faster. The other options will allow your organization to be exempt from paying taxes on your organizations income, but it will not give your donors a tax write off.
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Old 11-04-2012, 03:38 PM
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iacas iacas is offline
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Originally Posted by JRW III View Post
Even though it is a small organization, I would still recommend setting up a non-profit organization. When you set up a bank account, you are going to need a tax ID. If you do not have an organization set up, you will have to use someones personal social secruity number.
Yes, we'd use mine.

Perhaps I didn't stress it enough, but I'm willing to create a non-profit if it's cheap and fast. It does not make sense to spend $2k and wait six months when our first year's budget might not top $6k. If we had to create a 501c3 or something, that might just kill it before it even gets started.

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There are several options as to what type of non-profit organization you set up. A 501c3 would be expensive and take a long time like you said, but it will allow the individuals/corporations donating money to you to count it as a tax deductible donation.
I don't really care about that, to be honest, and I've heard complying with all of the regulations to remain a true 501c3 is a bit of a pain. More hassle than it's worth.

I'd just like to (fairly) cheaply and (fairly) quickly create an organization that the government realizes is not someone's personal income (or personal expenses).

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However, there are other non-for profit entity structures that are much easier to set up and can be done much quicker and faster. The other options will allow your organization to be exempt from paying taxes on your organizations income, but it will not give your donors a tax write off.
These are the things I want to know more about. If it's $250-500 instead of $2k and can be done in a month, great. I'll do that. But what are they? How do you create them? What are their benefits and drawbacks?

We're just getting started. What are the options out there?

P.S. I realize those who respond aren't necessarily lawyers and/or accountants, and so I assure you I'm not taking anything here as absolute legal or financial advice. So no "IANAL" disclaimers needed. I appreciate all "leads" anyone can provide so that I can follow up with actual lawyers and/or accountants.
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Old 11-04-2012, 03:53 PM
JRW III JRW III is offline
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These are the things I want to know more about. If it's $250-500 instead of $2k and can be done in a month, great. I'll do that. But what are they? How do you create them? What are their benefits and drawbacks?
501(c)(7) — Social and Recreational Clubs

Pros: Seperate legal status for the club with a seperate taxpayer ID. Organization is exempt from paying federal taxes (be aware that you most likely will still need to pay state sales tax on the merchandise you sell).

Con: Donors do not get a tax write off.

Much closer to $500 than $2,000. I am not sure on exact expenses. Can also vary from state to state.
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Old 11-04-2012, 04:14 PM
aardvarkious aardvarkious is offline
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It 100% depends on your jurisdiction. I am in Alberta, Canada. If you don't include writing our by-laws, it took about 2 hours of work and under $200 for me to setup a disc golf club.

There should be a government department that handles this and gives out all the info. Google "corporate registry [your state]" or "forming society [your state]."

If you are looking for money from businesses, don't worry about the charitable status. A business can write off any donation they make as marketing, and (at least up here), get the same tax deduction as for a charitable donation. The charitable status is nice if individuals want to donate, but is a lot more time/money consuming to maintain and may not be possible as a sporting club.

I think it is definitely worth setting up a non-profit. It makes things easier when people transition in/out. It gives you WAY more respectability when you approach a parks department or business. It allows you to buy insurance. And it can protect you as well by limiting legal liability- if you are running something as a representative of a registered club and someone gets hurt they sue the club and go after the club's assets which don't amount to much. If you are running something as an individual, they sue you and go after your house.
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Old 11-04-2012, 04:46 PM
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dashiellx dashiellx is offline
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If you set up the "club" as you DBA then you are personally responsible for everything-financial and liability. Basically it would be setting up a sole proprietorship. Be very, very careful. If someone slips and bonks their head, gives you money for the course and then says they want it back--you are responsible and they legally can come after your personal assets. Setting up the club as a legal entity separates your personal assets from the club and protects you.
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Old 11-04-2012, 04:55 PM
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dashiellx dashiellx is offline
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Something else I just thought of and missed the edit time. Many times, parks departments want clubs to have insurance in order use public lands for tourneys and what not.
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Old 11-04-2012, 05:19 PM
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Quote:
Originally Posted by JRW III View Post
501(c)(7) Social and Recreational Clubs
Thanks. The one con is not important. I appreciate it.

Quote:
Originally Posted by JRW III View Post
(be aware that you most likely will still need to pay state sales tax on the merchandise you sell).
Okay. Maybe we just won't sell any merchandise.

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Originally Posted by dashiellx View Post
Something else I just thought of and missed the edit time. Many times, parks departments want clubs to have insurance in order use public lands for tourneys and what not.
Yeah, again, I always knew we'd eventually want to get a non-profit set up, I'm just trying to figure out what it can cost. If it costs as little as it seems to me now, then that time will be sooner rather than later.
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Old 11-04-2012, 10:00 PM
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I've been involved in setting up a 501(c)3 that had nothing to do with disc golf. It involved an accountant and a very thick stack of paper. There is also a little bit of legal work involved. As far as regulations, its mostly political stuff for a 501(c)3. The feds want to make absolutely certain that the money's not being used for political purposes. It did take about six months to get done completely. It didn't cost our organization any money as we were fortunate to find an accountant who was eager to do some pro bono type work.
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Old 11-05-2012, 10:19 AM
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I've seen another option tried to raise $$ that can be deductible for the donors. Many county/regional parks have an allied "foundation"; if there is one, make a contact and set up and agreement of funneling DG $$ through them.
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