I run a ministry in Oklahoma and would like to do some fundraising. Up until now, I haven't bothered with filing anything because up until now I didn't have any real need for funds beyond what I am able to generate as an independent contractor. (I train horses and do artsy stuff too.) But now, I find myself needing some funds specifically for the ministry work over and above what I generate normally. It's just me taking care of this for now so there's no employees and no board to make decisions. Is it okay to stay as I am (my current filing is as self-employed), raise additional funds for the ministry, and add them to my tax filing? If so, does that extra 'income' get filed on my year-end taxes as income or donations or both? Or do I need to file a non-profit status? I'm not ready for corporate stuff yet. I just need some extra on-going funds for the ministry.
BizResearcher | Window Shopper |
10/20/2009 - 11:45 am
In order to become a non-profit, you have to apply to the IRS and receive approval from them before you register as a non-profit corporation with your state. You may need to have a board of directors. You can find information at http://www.irs.gov/charities/index.html
The form you need to file is found at http://www.irs.gov/pub/irs-pdf/f1023.pdf
Thanks for chiming in, everyone! Gideon, I hope you found these replies helpful.
I also want to pass along a recent article :
How to Start a Non-Profit Organization: it details the steps you need to incorporate your non-profit and gives fundraising tips as well
best of luck to you, and please keep us posted on your progess!
ChristineL | Former Moderator |
10/19/2009 - 1:30 pm
Hi Gideon,
You can take a look at the Business Incorporation page for a general overview of what different structures mean and look like. We also blogged about the differences in legal structures,the advantages and disadvantages of LLC and S-Corps, and entity selections that may be helpful to you.
However, please do consult professional with the specifics of your situation.
Message Edited by ChristineL on 10-19-2009 01:41 PM
I second what cork-guy said - you're asking for trouble by doing what you're doing. If you do not have tax exempt status, which you currently do not, then yes, you must pay taxes on the 'income' you generate. As long as you're filing as an SP, you must claim the donations as income and pay taxes on those funds. This seems super crazy (because I'm sure your donees are expending all the funds to be used for your ministry) and will lead to problems when you finally file for tax exempt status.
Spend the money now and get a 501(c)(3).
You could be really setting yourself up for some major issues in the future; especially being self employed. Why would you claim charity income as extra income; that's just insane! You'll want to apply for your own not-for-profit corporation (not LLC) and let funds for charity flow through there and not your personal income, which can be a disasterous audit in the future. You can use services like LegalZoom to setup one of this corporations for you.
BizResearcher | Window Shopper | 10/20/2009 - 11:45 am
NicoleD | Former Moderator | 10/22/2009 - 4:38 pm
ChristineL | Former Moderator | 10/19/2009 - 1:30 pm
hostingdiva | Creator | 10/15/2009 - 12:12 pm
cork-guy | Window Shopper | 10/15/2009 - 8:28 am
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