Good advice. I'll just make a couple of comments. To clarify, there is no one's personal social security # needed on any of this. That's why the PTO gets its own EIN (which is the same thing as a tax id #). Also, a federally-registered 501c3 pays no federal income tax. That's a key benefit of registering as a 501c3. (Okay, there's an insidious tax on unrelated business income that some non-profits should be paying, but that's not your primary concern right now). Pals said you should be paying tax on all your profits - that's not exactly true...unless your profit is coming from something that has nothing to do with your purpose like selling hot dogs at the friday night football games (but that's a discussion for another string). For the most part, PTOs who are 501c3 pay no income tax.
It doesn't take 6-8 months to earn your 501c3, unless you take 4-6 months to complete your application. The IRS says they can approve a complete application in about 6 weeks. Yes, absolutely there's a LOT of work to complete the application, but it doesn't have to be done by your treasurer. Anyone with decent understanding of your PTO and access to some documents can do it. The only additional workload is the annual IRS return, which isn't all that hard if you keep good financial records.
Encourage your treasurer to visit here. Perhaps she can learn enough to ease her fears.
If you have a strong PTO with a long history of service, and a bright future, and you take in so much money each year, you should seriously consider 501c3 status. You are involved in a non-profit business, not just a social club.
New PTO Pres - First take a deep breath. It really isn't that difficult although it seems overwhelming at first. You've come to the right place - lots of help available here!
Our costs (and the order we did them in) were:
$75 to file as a non-profit corporation with NJ.
$0 to get our EIN/Tax ID #
$500 to file with the IRS.
$99 PTO Today Plus membership (annual)
$330 insurance (annual)
The IRS filing is expensive BUT since you are raising over 60K it is really just a drop in the bucket and well worth it in the long term.
I don't understand why your treasurer would not want to incorporate so that individuals are not held liable. There is another active thread on the message boards about that. If you join PTO Today Plus you can get the handbook which guides you through the IRS filing. Plus you get a discount on insurance with AIM. Again, well worth the membership price.
We have a parent who is an accountant who prepares state and federal forms for us at no charge. Reach out to your parents - I'm sure you can find a few accountants out there.
Make sure that your EIN is registered with the correct organization name. NJ requires that the name end with "Inc." so we did the NJ paperwork first and then got the EIN. Massachusetts may be different so log onto your state website and find a number to call. I made lots of phone calls before I figured out exactly what to do but only filed once!
You'll need your state Articles of Incorporation as part of your IRS filing as well as bylaws. Again, many examples of bylaws in the message boards if you do a search. We copied a whole bunch and then edited to fit our group's needs.
Finally, ask for help from everyone here. Advice from JHB, Critter and many others got our group through the whole process and I'm sure you will have the same experience. Good Luck!
Yeah, i think the treasurer is not wanting to be burdened by the work required. But I agree with you - it's something that should have been done a long time ago. They say that parents won't want any of their money to go to admin costs...i'm a little taken aback by their opposition too....this is way more then i signed on for! thanks for the advice - this site has been very helpful already.
Hope I can help, a ein number is the number you need for your account. In all reality when I open up our pto account this was all they took, they took my social security number or the treasures number. Now I know all banks are different.
First get you EIN muber, write bylaws if you don't have them, get incorporated, then file 501c. They say 6-8 months but if you dot you i's and cross your t's it can take alot less. I did our paperwork (all of it) in less than two months! It is possible. Incorporating will help with some of the liability but you should look into pto insurance.
Second, I am confused why you have parents saying that they don't want to do this, your group brings in way too much money NOT to do this. You should be filing tax forms and really you should be paying tax on all of your profits (MOST groups don't do either). Another thing about filing 501c is that you are tax exempt from alot of sales tax as a non profit (saves money in the long run).
I would worry a little about your treasurer not wanting to do this, is she afraid of the work, or what. I think I would talk to your principal and really see what route they think your group should take, personally I would do the paperwork! I am not an expert, but you will find alot of help on this forum! Good Luck! maybe some on else has input!
"When you stop learning you stop growing."
Well, looks like I'm up against the wall on this one.
The bank informed us we need a tax ID # - apparently what we thought was school's # was actually the TOWN #! We have a week to fix this.
Our school wants US to have a tax ID #. We've been debating this and have VERY strong opposition (treasurer) who says they'll quit if this goes forward.
My question: one parent (thinking they were being helpful) got an EIN #, but then tried to cancel it - it's not cancelled yet. Is this the same as a tax ID? Treasurer says if we attach this tax ID # to our account ($30K in it right now, with probably $20K coming this week)everything we do this year we'll pay taxes on unless we file non-profit which takes 6-8 mos they say. They also say there has to be someone attached to the tax ID #, social security #, etc that would be liable should anything go wrong. Thus we should also incorporate. And if all these things happen - then they'll quit and won't support the PTO!
Can anyone offer guidance? I think this is inevitable, and i'm not against it since our gross will probably be well over $60K for the year (before spending it all on programs, playground, etc of course).
We have a very strong, supportive and active PTO, with probably 25-30 at each meeting (so far!) - I'm really not thinking that people will jump ship if this happens - to me it's just part of the "business" of PTO.
What is the order of things that I should do? How much did it cost you if you've done this? Did you hire an accountant? Did people jump ship for you? Any advice/help would be GREATLY appreciated!
