Trade Associations (which ACBS is) qualify for tax-exempt status under US, IRS tax code designation 501c6. This is tax-exempt. We are established as a "corporation". It is not "non-profit" in the sense that any money given to it is not tax deductible, and we can not apply for a waiver of state sales tax, as a "charity" can.
IRS Help via Phone: I've been impressed multiple times by how knowlegeable and helpful the IRS has been when calling them for assistance. They are tax experts on the other end of the line, not a receptionist.
Telephone Assistance for Exempt Organizations, Retirement Plan Administrators, and Government Entities:
Toll-Free, 1-877-829-5500
Hours of Operation: Monday – Friday, 8:00 a.m. to 5:00 p.m. Local Time.
ACBS is not an attorney or an accountant and can not provide definitive tax advice. The information below is for your convenience only.
How to establish your association at the state & federal levels:
Step 1, apply for an EIN
Step 2, contact your state's secretary of state to be recognized in your state (ACBS is categorized as a "non-profit corporation" in the state of Nevada). You need to file your Articles of Association with them. Go here to find contact information for your state.
Before you apply to your state, you'll need your By-laws and list of officers (often referred to as members).
Step 3, complete the Form 1024 with fee form: https://www.irs.gov/pub/irs-pdf/k1024.pdf
You'll need your by-laws, list of officers, Articles of Incorporation/Association, a conflict of interest policy. (ACBS has attached theirs to this webpage if you need a template.) ACBS has also attached their original 1024 application to this webpage (login and see below. This is for your info only. Please do not copy or forward it.
Step 4, check to see if your city has any additional requirements for a tax-exempt entity (some do, some don't)
http://www.irs.gov/Charities-&-Non-Profits/Application-Process
http://www.irs.gov/Charities-&-Non-Profits/Frequently-Asked-Questions-About-Applying-for-Tax-Exemption
https://www.irs.gov/Charities-&-Non-Profits/Other-Non-Profits/Life-Cycle-of-a-Business-League-%28Trade-Association%29 this is each step, from formation to annual maintenence of your tax status
These links above might help you too.
Annual Tax reporting for 501c6 Trade Associations:
990 - Annual Information Return
990-N - For Associations with Annual Gross Receipts of less than $50,000 (please verify this number annually)
1099s & 1096 - Usually 1099-MISC are all that are required.
501c6 Associations are required to keep annual minutes.
If you have paid staff (not occassionally contracted 1099 workers) you'll need to issue W-2s, and complete annual W-3, and pay Federal Unemployment Tax (FUTA) on form 940. In addition to quarterly 941 reporting. For these employees states will also require you to pay state unemployment, sales/use-tax, and other possible taxes quarterly. (ACBS has a paid version of QuickBooks, with the Payroll Subscription to calculate these. You may consider something like this if you have W-2 employees.)
If you need to order documents (W-2 forms to complete for employees, 1099s, etc.) the IRS will send them to you for free if you order here.
You will need to check with your state to see if you need to do any kind of Annual Tax Return equivalent or not, for your state.
Annually, you'll also need to pay for your business license, with your state (amout varies by state... Nevada is about $50 annually). One thing to note, it is possible to incorporate in a state other than your own. It may be cheaper. HOWEVER, you'll need to contract with a company to be your "registered agent" (I think that's under $150 for ACBS annually), and if you have paid employees in your state (not the state of incorporation) you'll need to register with your state anyway as a "foreign" company doing business in that state. There is typically an annual fee associated with that (although it's usually less than a business license).
What if I don't want to incorporate? (or don't have the money to pay the fees to incorporate)
The simplest way moving forward is to work via an individual. This can be a trusted senior member, a trusted board member etc. You would create a PayPal account for this purpose, collect money that way, and any "profit" at the end of the year would actually work like "income" for that person. They would pay taxes on it, as you are not a tax-exempt entity. Presumably any money paid in taxes would be deducted from the profit, so that the individual doesn't carry any financial burden doing this. Assuming that you would want to operate under the name "ZZZ chapter of ACBS" then to do this you'd likely need to file a "fictitious name" form filed officially through your state, so that you can accept checks and do business under that name. This person would "hold" the money for the chapter and pay it out as needed.
Ok, what else do you what on this page? Or what can you update? Please click "add comment" below, when logged in, and let us know any new information that should be added or updated on this page.
Thanks!
...