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Fake receipt generator for Nonprofit

hey y'all so if you want to stay out of trouble with the irs when you're collecting donations make sure you watch this video because i have a cautionary tale for you let's get into it hey everyone i am tiffany with boston the budget i help new and small nonprofits get up and running if you need help with the non-profit make sure you subscribe to this channel because i drop videos every week so i wanted to share this cautionary tale just to remind people who are starting their non-profits or who have even gotten started with their non-profits what to be mindful of when you're collecting money so i want to tell you about a news story that i recently heard about this was in april 2021 about a man in connecticut and how he collected donations and it kind of bit him in the butt but i'm not sharing it just to down him i'm sharing it to provide lessons to you so you can avoid the same mistakes that he made in the future so stay tuned to the end of the video because i'm gonna share three key lessons that all nonprofits should take from this especially if you're a new nonprofit okay story time so there was a man named louis goffin probably jacking his name up but he's a teacher in connecticut so when covet 19 hit last year he wanted to do something good for his community so he set up a facebook fundraiser to help out his community residents around thanksgiving time so he set it up to collect money to pay for people's dinners and to buy food for his neighbors well he had no idea that it was going to take off right he had no idea that people were going to get behind it he himself said i just thought i was gonna raise a couple hundred dollars and that was it but he ended up raising a lot more and then he actually did a second facebook fundraiser where he wanted to buy like gift cards and buy things for family so they could afford christmas presents for their children and to have a good christmas so all in all he raised about 41 000 through facebook which is amazing it's awesome that he saw a need in his community he galvanized the people around him and they decided to help each other right the problem with that was a couple months later he got a 1099 k form which is what is that right so he got a form that stripe which is the payment processor for facebook said you collected all this money so this is a record of the money you collected and as a result of them following that paperwork of course the irs is now aware that he collected that money and he owed a tax bill of 16 000 a little bit over 16 000 so he was trying to do some good in his community he raised money to help people and he got this bomb in the mail like months later that said oh by the way you owe the irs sixteen thousand dollars so you may be listening and be like oh that's so unfair see that's what's wrong with the government people trying to do good and they're always you know trying to come after people but the reality is if he had thought about it more clearly he could have avoided a lot of the issues and the liability that he incurred as a result of it so i've been reading a couple articles this was in connecticut and um one article said that he consulted with a lot of accountants and they said that he definitely owes the money then another article said well he could probably get a lot out of a lot of the tax liability but the bottom line is he owes something because he collected that money he deposited in his personal bank account and that counts as income for him right so when you're collecting money and you're not doing it on behalf of an organization or as an organization or a business then that counts as personal income so be very mindful as an individual if you want to do some good in your community you got to be very mindful of the implications of collecting money especially large sums of money and because he raised so much he definitely was going to get flagged right because he it was so much money being deposited into his account and even though he has documentation that he spent it on other things those still look like personal expenses right he didn't donate it to an organization so he can get the deduction when he paid the money out he gave it to individuals so again there was no actual tax benefit or he he basically had to incur all the risk by doing that so what are the lessons that new nonprofits can take away from this story right because he still owes the money it's not going anywhere lesson number one don't collect money unless you are incorporated in a state okay so don't collect money as an individual if you are not trying to pay taxes on that money so that's the very very first thing that's a basic thing make sure you are incorporated you have a separate bank account and it's set up as a business bank account number two if you want that money to be tax exempt because that's technically income that he's bringing in you need to do your due diligence and file with the irs file to become a 501c3 tax-exempt organization so if you don't want to be taxed on that money you need to do your due diligence and do your paperwork to make sure that you don't incur any taxes as a result of donations that you're collecting and also for the people who are donating to you if they're trying to write off their donations to you they can't do that unless you are a 501c3 organization so you just want to make sure you cover your bases all around to make sure that you're not owing any tax on it the third lesson you should take from this is make sure you talk to a professional whether it's a business attorney or tax professional to help you understand the implications of any major moves that you're making the fact that he was collecting so much money should have signaled to him that he should check with an accountant or check with someone to figure out how he can make this more official if you look at the articles he said well now i'm going to create um a non-profit and now i'm going to do it officially the right way but he should have done that at least soon after he got started after he realized it was getting bigger than he thought it was or right before so he wouldn't run into these issues and the other thing is when you talk to a professional they can help you understand your options because it sounded like he wanted to become a non-profit a public charity nonprofit check out my other video on this if you don't know what that means but it doesn't necessarily mean just because he's collecting money or doing good for his community doesn't mean he has to be a public charity he could possibly set up a private foundation where he's just a conduit he collects money for whatever activities that he has and he disperses it to the community he could have his own trust that he sets up in his community he can set up a donor advised fund maybe through his community foundation and just be responsible for collecting money and just disperse it to people who need it because it sounded like he wasn't doing a lot of direct services he was just disbursing money so there are other options besides being a public charity non-profit where you're doing direct services he could just collect donations and just continue that trend but because he didn't talk to a professional before he didn't understand his options he didn't understand what was the right move to make for his specific situation given where he lived right so this is just another recommendation to make sure that you consult with professionals before you get started on this journey it's great to watch videos it's great to google and i appreciate y'all watching me but every state is different and every one of your individual tax situations are different so at least consult with somebody so you can understand what your options are thank y'all so much for watching if you need help trying to figure out whether a non-profit is right for you you should check out my non-profit business bundle it includes three workbooks to help you figure out how to flesh out your idea how to draw out your program and what your outcomes are and what your target population is and then also how to figure out how to fund your nonprofit so if you're interested in that workbook it's actually a bundle of three workbooks check out the link below in the description box thank you all so much for watching and i'll see you in the next video you