Student Organization Finances

Student Organization Finances

Most organizations will want or need to spend/collect money. Whether the money is collected through membership dues or fundraisers, securing it appropriately is essential.

The Basics

Where should my organization go to open an account?

Kirksville has a variety of different options for organizations to explore. Your organization should investigate each bank to see which offers the best support. Organizations can explore the following banks in the Kirksville area:  Alliant Bank, American Trust Bank, Bank Midwest, Bank of Kirksville, Northeast Missouri Savings Bank, and US Bank.

What type of bank account should organizations open?

While the U&I highly encourages organizations to have an official organization bank account, the specifics of the account are up to you. We do not recommend having an organization account under an individual member’s name and information. Instead, we recommend that you open an account under the organizations name and then change the student names on the account each year.

We also recommend organizations consult with bank representatives . Some items to consider are: Who should have access to your account? Who should be responsible for making payments? Should you get checks or a debit card for the organization? Who will keep up with all the financial information (i.e. monthly paperwork, account information, etc.)?

What address should organizations use to receive bank statements and other information?

Organizations can list their U&I mailbox as their mail address (Center for Student Involvement; 100 E. Normal). The U&I will deliver mail as it arrives to the appropriate organizational mailbox.

Tax ID Numbers

What is a tax ID number or EIN (Employer ID number)?

A tax ID is like a social security number for your organization. The purpose of this number is to make your organization responsible for taxes on revenue that the organization has earned. This number is unique to your organization’s legal name and should be kept confidential, unless requested on a W-9 tax form.

Why should my organization have one?

Student organizations are not permitted to use the University’s tax ID number; therefore, organizations should apply for their own unique number. Organizations are often in situations that require a Federal tax ID number (i.e. opening an organizational bank account, conducting off-campus fundraisers, renting facilities, receiving/accepting donations, receiving payments etc.). Student organizations are strongly discouraged to open a checking account using an individual’s social security number. Without a tax ID, the financial burden of the account will rest with the individual that opens the account instead of the organization. This means that individuals are personally held responsible for claiming taxes, extra fees or unpaid bills.

How do I apply for a tax ID or EIN number?

Any student organization that raises money and, therefore, spend money, will need to maintain proper financial accounts for the group.  The organization should file Form SS-4 with the IRS or follow the online process to apply for a tax ID or EIN number . Any financial accounts created or maintained for the organization should be managed under this number.

Apply for an EIN:

1.    Go to the Online EIN Application

2.     Read instructions and click on “Apply Online Now”

3.     Read instructions and click on “Begin Application”

4.     Scroll to bottom of list and select on “View Additional Types including Nonprofit/Tax-Exempt Organizations,” click “Continue”

5.     Choose either “Community or Volunteer Group” or “Social or Savings Club” depending on which best describes your group, click “Continue”

6.     Read description to confirm your selection, click “Continue”

7.     Fill out the rest of the information

8.     Print out and retain a copy of your CP575 Confirmation. Your current and future officers will need this document for tax filing purposes.

It is also suggested to complete the Articles of Incorporation for a Nonprofit Corporation form and submit it to the state. There is a one-time $25 filing fee for this form. Although the form is titled “nonprofit,” this does not establish your organization as a nonprofit organization. To become a nonprofit organization, you will need to follow a separate process in order to become tax exempt.

Tax Exempt Status – just because you have a tax ID, doesn’t make you tax exempt

How much time does it take?

An organization wishing to apply for tax-exempt status must realize it is a complex process. The application process will take a minimum of six months to a year before a tax-exempt certificate is issued.

What is the difference between non-profit and tax-exempt status?

Non-profit status is a state law concept.  Non-profit status may make an organization eligible for certain benefits, such as state sales, property, and income tax exemptions.  Although most federal tax-exempt organizations are non-profit organizations, organizing as a non-profit organization at the state level does not automatically grant the organization exemption from federal income tax.  To qualify as exempt from federal income taxes, an organization must meet requirements set forth in the Internal Revenue Code. See Types of Tax-Exempt Organizations or Publication 557 for more information.

Where do I go and how do I apply for a tax exempt status?

To qualify as tax-exempt from federal taxes, a group must meet requirements set forth in the Internal Revenue Code.  For more information see Types of Tax-Exempt Organizations or

Publication 557 on the IRS Website.  The IRS also has excellent online resource materials on the life cycle of a tax-exempt entity on its website that explains the appropriate procedures that a group must take to be tax-exempt and to maintain its exemption.

Some groups have tax-exempt status through a group exemption from their national organization.  The national organization should have a standard form which you may use as the basis for your claim for exemptions.  If this applies for your student group, you should contact your national chapter to see if you have tax-exempt status from the IRS, as well as state sales tax exemption for any items purchased at a store.

Gambling vs. Fundraising – How can we raise money for our organization without breaking the law?

Fundraising is the organized activity or an instance of soliciting money or pledges, as for charitable organizations or political campaigns. Gambling is to play a game of chance for stakes or to best on an uncertain outcome. The line between these two entities is  fine, but there are ways to legally fundraise and have fun. We have developed a comprehensive brochure that helps explains the legal how to’s of gambling, and provide some useful examples of activities. We do suggest that whenever possible use language such as “for entertainment purposes only,”  “donations gladly appreciated,” or “no purchase necessary.” It is best to consider all possibilities.  If you have questions, please contact U&I via email at csi@truman.edu or call us at 785-4222.

 

If you need any assistance or have questions regarding any of the information below, please contact U&I staff via email at csi@truman.edu or by phone at 660-785-4222.