I am sure this question is more for the "attorney" than a forum such as this, but thought I would try here first. I notice that in our area, only 1 travel team (that I can find) is listed as a 501 (c)(3) non-profit orgnization. Should travel softball teams be incorporated in order to protect the liability to the coaches in case of injury, etc.? Should they be incorporated as a non-profit due to handling money and fundraisers?
Is it necessary to incorporate the softball team/organization?
- Thread starter rocker
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- May 25, 2010
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Liability issues - and any protections available - vary from state-to-state.
On the financial side, it would be foolish not to have a business banking account for the team, even if there's a $15/month fee.
It's easy enough to register as a non-profit, but my advice is to consult with a local attorney on setting up your actual business entity. Even in the most expensive areas of the country, the hour shouldn't cost more than about $125 or so, but could potentially save many headaches later.
On the financial side, it would be foolish not to have a business banking account for the team, even if there's a $15/month fee.
It's easy enough to register as a non-profit, but my advice is to consult with a local attorney on setting up your actual business entity. Even in the most expensive areas of the country, the hour shouldn't cost more than about $125 or so, but could potentially save many headaches later.
A corporation will not protect the coach from liability. A corporation will protect people not directly responsible for an injury. If the organization is not incorporated, then a 14U coach could be liable for the actions of the 16U coach, even though the 14U coach didn't have anything to do with the injury.
The insurance protecst the coach from liability.
When you incorporate an organization, you either are profit or you are non-profit. It isn't because of handling money. If you are a "for profit" organization, there are more reports which must be filed each year.
- Jun 16, 2010
- 259
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No, it is not necessary.
The benefit of operating as a non-profit is that you keep more of what you raise.. You will solicit much more donations from others that can deduct them from taxes too. Most organizations that are do it because they raise a lot of money, and have CPA firms which handle their affairs. There are restrictions on how the money is used, you dont get to use it as you see fit. Receipts are submitted, everything is accounted for, etc. If something doesnt qualify expect the CPAs to kick it back and you will eat it out of your own pocket.
The benefit of the other way is that small fundraisers that are undocumented anyway are basically yours to keep everything anyway. And there is no restrictions or accounting for how you spend that money. But larger efforts where you are paid to work sporting events, etc you will be taxed, which can make an already below-minimum-wage effort less practical.
The benefit of operating as a non-profit is that you keep more of what you raise.. You will solicit much more donations from others that can deduct them from taxes too. Most organizations that are do it because they raise a lot of money, and have CPA firms which handle their affairs. There are restrictions on how the money is used, you dont get to use it as you see fit. Receipts are submitted, everything is accounted for, etc. If something doesnt qualify expect the CPAs to kick it back and you will eat it out of your own pocket.
The benefit of the other way is that small fundraisers that are undocumented anyway are basically yours to keep everything anyway. And there is no restrictions or accounting for how you spend that money. But larger efforts where you are paid to work sporting events, etc you will be taxed, which can make an already below-minimum-wage effort less practical.
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