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501c3

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After consulting with tax counsel in Washington, we were advised to get the 501c3 application for GWOB going ASAP.  As part of the cost/benefit I went over this with Willow earlier, and now relay it to to the group:

 

I don't think the costs are as high as James was stating--that includes a lot of overhead based on their choice to have accounting firms involved at several levels of the process.  I don't know what/if the similar expenses will be for us, but they don't have to be that much.  As long as we keep good records, we could probably do the reporting and tax filings ourselves.  (If we make less than $50,000 for the year, we might not even have to file annually.)

The 501c3 application fee is going to be $850 (unless we can truthfully project revenues of less than $10,000 over 3 years--I doubt it).

The question is, what is the cost of not doing it?  We will have to pay corporate income tax to the IRS.  We can't use the School Factory as a shield once we exist as a separate entity with our own bank accounts and payroll.  This can be a lot.  For example, if we make $50,000 in 2012, our projected federal tax burden would be $7,500.

Additional note: so long as the money is used exclusively for operations and costs, we are probably going to mostly avoid Washington B&O tax, but will have to see at the end of the year.

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