Today TaxMama hears from Sarah in Louisville, KY who has this story, “I am part of a group of 40 businesses who have joined together to purchase ads.
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We do charge a small membership fee for members which goes for our website and press releases etc. All ads are split between the group equally. Everything we bring in will be spent on ads. There will be no profits.”
Dear Sarah,
There are any number of ways you can do this –
You can create a non-profit association – you’re all members and don’t plan to make a profit.
You can create a general partnership – you’re all equal in the decision-making and fees.
You can create an LLC to protect everyone from lawsuits.
Or, since it’s going to break even anyway, just run it through one person’s tax return. Someone has been getting the checks and paying for the ads, right?
You couldn’t have opened a separate bank account without creating an entity and an entity name – no bank would accept it. So, if you did open a separate account, it would have been in a person’s name, or in their own business name.
So, as long as things are running on this level, that’s what I’d do – run it out of my own bank account and make sure all the funds are spent before the end of each year.
The only thing to be concerned about?
If one of your members gets upset about some perceived inequity or slight and decides to sue. So, just be careful who you accept as a member.
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Besides, you don’t want to include anyone that touchy or
unpleasant anyway!
Now, if you DO run it through one person’s account, just report the whole activity on a separate Schedule C, and it will all zero out each year.
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And remember, you’ll find answers to questions about business entities and all kinds of tax issues, free. Where? Where else? At TaxMama.com
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