# I want to give money to my kid's school's parent club



## LittleDogy (Jan 15, 2008)

I'm confused on how to treat a donation on my books.

It doesn't seem right, to me, to sell shirts with my kid's school name on it if the school does not benifit from the sale.

So I want to give/donate some money to the parent club for every shirt that is sold through my business. 

I'm sure that if a check shows up every month, the parent club would not complain about getting the money but how do I treat the donation on my books?

I'm guessing that parent clubs are non-profits? so does that make it a donation? And do have have to request a donation receipt from the club? 

What are the rules on donations? Is there a limit to how much I can donate a year. Can I treat it as a business expense?


----------



## splathead (Dec 4, 2005)

Yes, you would classify it as a donation. I don't think it matter to YOU if the organization you are giving it to is a non profit or not. It matters to THEM whether they would have to pay tax on the donation or not.

Donantions are tax deductible. you don't need a receipt, your cancelled check will do. But if you can get one, so much the better.


----------



## LittleDogy (Jan 15, 2008)

splathead said:


> Yes, you would classify it as a donation. I don't think it matter to YOU if the organization you are giving it to is a non profit or not. It matters to THEM whether they would have to pay tax on the donation or not.
> 
> Donantions are tax deductible. you don't need a receipt, your cancelled check will do. But if you can get one, so much the better.


Thank you : )

So I can donate anytime to anyone or anything...I just need to keep the cancelled checks. 

And then all of those donations can be written off, with no limit, as far as my taxes are concerned?


----------



## sunnydayz (Jun 22, 2007)

You better make sure with your states tax laws as far as having a reciept. Every year I make a bunch of tees for moms who do the march of dimes walk because I have a preemie grandbaby. So when I talked to my tax guy he said it is not tax deductable because they are not a registered non profit. If I had made the donation to the MOD directly and gotten a reciept it would have been a deduction but because I donated just to the moms it was not. He also warned me that any charity you decide to donate to, make sure to get a reciept because if you are ever audited you will need the reciept from the charity (I am in the middle of this now, being audited). Its true you dont need a reciept when filing your taxes but if an audit comes up, you will need it. He also informed me that the irs is upping the audits 20% this year and probably a higher rate of audits next year because they need to get more money back into the system. I now know to make sure I keep really good records and to make sure you have all the paperwork to back up what you claim. Hope this helps


----------



## LittleDogy (Jan 15, 2008)

sunnydayz said:


> You better make sure with your states tax laws as far as having a reciept. Every year I make a bunch of tees for moms who do the march of dimes walk because I have a preemie grandbaby. So when I talked to my tax guy he said it is not tax deductable because they are not a registered non profit. If I had made the donation to the MOD directly and gotten a reciept it would have been a deduction but because I donated just to the moms it was not. He also warned me that any charity you decide to donate to, make sure to get a reciept because if you are ever audited you will need the reciept from the charity (I am in the middle of this now, being audited). Its true you dont need a reciept when filing your taxes but if an audit comes up, you will need it. He also informed me that the irs is upping the audits 20% this year and probably a higher rate of audits next year because they need to get more money back into the system. I now know to make sure I keep really good records and to make sure you have all the paperwork to back up what you claim. Hope this helps


Totally helps, thank you so much. 

I'm sorry that you are being audited. How did you get informed? And how does it proceed from there? What has the experience been like? 

It makes me want to get more organized. I think I would be a wreck and be upset.


----------



## sunnydayz (Jun 22, 2007)

I got a letter in the mail saying you have been selected and to call and make an appointment for your audit. It is stressful as you know they are going to go thru all of your stuff with a fine tooth comb  I have my tax preparer going with me so he will handle the whole thing while I sit and be quite  They gave about 6 weeks to prepare for it so that was good, but you have to call within 10 days from the letter to schedule it. From what my tax guy says is that its going to be more common for small business to be put thru this in the future. The irs told me to expect to be there for 4 hours while they do it and then they will notify me within 30 days to let me know if I have to pay anything or not. from what I understand it is really at their discretion what they do and dont except of your writeoffs. Then after they notify you, you have a right to appeal any fines they may give you. I will just be glad when its over  but it has really opened my eyes to my organization hehe.


----------



## sunnydayz (Jun 22, 2007)

I also wanted to add that I am being audited for 2005, not 2007. So it is true when they tell you to save all of your records for so many years  I wish I would have knew the info I know now before I got that letter.


----------



## LittleDogy (Jan 15, 2008)

sunnydayz said:


> I got a letter in the mail saying you have been selected and to call and make an appointment for your audit. It is stressful as you know they are going to go thru all of your stuff with a fine tooth comb  I have my tax preparer going with me so he will handle the whole thing while I sit and be quite  They gave about 6 weeks to prepare for it so that was good, but you have to call within 10 days from the letter to schedule it. From what my tax guy says is that its going to be more common for small business to be put thru this in the future. The irs told me to expect to be there for 4 hours while they do it and then they will notify me within 30 days to let me know if I have to pay anything or not. from what I understand it is really at their discretion what they do and dont except of your writeoffs. Then after they notify you, you have a right to appeal any fines they may give you. I will just be glad when its over  but it has really opened my eyes to my organization hehe.


 
Wow! So it could be like a shake down?

As far as the ladies you donated to, could you then treat it as a promotional expense? Like when you give out free shirts to promote your business?


----------



## sunnydayz (Jun 22, 2007)

I guess its possible to write them off as advertisement. There is another thread that was going yesterday or so that talks about this.

here is a link to the thread 
http://www.t-shirtforums.com/general-t-shirt-selling-discussion/t49525.html


----------



## splathead (Dec 4, 2005)

LittleDogy said:


> As far as the ladies you donated to, could you then treat it as a promotional expense? Like when you give out free shirts to promote your business?


That's what i was going to say, if for some reason they don't qualify as a donation, there could be several other tax deductible classifications you could fit it into. Advertising, good will, etc.


----------



## LittleDogy (Jan 15, 2008)

splathead said:


> That's what i was going to say, if for some reason they don't qualify as a donation, there could be several other tax deductible classifications you could fit it into. Advertising, good will, etc.


 
I can see how that would work for giving shirts away but I guess that might still put me at a loss since I'm selling a shirt and then giving money to a parent club. If they are not a non-profit then I have an accounting issue.

What do you call giving money away if it's not a donation? How does that go on the books?


----------



## sunnydayz (Jun 22, 2007)

That I think would only work for advertising if you are giving the shirt to them and then you can write off the cost of what it cost you to make. I am not sure how that works with giving them part of the money. Your best bet to be safe is talk to your tax person for the particular filing laws for what you want to do. That is what I did to be safe. He told me to quit giving things to people that were not registered charity's and that if I did that was at my own expense


----------



## LittleDogy (Jan 15, 2008)

sunnydayz said:


> That I think would only work for advertising if you are giving the shirt to them and then you can write off the cost of what it cost you to make. I am not sure how that works with giving them part of the money. Your best bet to be safe is talk to your tax person for the particular filing laws for what you want to do. That is what I did to be safe. He told me to quit giving things to people that were not registered charity's and that if I did that was at my own expense


 
Thank you BobbieLee : )

I just found out that our Parent Club IS a non-profit. So it looks like I'm good : )

I don't know if they are all that way but I was told they had to file and go throught he whole process to get a bank account open .

Thanks again for the help


----------



## sunnydayz (Jun 22, 2007)

yep that sounds right, Just make sure to get a reciept for each donation you make to them  Also another great thing I do for a write off is when I have shirts I dont need or maybe have a small misprint, I donate them to a womens and childrens shelter that is registered, so I get a write off for most of my mistakes  I figure I cant sell it because of the mistake but a mom or kid without anything wont have a problem wearing them, and they do really appreciate getting a nice new shirt to wear


----------



## LittleDogy (Jan 15, 2008)

sunnydayz said:


> I donate them to a womens and childrens shelter that is registered


 
What a great idea! I'm sure that because you just posted this, others will start donating the same way. Great Job!

After all, I have all kinds of mistakes piled up right now. Switching from material to material sometimes I forget to mirror. Too bad backwards print isn't the cool thing to sport : )


----------



## UglyCook (Apr 30, 2008)

You really do want to work with a professional accountant or tax professional on this because you may be really costing yourself more money than you think. If you sell the shirts, and then donate the profits to the group, are you truly factoring in all of your costs? If you have to pay B&O to the state (if your state has it) be sure to add that to your costs. 

It might make work better to donate the shirts to the group, deducting your costs as a donation, and let the customers pay the group directly, even if you are the volunteer handling the sales. Does that make sense?


----------



## LittleDogy (Jan 15, 2008)

UglyCook said:


> You really do want to work with a professional accountant or tax professional on this because you may be really costing yourself more money than you think. If you sell the shirts, and then donate the profits to the group, are you truly factoring in all of your costs? If you have to pay B&O to the state (if your state has it) be sure to add that to your costs.
> 
> It might make work better to donate the shirts to the group, deducting your costs as a donation, and let the customers pay the group directly, even if you are the volunteer handling the sales. Does that make sense?


thank you for the ideas : )

But I want to be a non-hassle blessing to the parent club. I don't want to take up any of their time. After all, they are a bunch of volenteers. And I don't want to confuse the situation because I do plan on making a profit. So I think if I just donate money I'll look better than trying to work with them and then take a profit. 

Hopefully I said things right? : )


----------



## sunnydayz (Jun 22, 2007)

Just make sure to get reciepts for each donation you give and you will be fine


----------



## COEDS (Oct 4, 2006)

I sold shirts through a school, I worked at and gave the PTA a check at the end of the sale. I put a sign up saying a portion of the price would benefit the school. I then sold shirts to teachers,staff,and parents. I gave the PTA a check for the arranged percentage of total sales. I kept a copy of the check and thankyou letter from the PTA. I took this as a donation off my taxes. ..... JB


----------



## Phantom (May 1, 2008)

I agree with most of the above posts. Non profit donations are safest. You can donate to a not for profit entity, but they must have applied to the state for a charitable status to be considered a deductable donation. They should have a certificate denoting this. There are ways around most of this clutter. If it has your name, it can be considered advertising. You may even be able to call them samples and deduct them as a business expense. It would be best to talk to you accountant to get the best bang for the charitable buck.


----------



## Phantom (May 1, 2008)

I did forget one thing. If you are selling something to a charitable group, but offering a "discount", you may have trouble deducting this. For example... You sell $1000 worth of tee shirts to a church, but offer to sell them at cost of say $250.00 to cover your expenses. You could have trouble saying you donated $750.00. In a case like this where you are just trying to cover costs, your best bet may be to charge the full $1000.00 and after you have received and deposited the check, you could later send them a check for $750.00 as a separate transaction donation. Just be sure it goes to the charity and not an individual or it may be considered a kickback.


----------



## sunnydayz (Jun 22, 2007)

And to add to the above statement make sure to get a reciept of donation


----------



## Phantom (May 1, 2008)

Thanks for covering my six on that Sunnydayz. 

Mike


----------



## sunnydayz (Jun 22, 2007)

No problemmm hehe


----------



## splathead (Dec 4, 2005)

COEDS said:


> I sold shirts through a school, I worked at and gave the PTA a check at the end of the sale. I put a sign up saying a portion of the price would benefit the school. I then sold shirts to teachers,staff,and parents. I gave the PTA a check for the arranged percentage of total sales. I kept a copy of the check and thankyou letter from the PTA. I took this as a donation off my taxes. ..... JB


Be careful how you log this in your books. For example say you sold $100 with the agreement the school would get $25. If you are claiming the $25 as a deduction, then you would still have to show income on your books for $100 and not for the actual income you netted, which was $75.


----------



## LittleDogy (Jan 15, 2008)

splathead said:


> Be careful how you log this in your books. For example say you sold $100 with the agreement the school would get $25. If you are claiming the $25 as a deduction, then you would still have to show income on your books for $100 and not for the actual income you netted, which was $75.


Hi Joe,

For some reason, I already had it in my mind that the two transactions would be completly sepperated from each other.

#1 I would sell a shirt and there would be profit.

#2 At some point later, there would be a donation.

The amount donated will be in direct realation to how many sales I made but the donation won't point that out. It will just be an amount of money donated.

So on my books there will be two totally different transactions.

Did I get it right?


----------



## splathead (Dec 4, 2005)

LittleDogy said:


> Hi Joe,
> 
> For some reason, I already had it in my mind that the two transactions would be completly sepperated from each other.
> 
> ...


You did.


----------



## Bear Threads (Jul 23, 2008)

COEDS said:


> I sold shirts through a school, I worked at and gave the PTA a check at the end of the sale. I put a sign up saying a portion of the price would benefit the school. I then sold shirts to teachers,staff,and parents. I gave the PTA a check for the arranged percentage of total sales. I kept a copy of the check and thankyou letter from the PTA. I took this as a donation off my taxes. ..... JB


Someone told me that if you advertise that you are donating proceeds or whatever that you cannot then deduct it.....do you have any insight to that?

p.s. I'm from Pennsylvania so I'm not sure if the laws differ that greatly from state to state


----------

