2014 NISD Booster Club Mixer (Transcript), 2014-07-26

1
ST
Annual NISD Booster Club Mixer
July 26, 2014
Speaker:

Paul A Ayala Sr
Professional Tax Preparer/Bookkeeper
Former President of the John Jay Mustang Band Boosters
Hosted by:

2014-2015 John Jay Mustang Band Boosters

Location:
John Jay High School Band Hall

501(C)(3) STATUS ............................................................................................................................................... 1
WHAT IS A 501(C)(3) DESIGNATION? ................................................................................................................................ 1
NONPROFIT ASSOCIATION VS CORPORATION ....................................................................................................................... 1
CREATING A 501(C)(3) CORPORATION IN TEXAS .................................................................................................................. 2
501(C)(3) APPLICATION PROCESS ..................................................................................................................................... 3
PARENT BOOSTER USA (PBUSA), EASIER GROUP STATUS THROUGH ANNUAL MEMBERSHIP ................................................... 4
VERIFICATION OF 501(C)(3) STATUS ................................................................................................................................. 4
WHATS YOUR CLUBS CURRENT STATUS? .......................................................................................................................... 5
STATE REPORTING REQUIREMENTS (ANNUAL INFORMATION REPORTS) .................................................................................... 5
WEBFILE (TCPA) AND SOSDIRECT (SOS) SYSTEMS ............................................................................................................. 6
FEDERAL REPORTING REQUIREMENTS (FORM 990 SERIES) ..................................................................................................... 6
BY-LAWS ............................................................................................................................................................ 7
IMPORTANCE OF CREATING AND MAINTAINING EFFECTIVE BY-LAWS ........................................................................................ 7
PERIODIC REVIEW AND AMENDMENTS ............................................................................................................................... 7
SAMPLE BY-LAWS .......................................................................................................................................................... 8
ACCESSIBILITY OF BY-LAWS .............................................................................................................................................. 8
IRS, UIL, NISD AND CAMPUS POLICY COMPLIANCE ............................................................................................. 8
IRS COMPLIANCE ........................................................................................................................................................... 8
UIL BOOSTER CLUB GUIDELINES ..................................................................................................................................... 10
NISD POLICIES, NBA BY-LAWS ...................................................................................................................................... 10
CAMPUS ADMINISTRATION POC ..................................................................................................................................... 11
FAILURE TO COMPLY ..................................................................................................................................................... 11
BOOKKEEPING/RECORD KEEPING ...................................................................................................................... 11
ANNUAL BUDGET ......................................................................................................................................................... 11
BOOKKEEPING SOFTWARE (PBUSA BRIEFCASE/QUICKBOOKS/GNUCASH/WAVE ACCOUNTING) ................................................ 12
FINANCIAL REPORTS (ANNUAL BUDGET, MID-YEAR BUDGET, TREASURERS REPORT, FINANCIAL AUDIT, P&L, CASH FLOW, EOY TAX
SUMMARY) ................................................................................................................................................................. 13
RECORD RETENTION POLICY ........................................................................................................................................... 14
INSURANCE & LIABILITY .................................................................................................................................... 16
WHAT IT MEANS TO BE BONDED ................................................................................................................................ 16
OTHER TYPES OF INSURANCE COVERAGE TO CONSIDER ........................................................................................................ 16
REDUCING THE ORGANIZATIONS LIABILITY ....................................................................................................................... 16
EFFECTIVE COMMUNICATION AND SOCIAL NETWORKING ................................................................................. 17
IMPORTANCE OF ONGOING, TWO-WAY COMMUNICATION WITH BOOSTER MEMBERS ............................................................... 17
MAINTAINING AN EFFECTIVE WEBSITE ............................................................................................................................. 17
ACTIVE SOCIAL MEDIA CAMPAIGN (E.G., FACEBOOK, TWITTER, LINKEDIN, INSTAGRAM, GOOGLE+, YOUTUBE, ETC.) ...................... 19
ANALYTICS (IMPORTANT INFORMATION FOR MARKETING AND POTENTIAL DONORS) ................................................................. 20
FUNDRAISING ................................................................................................................................................... 21
PLATE/FOOD SALES (LIABILITY ISSUES WHEN SELLING TO THE PUBLIC) ................................................................................... 21
SALES TAX (E.G., SPIRIT ITEMS/RESALE ITEMS, TAX EXEMPT FORM AND RESALE CERTIFICATES) .................................................. 21
ACCEPTING CREDIT CARD TRANSACTIONS (ONLINE AND MOBILE) .......................................................................................... 24
Q&A AND OPEN DISCUSSION PERIOD ................................................................................................................ 26
ADJOURNMENT ................................................................................................................................................ 26

1st Annual NISD Booster Club Mixer July 26, 2014

501(c)(3) Status

What is a 501(c)(3) Designation?

Section 501(c)(3) of the United States Internal Revenue Code (IRC) (26 U.S.C. 501(c)) defines
29 types of nonprofit organizations exempt from some federal income taxes. A 501(c)(3)
nonprofit organization is exempt from federal income tax if its activities serve the following
purposes: charitable, religious, educational, scientific, literary, testing for public safety,
fostering amateur sports competition or preventing cruelty to children or animals.

The organization must not engage in profitable activities or perform any tasks that do not serve
its tax-exempt purpose. Shareholder distributions are strictly prohibited.
Nonprofit Association vs Corporation

The organization may be an unincorporated association, or registered with the Texas Secretary
of State as a legally incorporated entity.

Associations are not required to register with the state and may not be eligible to receive
certain government grants. Associations are not qualified charities under the US tax code!
Donors, whether individuals or businesses, may not claim deductions for charitable
contributions on their federal income tax return.

Nonprofit corporations are required to register with the state in order to operate as a
recognized entity. All corporations must obtain an Employee Identification Number (EIN) from
the Internal Revenue Service (IRS), even though it does not employ anyone. Applying for an EIN
can be done in a matter of minutes on the IRS website and the number will be provided
immediately, with an official IRS EIN Assignment Notice (CP575) sent via USPS.

Periodic information filings with the state are required upon request to maintain status as a
corporation authorized to conduct business activities. Although not required, boost clubs
should file information reports with the Texas Comptroller of Public Accounts (TCPA) each year
to ensure the list of officers is always up to date (officers often change from year to year
compared to other corporations). One agent (band director or coach) should be identified with
the Secretary of State (SOS) and updated as necessary.

Most nonprofit organizations (except faith-based organizations, government corporations,
certain state institutions and subsidiaries covered under a parent organizations group filing)
are required to file a federal income tax return every year, even though no tax is due! This is to

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report financial activity to the IRS on an annual basis. Failure to file federal income tax returns
may result in penalties, interest fees and forfeiture of the organizations 501(c)(3) status.
Creating a 501(c)(3) Corporation in Texas

First, you need to form a nonprofit corporation under Texas state law (the Texas Business
Organization Code (BOC)).

1. Choose the initial directors for your nonprofit. In Texas, you must have at least three
directors on your board (unless your nonprofit is managed by members instead of directors).
The incorporator can be a natural person 18 years or older, a corporation or another legal
entity.

2. Choose a name for your Texas nonprofit corporation. The name of your nonprofit
corporation cannot be the same as, deceptively similar to, or similar to the name of any existing
domestic or foreign entity, or any name reservation or registration filed with the SOS. To see if
your proposed name is available, you can check the SOS Direct online directory (for a small fee)
on the SOS website. You can also e-mail or call the SOSs office to request a preliminary name
availability check.

3. Prepare and file your nonprofit articles of organization. You create your nonprofit entity by
filing Form 202 Certificate of Formation - Nonprofit Corporation with the Texas SOS. Your
certificate of formation must include basic information such as that provided for traditional for
profit corporations. Nonprofits planning to apply for 501(c)(3) status must also include
language required by the IRS to be granted such status. This includes a statement of purpose
that meets IRS requirements, statements that your nonprofit will not engage in prohibited
political or legislative activity and a dissolution of assets provisions dedicating your assets to
another 501(c)(3) organization upon dissolution. Form 202 must be submitted in duplicate (2
originals) along with a $25 filing fee. Complete instructions are provided in the first 5 pages.

4. Prepare By-Laws for your Texas Nonprofit corporation. Before you file your certificate of
formation, youll need to have By-Laws that comply with Texas law. Your By-Laws contain the
rules and procedures your corporation will follow for holding meetings, electing officers and
directors and taking care of other corporate formalities required in Texas. Your By-Laws do not
need to be filed with the state they are your internal operating manual.

5. Hold a meeting of your board of directors. Your first board meeting is usually referred to as
the organizational meeting of the board. The board should take such actions as: approving the
By-Laws; appointing officers; setting an accounting period and tax year and approving initial
transactions of the corporation, such as the opening of a corporate bank account. After the
meeting is completed, be sure to create Minutes that accurately record the actions taken by the

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Board.

6. Setup a corporate records binder. You should setup a corporate records binder for your
nonprofit to hold important documents such as your certificate of formation, By-Laws, and
Minutes of meetings.
501(c)(3) Application Process

Obtain your federal and state tax exemptions. Now that you have created your nonprofit
corporation, you can obtain your federal and state tax exemptions. Here are the steps you
must take to obtain your tax-exempt status

1. File your Form 1023 federal tax exemption application. To obtain federal tax-exempt status,
complete and file IRS Form 1023 with the IRS. This long and detailed form asks for al lot of
information about your organization, including its history, finances, organizational structure,
governance policies, operations, activities and more. It is very important to receive assistance
from a tax professional familiar with filing Form 1023 as its accuracy is key to successfully
obtaining 501(c)(3) status. Any single error, whether entering incorrect information or missing
any question or option on the form, may result in delays in the application process, or even
result in denial of tax-exempt status. The IRS states that processing the application can take
anywhere from 2 to 12 months, but it is not uncommon for an application to take many
months, even years in some cases (IRS currently cites a backlog of more than 60,000
applications with many pending for nine months). An interactive Form 1023 is available online
to assist you as much as possible if attempting to submit an application on your own. You will
need all possible information on your organization to successfully complete the form, including
your Certificate of Formation with the required language. A user fee of $850 is applied to
organizations with average annual gross receipts exceeding (or will exceed) $10,000 annually
over a four-year period; $400 for organizations whose gross receipts have not exceeded (or will
not) exceed $10,000 annually over a four-year period. The organization may operate as a
501(c)(3) while the application is pending, including the filing of annual Form 990 or Form 990-
N if due date arrives before the tax-exempt status is granted. Additional information, including
complete line by line instructions for Form 1023, is available on the IRS.gov website.

UPDATE: The IRS recently announced a new simplified application called Form 1023-EZ. This
form is available on IRS.gov and is only three pages long, compared to the 26 page standard
Form 1023. As many as 70% of all applicants qualify to use the new simpler form (most
organizations with gross receipts of $50,000 or less and assets of $250,000 or less are eligible).
Form 1023-EZ must be filed online via the IRSs new pay.gov website and a $400 user fee is due
at the time of submission. The organization may operate as a 501(c)(3) while the application is
pending, including the filing of annual Form 990 or Form 990-N if due date arrives before the
tax-exempt status is granted. Additional information, including complete line by line

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instructions for Form 1023-EZ are available on the IRS.gov website.

2. Obtain your Texas state tax exemptions. You must apply to the TCPA for an exemption from
state sales, franchise and hotel taxes. The easiest way to do this is to complete and file Form
AP-204 with the TCPA after you have obtained your federal tax exemption. Include a copy of
your IRS exemption letter with your application. Organizations with 501(c)(3) status are
exempt from Texas Sales & Use Tax for goods and services directly related to the organizations
tax-exempt activities; however, submission of Form AP-204 is still required to confirm eligibility
and receive an exemption of the states franchise tax.
Parent Booster USA (PBUSA), Easier Group Status Through Annual Membership

Parent Booster USA is a national booster organization that provides information, training and
help to setup and operate school support organizations (booster clubs and parent teacher
organizations). The IRS has granted PBUSA group 501(c)(3) status. This means that other
organizations with similar tax-exempt purposes receive automatic 501(c)(3) status simply by
becoming subordinate members. Any booster club organization can gain Basic Membership
with PBUSA by first applying for an employer identification number (EIN) on the IRS website,
then paying the $235 joining fee (CP575 notice required). Annual renewal cost is $135 every
January 1
st
; if joining on or after October 1
st
, first renewal fee is not due until the following year.

Booster clubs still need to follow the steps given to form a nonprofit corporation with the state,
and filing the state Form AP-204, but membership with PBUSA eliminates the need to apply for
501(c)(3) status with the IRS. This means the booster club can avoid completing the
complicated Form 1023, paying the $400/$800 filing fee and waiting the 2 to 12 months (or
longer) to receive approval from the IRS. PBUSA also provides members-only resources, like
Form 990 filing reminder notices, free informational webinars and their new cloud-based
record storage & bookkeeping software called PBUSA Briefcase.

PBUSA also offers a Get Legal Membership for a $355 joining fee ($195 annual renewal) which
adds other federal and state filing assistance, such as applying for an EIN, incorporating your
organization with the state, applying for sales tax or franchise exemptions, or even filing your
IRS Forms 990 and annual state information filings.
Verification of 501(c)(3) Status

Upon approval of a clubs 501(c)(3) tax-exempt status is granted, the IRS will mail an affirmation
letter to the address provided. This letter will need to be retained with the organizations
records and may be requested by donors, vendors or anyone wanting to verify the club as a
qualified charitable organization, enabling them to receive a tax deduction for their
contributions. The IRS provides an online verification service known as the Exempt

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Organizations Select Check tool. This tool allows you to quickly search for specific organizations
that are eligible to receive tax-deductible charitable contributions, were automatically revoked
(for not filing required tax forms on time) or have previously filed Form 990-N.

Booster clubs that received 501(c)(3) tax-exempt status through group membership with PBUSA
may not be found using the Exempt Organizations Select Check tool unless their status was
automatically revoked for they previously filed Form 990-N rather than Form 990 or 990-EZ.
PBUSA members can instead verify their 501(c)(3) tax-exempt status on the PBUSA website.
You can quickly search for any organization included in their IRS Business Master File. PBUSA
submits updates of its members to the IRS quarterly, which can take 6 months for the IRS to
post online. Therefore, the PBUSA website is the best option for verification.

When asked to present an IRS affirmation letter for your booster club, you must instead
provide PBUSAs group affirmation letter and your PBUSA Tax Exempt Certificate (provided by
PBUSA). The PBUSA affirmation letter is proof of PBUSAs group status, and the certificate
proves that your club is listed as a subordinate group. These documents should only be
provided upon request. Normally, most vendors only require a Texas Sales and Use Tax
Exemption Certification (found on the back of Form 01-339).
Whats Your Clubs Current Status?

You should verify your clubs 501(c)(3) tax-exempt status annually to make sure there are no
surprises. You should also check the status of your state franchise account on the TCPAs
website. If either of these is found to not have been properly applied, or have been revoked for
any reason, you will need to determine where the setup process went wrong or came to a stop,
or why your status was revoked. If it is determined that the initial setup process was
incomplete or incorrect, you will need to fill in the appropriate gaps immediately. If status is
revoked by your federal or state government, you will need to contact the IRS, TCPA or SOS to
determine any remedy available to reinstate it. Operating as a 501(c)(3) tax-exempt
organization without having been approved (or at least submitted an application) is considered
fraudulent activity and may subject your club to criminal charges and/or severe fines.
State Reporting Requirements (Annual Information Reports)

Normally, nonprofit corporations are still liable for state franchise taxes and sales & use taxes.
After successfully filing your Form AP-204 and receiving tax-exempt status from the state, you
are then exempt from the state franchise tax and reporting. However, the TCPA may still
request an information filing, a form that is used to update your list of directors and other
organizational information. Since most booster clubs have one or more officers leave office
each year, it is a good idea to file an information filing each year, although this is not required.
Failing to file an information filing in a timely manner when requested by the state will result in

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forfeiture of the clubs ability to operate in the state.

Booster clubs should also file Form 401 Change of Registered Agent and/or Registered Office
with the SOS whenever there is a change in the Registered Agent for the club (e.g., Band
Director or Coach). A $5 filing fee is due at the time of submission of your Form 401.
WebFile (TCPA) and SOSDirect (SOS) Systems

The TCPA and SOS have recently instituted online filing and payment systems to ease the
process of meeting your tax filing requirements.

The TCPAs WebFile system can be used to file and pay Sales & Use and Franchise Taxes, or file
No Tax Due and Information Filings in those systems. When first registering your corporation
with the SOS, they will send you a letter affirming your corporations formation. That letter will
include the clubs 11-digit Texas Taxpayer Identification Number and WebFile number
(beginning with the characters FQ). The Texas Taxpayer Identification Number will always be
necessary, the FQ WebFile number is needed when completing your initial new entity
questionnaire. After completing that filing, the SOS will mail you another letter containing a
new WebFile beginning with the characters XT. All future filings relating to the Franchise Tax
system will require this new WebFile number. All filings through the WebFile system result in
more accurate reporting, can help avoid penalties and interest by filing in a more timely fashion
and faster processing (usually 24 hours).

The SOS has a similar online solution called SOSDirect. This more recent system has recently
been updated to include more electronic versions of forms, including the certificates of
formation, annual statements, changes to agents/officers, dissolutions (closing of a booster
club), nonprofit corporation reports and more. Forms are generally processed in 24 hours or
less and filing fees can be paid through the system.
Federal Reporting Requirements (Form 990 Series)

It is a common misconception that 501(c)(3) tax-exempt organizations are not required to file a
federal income tax return because of their tax-exempt status. The truth is that the IRS needs to
be able to determine that the organization continues to qualify for 501(c)(3) status. In order to
make that determination, the IRS needs to know what the organizations gross receipts are and
generally whether or not that income is being used for the tax-exempt purpose the
organization was approved for. Nonprofits report this information to the IRS using Form 990
Return of Organization Exempt From Income Tax, Form 990-EZ Short Form Return of
Organization Exempt From Income Tax or Form 990-N (e-Postcard) Annual Electronic Notice.

Form 990 is the full form generally required for 501(c)(3) organizations with gross receipts of

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$200,000 or more, or total assets greater than or equal to $500,000 at the end of their tax year.
Subordinates of PBUSA may request that PBUSA include them in a group filing of Form 990.
Form 990-EZ can be filed by organizations with gross receipts of less than $200,000 and total
assets of less than $500,000 at the end of their tax year, though they may opt to file the full
Form 990 instead. Form 990-EZ may not be used to file a group return.

Organizations that normally have annual gross receipts of $50,000 or less must submit Form
990-N IF they choose not to file a complete Form 990 or Form 990-EZ. The IRS will send you a
reminder notice if you do not file your Form 990-N on time. There is no penalty for late filing of
Form 990-N, but an organization that fails to file any variation of Form 990 for 3 consecutive
years will automatically lose its tax-exempt status upon the filing due date of the 3
rd
year.
Organizations also lose tax-exempt status with the state of Texas automatically when such
status is revoked on the federal level. All variations of Form 990 are due on the 15
th
day of the
5
th
month after the close of your tax year. Forms 990 and 990-EZ can be filed electronically via
an e-file provider. Form 990-N can only be filed electronically online. PBUSA provides fill-in
organizers for all three options on their website as an easy way for you to report all required
information to them for the purpose of completing your federal filing requirements. Filing fees
for Basic Membership groups is $50 for Form 990-N, $300 for Form 990-EZ and $500+ for Form
990. Get Legal and Stay Legal Membership groups membership fees include filing assistance at
no extra charge.
By-Laws

Importance of Creating and Maintaining Effective By-Laws

Your By-Laws serve as the governing document for you booster club, so it is important to make
sure it covers all the basic activities of your organization. First and foremost, it should outline
the purpose and basic goals of your booster club; define the executive office positions and
describe their basic duties, responsibilities, and term limits; list standing committees and
describe the tasks they are charged with; establish the fiscal policies of the organization; outline
when regularly scheduled and emergency meetings of the Executive Board and General
Assembly are to take place; and most importantly, define the conditions under which the By-
Laws can be amended.
Periodic Review and Amendments

One of your standing committees should be a By-Laws Committee charged with the task of
periodically reviewing the entire contents of the By-Laws and producing a list of recommended
changes. Those recommendations should be provided to the Executive Board for further
review and input, then presented to the General Assembly for approval. Changes can be

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accepted as is, with modifications, or in part (with other parts voted down or floored for further
discussion). There should also be a procedure defined for any member of the General
Assembly to recommend amendments to the By-Laws.

Your By-Laws should also state the basis for parliamentary procedure, usually assigning
Roberts Rules of Order as the default set of rules to follow. However, it should be noted that
the clubs By-Laws supersede any other rule, guideline or operating procedure. Therefore, it is
also important that the By-Laws do not conflict with any IRS, University Interscholastic League
(UIL), Northside Independent School District (NISD), Northside Booster Association (NBA) or
school campus policies. There should also be a reference to the version or most recent date of
amendment printed at the end of the document, or in the footer area.
Sample By-Laws

A good practice for creating new By-Laws, or tailoring your existing By-Laws to be more
effective, is to use a similar clubs By-Laws as a guide. Most clubs make their By-Laws accessible
on their website in various file formats. It is not recommended to copy their By-Laws word for
word, but reviewing them may allow you to adapt a particular format or remind you to include
key points that are not currently covered in your By-Laws.

The PBUSA and BoosterLand websites also provide sample By-Laws that you can use as a guide.
Accessibility of By-Laws

The By-Laws are also considered a public document, so it should be made easily accessible to
the public. The best way to do this is to post it on your website. A paper copy should also be
kept along with your organizations binder and should be made available to any state or federal
government agency or financial institution that requests it.
IRS, UIL, NISD and Campus Policy Compliance

IRS Compliance

Compliance with the annual tax reporting requirements have already been discussed, but there
are other areas where the IRS governs the operations of a 501(c)(3) tax-exempt organization.

1. Cooperative fundraising and individual fundraising accounts (IFAs). The PBUSA website
contains a thorough explanation as follows:

Cooperative fundraising is when a groups members join together (cooperatively) to raise
money and then credit the funds raised (or the time spent volunteering) to the individuals who

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participated in raising the money (the accounts credited are known as individual fundraising
accounts). These types of activities, while common among booster clubs, are not considered a
501(c)(3) tax-exempt activity.

Tax-exempt 501(c)(3) organizations must be operated for a public purpose. Booster clubs, for
example, often operate for public purposes such as supporting amateur athletics, supporting
arts in the schools, community support for public education and the like. The IRS and tax court
have both found that cooperative fundraising activities are operated for the private benefit of
the individual members of the group involved in the fundraising. This type of cooperative
fundraising may be engaged in by a for-profit, tax-paying organization, but not by a nonprofit,
tax-exempt 501(c)(3) group. If cooperative fundraising comprises any significant part of your
groups total activities (think more than 5% of total funds raised are credited to the individual
accounts of parents/students participating in the fundraising although the IRS does not have a
specific percentage test), then your group likely would not be considered to qualify for 501(c)(3)
status by the IRS.

PBUSA highly recommends avoiding the use of Cooperative Fundraising or individual
fundraising accounts entirely. The first portion of the PBUSAs official IFA Policy reads as
follows:

The IRS has found that the use of IFAs frequently results in illegal private benefit. However, the
IRS has stopped short of strictly prohibiting IFAs. Based on the available IRS guidelines, PBUSA
adopts the following policy regarding its members use of IFAs:

A. PBUSA strongly encourages its members not to use IFAs;

B. If PBUSA members use IFAs, the IFA activity must make up an insubstantial portion of the
overall activities of the organization; and participation in fundraising and/or IFA activity must be
voluntary;

C. PBUSA members who engage in IFA activity do so at their own risk understanding that IFAs
may result in fines and penalties from the IRS; and/or loss of tax-exempt status.

If the IRS finds that IFAs are used by your club, it will request evidence that an exception
applies. In such a case, the booster club bears the burden of proof to establish that it is not
organized or operated for the benefit of private interests related to the creation of individual
accounts within the unit. If that burden of proof is not met, the IRS may determine that the
clubs IFAs are not a primary activity to accomplish one or more of their exempt purposes and
revoke the clubs 501(c)(3) tax-exempt status.

2. Donations and appropriating funds. It is important to remember that all funds donated or

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otherwise received by any 501(c)(3) organization must be used at the discretion of the
organization in a manner that furthers its tax-exempt purpose. Funds must also be used to
benefit the general public (e.g., band, academic or athletic programs) and not any individuals
specifically. Donors (whether individuals, groups or businesses) also may not request that their
donated funds be allocated for any specific purpose. Also, donations are only tax-deductible
for the donor if they do not receive anything of value in return. In a case where a person pays
more than the face or fair market value of a particular item, product or service, the person may
claim a deduction for the difference.
UIL Booster Club Guidelines

From page 1 of the UIL Booster Club Guidelines: The district superintendent is solely
responsible for the entire UIL program. All school activities, organizations (including the
booster clubs), events and personnel are under the jurisdiction of the superintendent. Booster
clubs must recognize this authority and work within a framework prescribed by the school
administration.

The UIL Booster Guidelines brochure is available on the UIL website and summarizes the Dos
and Donts of athletic, academic and music booster clubs operating in the state of Texas. The
guidelines also express the importance of communication and cooperation between booster
clubs, the school district and the school campus. They also outline some basic points relating to
fiscal responsibility and the importance of always putting the education of the students first,
ensuring that good sportsmanship and the spirit of competition is always respected and
trusted, and adhering to ethical practices along the way.
NISD Policies, NBA By-Laws

There are no extensive guidelines or policies governing booster clubs because the UIL
Guidelines are already in force. However, the NISD does require that all volunteers complete
background checks before being allowed to participate in events where students are present.
The most effective way of ensuring that booster members have completed the required
background check is having them purchase an NISD photo identification badge from their
school. The school administration can provide confirmation that each volunteer passed their
background check. Once confirmation is made, volunteers can have their picture taken and
printed on a badge bearing the words Band Booster. This indicates to all NISD personnel that
the volunteer has been cleared and is authorized to access certain areas of NISD facilities.

The NISD also operates the Northside Booster Administration (NBA) to manage concessions at
various athletic facilities throughout the district (i.e., the Don Hardin Athletic Complex, Dub
Farris Athletic Complex, Northside Swim Center and OConnor High School Gym). The NBAs By-
Laws are posted on the NISD website and set forth the rules and regulations pertaining to

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concessions staffed by NISD booster clubs; including mandatory meetings, scheduling
assignments, enforcing fees and distribution of funds to booster clubs.
Campus Administration POC

Each school has its own policies, written or otherwise, for working with booster clubs. Schools
may impose an approval process for fundraisers held on campus; require security and/or
janitorial staff to be present at events held on campus; take disciplinary actions against booster
members found to be in violation of any government, UIL or district policy or ethical standards;
or even mediate booster related issues. Booster clubs need to make sure they are in constant
communication with their school administrations point of contact assigned to oversee their
activities. A supportive school administration can provide a level of authority that an
independent club does not have.
Failure to Comply

Failing to comply with the previously stated policies may result in a wide range of
consequences; including but not limited to IRS fines, revocation of your clubs tax-exempt
status, disqualification of your school in music/athletic events, or even the possibility of legal
action against your booster club.
Bookkeeping/Record Keeping

Annual Budget

Each booster club should produce an annual budget according to the procedure outlined in its
current By-Laws. The budget should list a line item for each anticipated source of income and
expense and may serve to assist and creating/maintaining a chart of accounts for bookkeeping
purposes. Each line item/account may be income only, expense only, or a combination of both.
For example, a Donations line item will only list an estimate of cash donations expected to be
received during the tax year. A General Supplies line item may only list an estimated total
expense for office supplies and other basic items not intended for any other specific purpose.
Line items dedicated to fundraising events should list estimated income and expenses, such as
the expected gross receipts collected from plate sale tickets and the expected cost of paper
goods, food ingredients, permits, food safety items, etc. The ending balance for each line item
should also be listed.

Your clubs budget should be evaluated continuously to ensure that the Executive Board is
aware of the progress of its activities and able to take any corrective action necessary. Some
clubs By-Laws allow for budget changes at any time throughout the year, others require that a
mid-year budget review take place. It is highly recommended that your budget(s) are approved

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by the General Assembly at any regularly scheduled meeting. Also, your By-Laws should outline
a policy for emergency expenditures. This way, your clubs overall spending is based upon the
approval of the entire club, but the Executive Board still maintains somewhat of a safeguard for
emergency situations.
Bookkeeping Software (PBUSA Briefcase/QuickBooks/GnuCash/Wave Accounting)

It is extremely important that 501(c)(3) organizations maintain complete and accurate financial
records. This includes a General Ledger; original receipts, invoices, purchase orders, checks,
etc.; periodic financial reports, original copies of federal and state tax related filings;
documentation of internal and external financial audits; bank statements; etc.

The easiest way to satisfy most of these requirements is to turn to electronic bookkeeping
software. PBUSA provides a new cloud-based solution called PBUSA Briefcase. Unfortunately,
this new service just launched this Summer and there no reviews, demos or tutorials available
to evaluate its effectiveness. Other solutions include the industry standard, Intuits
QuickBooks.

QuickBooks is available in a multitude of versions, each capable of running multiple editions for
specific users. QuickBooks Premier offers industry-specific features, including nonprofits.
QuickBooks Premier for Nonprofits includes a default chart of accounts tailored for nonprofits,
a budgeting feature, custom financial reports (including a tax summary report), detailed
tracking of all income and expense sources and more. Best of all, it allows you to scan original
receipts and other documents and attach them to transactions, vendor/donor accounts, or
even your company information record. Despite common belief, digital scans of original
documents are acceptable when presenting records for audit/review, provided that they are
clearly legible and accurate.

TIP: If using a scanner that implements optical character recognition (OCR), you must review
the interpreted data and make any necessary corrections in your financial records (especially if
that data is to be imported into QuickBooks or any other digital solution).

The retail cost of QuickBooks Premier 2014 (single user license) is $399.95. Intuit ProAdvisor
partners are able to provide 25%, 30% or 35% discounts (depending on their ProAdvisor status).
A less expensive option is the new QuickBooks Online (QBO) service, a cloud-based version of
the QuickBooks software that also supports nonprofits and is available as a monthly
subscription. QBO offers three editions ranging from $12.95/month to $39.95/month and
enables you to more easily share access to your company file with all Executive Officers,
booster members and outside Accountants/Bookkeepers when necessary. Each user can have
a different level of access based on preference that you set.

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If choosing QuickBooks Premier, the best option for nonprofits is to take advantage of The
Intuit Donation Program, offered by the Intuit Financial Freedom Foundation and available
through the TechSoup website (requires membership and proof of 501(c)(3) tax-exempt status).
Discounted prices for QuickBooks Premier are $45 for a single user license, $99 for a 3 user
license (additional licenses required for simultaneous multi-user access to a single company
file). QuickBooks for Mac 2014 also supports nonprofits and is available for $25. Eligible clubs
may purchase one QuickBooks product per year, allowing it inexpensive access to the most
current version each year.

Even with the huge discounts available to nonprofits purchasing QuickBooks, you may choose
to opt for a free alternative instead. While not as full featured as QuickBooks, the open source
program GnuCash is multi-platform, available under the GNU General Public License and a great
choice for desktop based software.

GnuCash is capable of importing/converting QuickBooks data and opening QuickBooks
company files, great options for anyone looking to cut costs by migrating away from
QuickBooks. Although there are no specific features tailored to nonprofits, its job tracking
feature can be used to track fundraisers and you can always export data into Excel to create
custom financial reports. Some clubs may find these extra efforts worth the $0 price tag.

A better free option is Wave Accounting (Wave), an alternative to QBO that provides more
robust features than GnuCash. Wave provides many of the same advantages as QBO, including
online and multi-user access and custom settings for nonprofits. QBO still offers more, but
Wave also provides free unlimited support. Credit/debit card processing and payroll support
are also available at very affordable prices compared to similar QuickBooks add-on services
provided by Intuit.
Financial Reports (Annual Budget, Mid-Year Budget, Treasurers Report, Financial Audit,
P&L, Cash Flow, EOY Tax Summary)

Financial reports are key to understanding your clubs cash flow thoroughly, providing you with
the valuable information necessary to make sound decisions and evaluate the effectiveness of
your fundraising activities. The QuickBooks and Wave products previously mentioned include
all the reports necessary for nonprofits organizations like yours. Financial reports may also be
requested by federal/state agencies, financial institutions or internal auditors.

The most important financial reports are your monthly Treasurers Reports (i.e., based on your
General Ledger) and your Tax Summary report at the end of the tax year. The Tax Summary
provides the totals needed to complete your tax filing requirements. With an effective Chart of
Accounts, proper data entry and accurate tax-line mapping, your Tax Summary report provides
quick, accurate accounting for each line in your tax return.

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Record Retention Policy

From the IRS Compliance Guide for 501(c)(3) Public Charities:

Record retention periods vary depending on the types of records and returns.

Permanent Records Some records should be kept permanently. These include the application
for recognition of tax-exempt status, the determination letter recognizing tax-exempt status,
and organizing documents, such as articles of incorporation and By-Laws, with amendments, as
well as board minutes.

Employment Tax Records If an organization has employees, it must keep employment tax
records for at least four years after the date the tax becomes due or is paid, whichever is later.

Records for Non-Tax Purposes When records are no longer needed for tax purposes, an
organization should keep them until they are no longer needed for non-tax purposes. For
example, a grantor, insurance company, creditor, or state agency may require that records be
kept longer than the IRS requires.

Excerpts from Texas C-Bars Nonprofit Legal Toolkit:

Nonprofits must keep correct and complete books and records. All nonprofits must maintain the
following information at the registered or principal office of the nonprofit in Texas: names and
addresses of members, if any, entitled to vote; the written consent of the registered agent;
minutes of meetings of members, board of directors, and any committees having the authority
of the board of directors; and complete books and records of accounts.

Nonprofits must keep true and accurate financial records. Records should contain full and
correct entries, including income and expenditures, in accordance with generally accepted
accounting principles. The records must be kept at the registered or principal office of the
nonprofit in Texas for at least three years after the close of the fiscal year.

Nonprofits should maintain and destroy records and files according to a written archival policy.
This policy should also cover email and voicemail. If the nonprofit knows of pending or
threatened litigation, any document destruction should be curtailed. It is a felony to falsify or
destroy a document with the intent to obstruct an investigation of any branch of the federal
government. See www.texascbar.org for a sample Document Retention Policy.

Most nonprofits that receive contributions from sources outside their membership in excess of
$10,000 during a fiscal year must maintain additional documents and make them available to

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the publicNonprofits do not need to disclose the names of donors.

Nonprofits must prepare an annual report of financial activity for the preceding year.
Nonprofits must prepare or approve an annual report that must include a statement of support,
revenue and expenses, changes in fund balances, a statement of functional expenses, and
balance sheets for all funds. The report must conform to accounting standards as promulgated
by the American Institute of Certified Public Accountants.

Members of the public may copy publicly available documents during normal business hours.
Nonprofits do not have to disclose the names of members or contributors. A nonprofit may
charge for the reasonable expense of preparing a copy of a record or report. Failure to maintain
financial records, prepare an annual report, or make the records available to the public is a Class
B misdemeanor under state law. There are additional penalties under federal law. Note: The
Internal Revenue Code also requires that the three most recent annual information returns
(Forms 990) be available for public inspection.

Nonprofits must allow the Attorney General to examine books and records. The attorney
General of Texas may inspect all the books and records of the nonprofit. The Attorney General
may investigate an organization to determine if it is in violation of its governing documents.
Failure to allow the Attorney General to examine or copy records is a Class B misdemeanor
under state law and may lead to penalties, forfeiture of property, and additional criminal
charges.

Nonprofits must allow any member or governing person to examine and copy books and
records, including the names and addresses of members entitled to vote. A member can make a
written demand to examine the nonprofits books and records. The purpose of the demand
must be stated in writing. The member or a members agent, attorney, or accountant may
examine the books at any reasonable time and for any proper purpose. The cost of copying is
the responsibility of the member.

Nonprofits with employees must keep extensive records in accordance with numerous
employment laws. Different employment laws apply to nonprofits depending on the number of
full and part-time employees. Record-keeping requirements vary under each law. A good rule
of thumb is to keep all payroll information, including time cards, sick and other leave, overtime,
and payment history for at least four years. Keep records of work-related injuries and illnesses
for at least five years.

Nonprofit directors and staff must file correct documents. A person who signs or directs the
filing of a false document is liable for damages, court costs, attorneys fees, and criminal
offenses.

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Insurance & Liability

Federal and state laws are already in effect to protect booster clubs and other organizations
that rely on volunteers. However, that protection only applies under specific conditions and
many exceptions apply. If your club is found liable for a volunteer; student or customers
personal injury; property or facility damage; loss of funds due to negligence, fraud or
embezzlement; the legal cost could be substantial and criminal charges or even jail time may
apply. Even if your club believes they are not liable, it may take an exorbitant amount of legal
costs to prove so in court. In some cases, such costs may result in the dissolution of the club.
Therefore, it is extremely important that each club take appropriate measures to protect
themselves legally.
What It Means To Be Bonded

The most common liability issue for booster clubs is the fraud and embezzlement of funds. A
simple Google News search for the past two months results in two months of results
(http://bit.ly/boosterembezzlement). These news stories all point out the fact that any club can
be targeted for such activity. Even though it is disturbing that any member of your club may be
capable of committing such fraud, you should always assume the worst and institute measures
to prevent, detect and respond to such situations. At the very least, every booster club should
be bonded. Bonding insurance will help cover the loss of funds or the organization to
embezzlement and the like.
Other Types of Insurance Coverage to Consider

The PBUSA website lists three other types of insurance booster clubs should consider. These
are listed as follows:

General Liability to cover accidents and injuries to individuals

Directors and Officers to cover the personal liability of officers and directors for their legal
responsibilities serving the organization

Property to cover loss of property/assets of the organization, such as damage to facilities,
owned and rented equipment, and property/inventory related to fundraising programs
(wrapping paper, candy or other products that the parent group receives before they are
distributed and funds collected)
Reducing The Organizations Liability

The PBUSA, BoosterLand and National Booster Club Training Council (NBCTC) websites all

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provide more information on the risks involved when operating without insurance, the
different types of insurance available, and even recommendations for insurance agencies
providing coverage tailored to booster clubs. With an NBCTC membership, you can even take
advantage of five discounted insurance programs for members only.

As PBUSA recommends, each booster club should seriously consider adopting a Risk
Management Policy. The best approach would be to form a Risk Management Committee
charged with the task of analyzing the clubs yearly activities and identifying all risks involved.
This will allow them to determine which risks the club is willing to live with, which ones can be
avoided with inexpensive solutions such as changes in club procedures, and which ones would
prove to be unavoidable or severely threaten the effectiveness of the club. Those listed in the
latter category should be the ones that determine what types of insurance you should
purchase. It is highly recommended that this be done without assuming that any federal or
state law will provide sufficient protection. Remember, when it comes to insurance, it is better
to have it and not need it, than to need it and not have it.
Effective Communication and Social Networking

Importance of Ongoing, Two-way Communication with Booster Members

The key to success for any booster club is the participation of its members, so its extremely
important to keep them all well informed. This goes beyond simply providing them with access
to your meeting Minutes and By-Laws. You must be willing to accept input from your clubs
members, including criticism when necessary. Members should feel welcome to offer such
input without fear of reprisal or animosity.

You should also stress to members that the best opportunity to bring up items of discussion is
at your monthly meetings. All members, students and other interested parties should be
encouraged to attend regularly so that their voices may be heard. This also provides another
advantage to the Executive Board; the ability to solve problems and make decisions that the
President or Executive Board have been unable to finalize. The tougher the decision, the
greater the benefit of expanding the discussion. There may be other aspects of the issue
brought up that have not yet been considered, and the burden and responsibility of the final
decision is shared among the majority when a motion is presented on the floor and a vote of
the General Assembly either passes or opposes the motion.
Maintaining an Effective Website

One issue small businesses and nonprofits alike often struggle with is creating (or upgrading to)
a well-designed, effective website. This is usually because finding an experienced, reliable web

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developer can be difficult. And when you do find one, theyre either too expensive for a
nonprofit organization operating under a strict budget, or not always available when you need
them to post content, add features, or redesign the site when needed. Without providing
current and accurate information at all times, members and other visitors will quickly find it not
worth the effort of visiting it regularly. So, it is important to always have a reason for interested
parties to visit on a regular basis. Its particularly easy to keep it current if you provide a way
for all Executive Officers and Committee Chairpersons to post content when needed. You
should assign one knowledgeable person to be your Website Committee Chair/Webmaster, but
theres no need to rely on them solely to post, approve or edit content. The remaining
members of the Website Committee or one or more Executive Officers should also be able to
monitor and moderate website content regularly.

The best option is to use a content management system (CMS) like WordPress, Drupal, Joomla
or Squarespace as the back-end for your website. WordPress is recommended because it is
absolutely free and there are plenty of plugins, themes and widgets freely available. This
means the only cost the club has to bear, the annual domain name registration and monthly
hosting fees (vary depending on chosen registrar and hosting service). It is highly
recommended that you purchase the .com, .net and .org top level domains (TLD). One of these
can point to your hostname server where your website is actually stored, while the other two
simply forward to that one. This way, visitors can use all three to access your website.

Recommended features for your website include a blog feed on your home page presenting the
latest content; a page that provides a digital archive of public documents like your By-Laws,
meeting Agendas, Financial/Treasurer Reports, General Assembly Meeting Minutes, your Band
Student Handbook and any other files you want members and others to have easy access to;
links to useful school and district resources such as the NISD Background Check Form; links to
other booster websites, information on charitable donations and a method to make donations
online; a way to accept online payments for fundraisers, booster polo shirts and event
registrations; contact form where visitors can submit questions, comments, etc.; and a signup
form for your e-mail distribution and newsletter subscription lists.

TIP: Be sure to comply with the Can-Spam Act when using e-mail to communicate or distribute
information. Although the letter of the law indicates that it applies to commercial e-mails, it
makes no exceptions for business-to-business e-mails or nonprofit organizations. This means
that you may be subject to penalties of up to $16,000 per instance. The Federal Trade
Commission (FTC) provides a simplified summary of the law on their Bureau of Consumer
Protection Business Center website. The following are the main requirements they list:

1. Dont use false or misleading header information (From, To, Reply-To and routing
information including originating domain name and e-mail address).

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2. Dont use deceptive subject lines.

3. Identify the message as an advertisement if it is one.

4. Tell recipients where youre located (use an e-mail signature on all messages).

5. Tell recipients how to opt out of receiving future e-mails from you.

6. Honor opt-out requests promptly.

7. Monitor what others are doing on your behalf (using third party distribution services do not
relieve you of your responsibility to comply with the law).

You should visit the FTC website referenced for a more complete explanation of these
requirements.

Most importantly, your website should describe your booster club and its Mission Statement,
goals, purpose, etc. You should also provide contact information for each Executive Board
Officer. Domain based (aka vanity) e-mail addresses can be used to help protect the private e-
mail addresses of each officer. If using Google Apps, it is possible to setup Google Voice
accounts for each officer if you would like to post phone numbers as well. Google Voice
numbers can be forwarded to secondary numbers like cell phones and home phones and also
provide a cloud-based voicemail system, allowing users to be contacted without exposing them
personal numbers. Google Voice apps are also available for smartphones and add the ability to
place outgoing calls using the Google Voice number.
Active Social Media Campaign (e.g., Facebook, Twitter, LinkedIn, Instagram, Google+,
YouTube, etc.)

In the digital/mobile world we now live in, most use at least one online social network, if not
three or more. Each platform focuses on different areas of social communication; from basic
conversation to distributing short updates, publicizing your location, sharing multimedia,
identifies areas of interest online, managing groups with like interests, providing
advertisements or even business networking. Sometimes, multiple platforms are used in
conjunction with each other to utilize many of these features. The most popular platform of all
is Facebook because it provides the most options for these needs, so it is a no brainer that it is
an effective two-way communication service. The other platforms warrant fair consideration
based on the needs of your booster club.

Many metrics are available online that identify the demographics of social networks and they
offer an interesting insight on the platforms most popular among users in certain age groups,

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genders and levels of income. For example, a recent Pew Research study found that 71% of
Internet users use Facebook, a good 49% points higher than the runner up, LinkedIn. Silicon
Alley Insider recently charted data from users of the popular AddToAny mobile app (enables
users to share items from other apps) that shows Facebook as the most popular share
destination (24%), with e-mail and Twitter being the runners up (11.1% and 10.8%
respectively). In both cases, the gap in usage statistics is very telling.

Whichever social networking/media sharing solutions you choose, it is important not to let
them drive visitors away from your website. All your means of communication should
complement each other, and constantly send visitors back and forth. This helps to promote all
solutions and validate their relativity and reliability to search engines, visitors and marketing
partners/supporters.
Analytics (Important Information for Marketing and Potential Donors)

Just as usage statistics helps us evaluate our options when considering what social networks to
utilize, statistics on how your website is being found and viewed can also prove useful. The
easiest way to collect such data is with Google Analytics.

With Google Analytics, all you need is to create a user account (any Gmail or Google Apps
account will work) and copy and paste a short script onto every page of your website you wish
to track (CMSs make this easier by using their internal settings or with the help of plugins). As
soon as data begins coming in, it is all collected into a database and made available to you in a
number of ways. You can review this data and quickly determine how visitors are finding your
website; where they are navigating to/from your website; which pages receive the most hits;
which pages are viewed the longest; how many first-time visitors vs repeat visitors are viewing
your website; and even how many visitors use specific operating systems, mobile devices,
screen resolutions, browsers, etc. You can also view a list of visitors IP addresses and their
general location (country).

This information can often help you focus on more popular features of your website, or
determine if an area of your site requires a redesign or additional attention to increase traffic.
If you have a YouTube channel, you even provide your Google Analytics ID in your account
settings there so that similar statistics can help you track the viewership of your posted videos.
You can also use your analytical information to convince potential advertisers, supporters or
donors that there is a higher probability of a return on their investments (total number of
views/visitors a month can be compared to traditional advertising methods).

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Fundraising

Plate/Food Sales (Liability Issues When Selling To the Public)

San Antonio City Ordinance requires all events where food is sold or given away to have a
license from Metro Health. In addition, state regulations require inspections of all temporary
food service establishments. The regulatory authority may impose additional requirements to
protect against health hazards related to the conduct of the temporary food establishment,
may prohibit the sale of some or all potentially hazardous foods, and when no health hazard
will result, may waive or modify requirements of these rules.

When paying for your license from Metro Health, you will be given a notice containing a
summary of the terms of the license, including the operational guidelines you must follow to
pass inspection on the day of the event. Proof of purchase must be presented at the beginning
of the event to the Sanitarian (Inspector). All foods must be from an approved source and/or
licensed facility or prepared in the temporary food establishment (on-site). No homemade
cakes, cookies, beans, tacos, or other preparations are permitted to be sold. All other
guidelines should be reviewed thoroughly prior to the event date. If cooking is done on-site, a
fire permit may also be required from the Fire Marshall.

If your event is held in a jurisdiction other than the city of San Antonio, you will need to check
with the appropriate licensing office for that area. Complying with these laws will ensure that
your event proceeds without interruption while reducing the liability risks associated with
selling/serving food items to the public. You should also make sure that event organizers take
every precaution possible to eliminate any safety hazard to all volunteers.

TIP: Student volunteers working plate sales, concessions assignments and other events that
cater to the general public may request documentation of community service hours needed for
The National Honor Society.
Sales Tax (e.g., Spirit Items/Resale Items, Tax Exempt Form and Resale Certificates)

There is a common misconception that tax-exemption status is all encompassing; that is,
applying to both sales & use tax that is owed at the time of purchase, and sales & use tax that is
due for collection at the time of a sale. It is important to know that your tax-exempt status only
applies to sales & use tax that is owed at the time of purchase, and that it only applies to
purchases of items necessary in assisting the organization to achieve its tax-exempt purpose.
Purchases of personal items or any goods or services that dont directly meet that requirement
are not qualified tax-exempt transactions. You must keep those transactions separate from the
clubs tax-exempt transactions. Any individual claiming tax-exemption fraudulently is subject to

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fines and possible criminal charges. Booster officers and members would also be subject to the
same penalties if they authorize any individual to falsely claim a tax-exemption.

Since there is no exemption for the collection of Sales & Use Tax, exempt organizations must
get a sales tax permit and collect and remit sales tax for all taxable items it sells. It is the
responsibility of the organization to collect correctly calculated sales tax on taxable goods and
services it sells, then report those to the state at the appropriate interval determine by the total
gross receipts. However, there are exceptions that allow sales tax collection and reporting to
be avoided. It is highly recommended that your booster club limits its sales activities to
situations that are covered by these exceptions; thus, avoiding the need to obtain a sales tax
permit and comply with the otherwise required reporting. The TCPAs brochure titled Exempt
Organizations: Sales and Purchases outlines the exceptions as follows:

Tax-Free Sales Fundraisers. An organization does not have to register for a sales tax permit if all
its sales are of exempt items, or sales made through tax-free fundraisers.

Meals and Food Products. Exempt organizations do not have to collect sales tax on meals and
food products, including candy and soft drinks, if the items aresold or served by a public or
private school, school district, student organization or parent-teacher association in an
elementary or secondary school during the regular school day by agreement with proper school
authorities, including vending machine sales or sold by a member or a volunteer of a nonprofit
organization devoted exclusively to education or to physical or religious training, or by a group
associated with private or public elementary and secondary schools as part of an organizations
fund-raising drive, when all net proceeds from the sale go to the organization for its exclusive
use.

Note: Alcoholic beverages are taxable. Sales of alcoholic beverages made by the holder of a
mixed beverage permit are subject to the 14% mixed beverage gross receipts tax. Sales of beer
and wine made by the holder of a beer and wine only permit are subject to sales tax.

Annual Banquets and Suppers. All volunteer organizations can hold a tax-free annual banquet
or other food sale provided the event: is not professionally catered; is not held in a restaurant,
hotel or similar place of business; is not in competition with a retailer required to collect tax; and
the food is prepared, served and sold by members of the organization.

Note: The exemption does not apply to the sale of alcoholic beverages.

Auctions, Rummage Sales and Other Fundraisers. Each chapter of an exempt organization
underIRS 501(c)(3)can hold two one-day, tax-free sales or auctions each calendar year
(January December)

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One-Day Sales. For one-day sales, exempt organizations are not required to collect sales tax.
This exemption does not apply to items sold for more than $5,000, unless the item is
manufactured by the organization or the item is donated to the organization and not sold back
to the donor.

For purposes of the exemption, one day is counted as 24 consecutive hours. These days
should be pre-designated so purchasers are aware of the tax exemptions. Organizations are
prohibited from collecting and keeping taxes on these transactions.

The designated one-day, tax-free sale day is either the day the vendor delivers the items to the
exempt organization or the day the organization delivers the items to its customers. Persons
buying from surplus inventory on the designated date do not owe tax. For example, a church
group selling cookbooks may accept pre-orders without collecting tax if the day the cookbooks
will be delivered to customers is designated as one of the groups tax-free fundraisers. Surplus
cookbooks sold during the same day also qualify for the exemption. Surplus cookbooks sold on
other days are taxable unless sold at the groups other tax-free fundraiser.

If two or more groups together hold a one-day, tax-free sale, the event counts as one tax-free
sale for each participating organization.

If an exempt organization is purchasing taxable items for resale during its designated tax-free
sale days, and it holds a sales tax permit, the organization may either give the retailer a resale
certificate, Form 01-339 (front), or an exemption certificate, Form 01-339 (back), to purchase
the items tax free.

A non-permitted exempt organization, however, may purchase items for resale tax free by
issuing an exemption certificate to the vendor for items sold during its two one-day, tax-free
sales

Non-Qualifying Fundraisers: Acting as an Agent or Sales Representative. When engaging in
fundraising activities, an exempt organization needs to identify the seller of the taxable items in
order to determine responsibility for collecting tax.

In some fundraising activities, an exempt organization will enter into a contract with a private,
for-profit entity to sell taxable items. For example, a group may receive a commission for
holding a book fair or for selling candy, gift wrap, or similar items, or the group will be provided
with sales brochures and take orders for fulfillment by the for-profit entity. The exempt entity
may collect the funds and remit an agreed portion to the for-profit entity. In these cases, the
fundraising firm is considered the seller and is responsible for collection of applicable sales and
use taxes. Exempt organizations are not responsible for sales taxes and do not use one of the
organizations tax-free sales days for the fundraiser.

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May fundraising companies include sales tax due in the selling price of items? This practice is
acceptable when the for-profit company discloses on the invoices or order brochures that Texas
sales tax is included in the sales price. This allows the company to remit to the state any due
sales taxes. In this instance, the exempt organization is not required to collect any tax amount
over the sales price

Amusement Services. The sale of an amusement service provided exclusively by an exempt
organization, other than an IRS Section 501(c)(7) organization, is exempt from sales tax as long
as the proceeds do not benefit an individualFor example, the sale of a ticket to a school
carnival, dance, athletic event or musical concert is exempt.

For an event to qualify for exemption, the organization must distinguish itself as the sole
provider in advertising (for example, billboards, radio, television and other media promoting the
event), as well as on the face of the physical tickets. Tickets should reflect that the exempt
organization is the provider, and that the event is exempt from Texas sales and use tax.

Can a nonprofit organization hire a for-profit entity? A nonprofit organization is allowed to hire
a for-profit entity to supply expertise required to produce an event as long as the for-profit
entity is not also considered a provider of the amusement service.

Membership Dues and Fees. Nonprofit groups membership dues and fees are tax exempt.
Country clubs and similar organizations that provide amusement services do not qualify for this
exemption.

Publications. Periodicals and writings are tax exempt if published and distributed by a religious,
philanthropic, charitable, historical, scientific or IRS 501(c)(3) organization. Materials published
by educational organizations do not qualify for this exemption.

Boosters should review the Exempt Organization: Sales and Purchases brochure for more
detailed information.
Accepting Credit Card Transactions (Online and Mobile)

As mentioned earlier, Intuit and Wave both offer credit/debit card processing services at an
additional cost. Those services can be purchased/enabled from within their respective
products, but there are also other low-cost solutions available with the added benefit of mobile
processing.

Square provides free mobile apps for iPhone/iPad and Android phones and tablets that enable
you to process credit/debit cards while mobile. Theres no complicated application process and

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monthly service fees and other charges related to merchant services provided by a bank, no
setup fees, no requirement to purchase or lease physical card readers and no need to pay
additional costs for receipt paper or dedicated phone lines. Even the mobile card reader is free
and you can always request additional readers at no charge. Compatible devices with the
Square app installed become mobile point of sale (POS) systems where you can even save
information on regularly sold items and donation amounts, run the credit/debit card and even
have the customer sign with their finger or stylus and receive a receipt via e-mail or text
message. You can also access your account and review your transactions history and other
information right from the mobile app. Nonprofits can use the Mobile Staff feature to invite
volunteers and staff to process transactions on your clubs behalf without allowing them to
view sensitive account information. You can even customize your receipts and save your EIN
number to ensure that IRS reporting is associated with the organization, rather than the
individual who created the account. The only cost of using Square is the low transaction fee of
2.75% for swiped transactions, and 3.5% + 15 for manually entered transactions.

Unlike Square, which is purely a mobile solution, PayPal offers full merchant services for your
organization. You can accept credit/debit card payments on your website, including payments
for spirit items, parent polo shirts, event registrations and charitable donations. PayPal now
has a mobile solution called PayPal Here, with most of the same features provided by Square.
PayPal Here turns any compatible iPhone, iPad or Android phone into a mobile register. Its not
a complete mobile POS system like Square, but it does everything a booster club needs to
accept credit/debit card payments at any remote location. Like Square, you can enable
volunteers and staff to process transactions on behalf of your club without accessing other
account information, but you must setup additional user accounts on the PayPal website. You
can also download other PayPal mobile apps that allow you to calculate PayPal fees in advance,
access your transaction history and even transfer funds to your clubs bank account. The PayPal
website also allows you to do all this and more, like create custom Buy Now buttons for your
website. If you already have a PayPal account, signing up for PayPal Here is a snap, and theyll
mail you your free mobile card reader. You can call customer support to request additional
card reader, or you can pick them up at Staples for $15 each. Theyll provide you with mail-in
rebates for you to receive a full reimbursement from PayPal. New PayPal business accounts
can be created on their website fairly easily. You will need to provide your bank account
information along with your business EIN and other information. If you provide your 501(c)(3)
documentation as well, youll be able to take advantage of special discount pricing on your
transactions fees. PayPals transaction fees are normally 2.9% + 30, and PayPal Here charges
2.7% per transaction (3.5% + 15 for manually entered transactions). For nonprofits, PayPal
fees are discounted down to 2.2% + 30 while PayPal Here charges remain the same.

PayPal also provides live phone support and the ability to accept checks and direct payments
from other PayPal account users. Your PayPal account functions just like any commercial bank
account. You can make PayPal payments to vendors and individuals with PayPal accounts of

25

their own, send payments or invoices via e-mail, and transfer funds to/from your actual bank
account, which also acts as back up funding for your PayPal account. For example, if you use
your PayPal account to make a $100 payment to a screen printing service and there is only $75
available in your PayPal account, PayPal will automatically draw $25 from your bank account to
complete the transaction. Like regular bank accounts, you can download your transaction
history and import it into QuickBooks, Wave, GnuCash, etc. If your clubs financial policy allows
for the use of charge cards, you can also apply for a PayPal debit card that allows you to charge
payments or withdrawal funds from an ATM. That financial policy should include appropriate
safeguards to prevent fraudulent use.

The ability to accept credit/debit payments online and on-site is an easy way to increase
revenue without incurring any additional costs. You can add convenience, processing or
handling charges to your prices to cover transaction fees, thus passing on that cost to your
customers. You dont have to pay all the additional charges related to merchant services
provided by traditional banks and there are no credit checks or complicated applications
required. No more missing out on sales because potential customers do not have cash on them
and no more lost revenue on silent auction items because customers arent carrying enough
cash to surpass the previous bidder. Also, more vendors are accepting payments online and do
not process checks.
Q&A and Open Discussion Period
Adjournment

26
REFERENCES AND RESOURCES
mixer.jjmustangband.net
Texas state resources:
Franchise Tax: http://bit.ly/txfranchisetax
O5-102 Texas Franchise Tax Public Information Report (PIR): http://bit.ly/05102txftpir
Texas WebFile: http://bit.ly/txwebfile
Texas Secretary of State: http://bit.ly/TexasSOS
Business and Nonprofit Forms: http://bit.ly/txsosbusnpforms
202 Certificate of Formation for Nonprofit: http://bit.ly/202cofnonprofit
401 Change of Registered Agent/Office: http://bit.ly/401corao
501 Name Reservation: http://bit.ly/501nameres
503 Assumed Name: http://bit.ly/503assumedname
SOSDirect: http://bit.ly/SOSDirect
TCBA Brochure Exempt Organizations: Sales and Purchases: http://bit.ly/txeosalesandpurchases
IRS Resources:
Online EIN Application: http://bit.ly/irseinapp
EO Select Check: http://bit.ly/nonprofitsearch
Interactive Form 1023: http://bit.ly/int1023
1023-EZ Instructions (Completed Form 1023-EZ Eligibility Worksheet beginning on page 11 to
determine if you can use Form 1023-EZ): http://bit.ly/1023ezinst
Instructions for Form 990: http://bit.ly/990inst
Instructions for Form 990-EZ: http://bit.ly/990ezinst
990-N (e-Postcard): http://bit.ly/990NePostcard
Other Resources:
Parent Booster USA (PBUSA): http://parentbooster.org
BoosterLand Blog: http://boosterland.com
National Booster Club Training Council (NBCTC): http://boosterclubs.org
FTC CAN-SPAM Act Compliance Guide: http://bit.ly/canspamactexp
UIL Booster Club Guidelines: http://bit.ly/uilboosterguide
Northside Booster Association (NBA): http://nisd.net/athletics/booster-clubs

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