Author Topic: Important information for all members to read  (Read 14170 times)

Offline castortiu

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Re: Important information for all members to read
« Reply #30 on: September 07, 2010, »
I read something that on Sep 14th there will be a voting to see if this is repelled.

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I may be reading something else :)

Cas.

Offline JJJR

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Re: Important information for all members to read
« Reply #31 on: September 08, 2010, »
Cas, That actually looks pretty relavant. I read a little furthur in and found a link to this article about the provisions they want to change.
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It looks like they would remove the 1099 filling requriment or at least bump the limit thats required up. They would justify the tax cost by also repelling a tax break for oil industries thats in the current law.

Offline castortiu

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Re: Important information for all members to read
« Reply #32 on: September 08, 2010, »
If the bill is repelled RJ won't have to do paperwork for a while until he has more than 25 employees, how far are you in that count RJ?  <pop..

Cas.

Offline loveroflife96

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Re: Important information for all members to read
« Reply #33 on: December 10, 2010, »
Understanding that everyone wants to keep the cost of each individual product low, what would be the feasibility of having multiple Co-op managers collecting money and paying the vendor in separate payments for specific parts with shipment occurring to one individual.  (i.e.  John, Mary, Joe, and Sue take payments for the items.  John takes payment for PCBs; Mary takes payments for enclosures, Joe takes payments for 1/2 the parts, Sue takes payments for the other 1/2.  All the items are shipped to John for separation, packing, and shipment).  Using paypal it would only increase costs by $1.20 for four people to manage.  Only issue I would see is communication between those four individuals to ensure that each member has paid the designated amount to each of them.   Being a noob to this, I have no clue the total expense of the coops in the past, but above, using 4 people, it'd make an $80,000 buy possible.  Of course, if multiple coops were planned, then the responsibility would have to be spread among more people in the community.  Of course, this would only be fair too, it shouldn't always be the same people staying up late nights to make the coops happen, we should all share in the responsibility if we want to be a DIY community.   


Offline hbomb341

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Re: Important information for all members to read
« Reply #34 on: December 12, 2010, »
RJ,

Was ponder what the follow up on this was with the new CoOp opening up?  Are you just going to have to convert another room in your house to a keep the records of all of these?

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Offline Watsont79

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Re: Important information for all members to read
« Reply #35 on: December 26, 2010, »
With the new reporting requirements, I don't see how you can avoid the IRS filing requirements.  The best you could do would be to simplify the recordkeeping.  I would think paypal could help with that especially if you can make the COOP purchases directly from the paypal account.   
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Offline tng5737

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Re: Important information for all members to read
« Reply #36 on: December 26, 2010, »
Just curious as where all of this puts our current LE coop?

Offline cubbieco

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Re: Important information for all members to read
« Reply #37 on: December 30, 2010, »
I know this post is a little late to the table but I found this posting from another on the board.  I know you can't believe anything you read on the internet but while I am not officially a "CPA" per say I am an accountant of 13+ years and have prepared taxes for people many of those years.  I'm not going to tell anybody how to bend rules but will spell out officially how things look from the IRS.

Any money you get from anywhere is income.  Period.  End of story.  There is no magic "hobby" income because hobby income is still income.  The differences with "hobby" income is that it is more difficult to deduct the losses if you have any.  Otherwise hobby income is income like anything else.

Spreading out money through several people is a bad idea.  Put it this way.  If $5,000 went through one individual and that individual happened to get a random audit for whatever reason the IRS will see that $5,000 come through their bank account (paypal account, whatever) and ask why they didn't report it as income.  Yes in the end the money back out may be deductible but it could cause a large headache in advance of that.  The same thing can happen for any coop manager.  Yes personal audits are more and more rare but with computers being more powerful and many of these "big brother" laws coming in to place it will be harder to not report income to the IRS.

Now - that's the bad news.  The good news is that this isn't very difficult to deal with.  I've never been a coop manager so insert any corrections you have.  In general you are ordering parts from lets say 5 different suppliers.  So you collect your $10,000 and spend $9,000 on parts from these 5 suppliers.  So - you need to save those 5 invoices.  Stuff them in a shoe box / whatever you need to do.  Save the email receipts / whatever you get.  It is not that hard to keep those invoices.

Now you mail out 600 individual packages for $1,000 (yes I know my math is wrong so bear with me).  The easiest thing is to pay with a credit card / debit card so you have a good record of how much you spent on postage.  Save the address list and a handful of the package receipts.  Saving 600 receipts might be overkill but if you are organized enough go ahead and do that.  Otherwise saving a handful of them should be sufficient.

So you have a record of everything you spend.  Create a schedule C on your tax return (business / hobby income ) report the $10,000 in income at the top.  Then the $9,000 will be "cost of goods sold" and the remaining $1,000 will be "postage" expense.  If you get audited you have the invoices for the parts, you have an electronic copy of all of the post office purchases (through your credit card statement) and a few of those receipts.  Then you can explain what you are doing and everything is fine. 

You don't need a federal ID number or to register a business name if you don't want to.  Although if you do this enough and you have neighbors that work for the city they may point out you should have a city / state business license (which technically you should) but for the occasional coop person in their spare time not making any money you should be ok.

The important things to know here:  Don't use cash for anything in a coop.  Always a check or a credit / debit card.  You need that electronic record of the transaction to help justify not being taxed.

Don't hide anything.  One way or another they'll find out about the money.  Personally I think it would me more likely you would be audited for this if the IRS catches wind of the income somehow then if you report the income and expenses up front.  Computers are powerful things and the laws are working for the IRS in finding out about things like this.  Another thing to know:  Businesses are not required to make a profit.  You can break even and report it and be fine.

If you have any money left over don't try to do anything stupid like deduct your own time as wages or something.  If you have money left over it is income to you and needs to be reported as such.

Feel free to PM me with questions or I'll try to keep an eye on the board.

David in Utah.

Offline RJ

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Re: Important information for all members to read
« Reply #38 on: December 30, 2010, »
You are correct and since we work to not make profit this is how I am approaching it on my experts advice.

RJ
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Offline jess_her

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Re: Important information for all members to read
« Reply #39 on: January 04, 2011, »
OK the newbie has something, How about asking Mouser or Digikey or newark kit them We buy direct, maybe more money but we might be able to cut a deal. Or how about finding a electronic hobby kit Co like Blue Point Enginering to put a kit together. I'm not sure how much RJ would want to keep this preparatory.
Jess
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Offline RJ

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Re: Important information for all members to read
« Reply #40 on: January 04, 2011, »
Already looked into it. The cost drove prices up a way too much!

RJ
Innovation beats imitation - and it's more satisfying

Offline jess_her

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Re: Important information for all members to read
« Reply #41 on: January 04, 2011, »
With your permission RJ I have a friend in the pinball repair business.  He is A LOR guy but would love this site. He might be willing to buy for the COOP under his Licence but I'm not sure what the Washington state tax implications would be.
Jess
Only limitations in life is your imagination

Offline LondoB5

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Re: Important information for all members to read
« Reply #42 on: January 04, 2011, »
I could run a co-op through one of my companies as well, but it would have to be 100% on the level. I would not be interested in doing anything that either would violate the law or cause me to be subjected to an audit because of suspicous bookkeeping. Also, all fees for the coop, including applicable state taxes, paypal fees, etc. would need to be covered. Also, for me to run a coop thru one of my companies, everything would need to be  shipped from one of my company locations (either NJ or Pa). Since the gov't would require proof of shipped goods.
I'm not sure that I would have any amount of time to be able to do this on the near term, though.
...there must be other members with their own businesses and business paypal accounts that could accomodate this kind of dollar value AND have the time necessary to do it.

JMHO

Offline RJ

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Re: Important information for all members to read
« Reply #43 on: January 05, 2011, »
First I want to be clear,

  We will not be doing anything that is not legal nor have I in the past.  We are not going to have companies running coops or anything like that. This is DIY and too many of the diy operations have already slipped into the commerical sector as far as I am concerened.

There is noting illegal about coops I am not sure where this is coming up from. This threaded got polluted into talking about hiding money from the IRS. I just did not want to have to do all the extra work but that is the only way to do it so as stated coop managers will need to keep good records so they can show every expense of the coop to offset the income they get from the members. In effect prove they did not make money from the coop.

This is an old topic and I think it has served it purpose.
RJ

RJ
Innovation beats imitation - and it's more satisfying