Some of our competitors believe the best way to do business as a private association in the USA is to form it under Common Law and avoid the IRS. We disagree.
Others believe being a USA nonprofit is too complex and complicated. Again, we disagree.
But to make it easy for you to form a nonprofit, tax exempt 501(c)(4) USA educational association, we'll do it for you. We'll form your nonprofit corporation in the USA. We'll obtain your EIN from the IRS and your 501(c)(4) status with the IRS and we'll file your annual IRS returns for you with your full knowledge and completely legally every step of the way.
In our experience when you try to avoid any governmental agency, all you really accomplish is to attract them. Whenever you attract a government agency, you usually have a frustrating experience.
The government assumes you're avoiding them because you're doing something illegal. Most of the time, the government is right.
If you're operating legally, ethically and professionally, there's no good reason to avoid the IRS. In fact if you can become a tax exempt organization, you can enjoy a lot of benefits you would not otherwise receive.
It's your choice to let the IRS help you or to become an IRS target.
If you form an education association to coach, educate, empower, facilitate, instruct, teach or train your members, your association can become a 501(c)(4) tax exempt organization. You can do this even if your members become a paying customer for your "other company." The term "other company" is defined at the end of the following important list.
As a 501(c)(4) properly formed private education association you can:
Make any claims about the products and/or services your "other company" markets and sells. You can legally make the claims your "other company" cannot make.
Charge your members a membership fee to cover your association expenses. And those membership fees are tax exempt.
Charge your members a fee for any classes, seminars, workshops, podcasts, audio files, webinars, videos, video files or other educational opportunities you offer to coach, demonstrate, educate, empower, instruct, mentor, supervise, teach, train or tutor your members on any topic allowed by your association documents. And these fees are tax exempt.
Sell your members any materials you use to coach, educate, empower, instruct, teach or train them. And, the income from those materials is also tax exempt.
Provide your members with samples of any products or services your "other company" markets and sells to the public. And, the price of those samples is tax deductible to your other company as advertising.
You cannot illegally avoid paying any taxes and expect to get away with it. You have to be very careful, truthful and honest about this. If you aren't, the IRS will dissolve your 501(c)(4) organization. It's better to give away samples than to risk losing your tax exempt status. But if you're prudent about it, you can sell samples to your members at your cost.
You can save profits for any purpose that serves your 501(c)(4) organization. You can pay yourself and your staff an income. But that income is taxable income. You can use that money for any purpose that serves your association.
• You can pay for all your education expenses including travel, room and board anywhere in the world to learn anything to improve your skills as a coach and a teacher or that you can share with your members and the public. You can save money for this is an Education Fund.
• You can save money to purchase real estate you can convert into administrative offices or classrooms. This can be called a Building Fund.
• You can create a Charity Fund with donations from your members and your company to pay the cost of services and products for people who cannot afford them.
• You can pay the usual business overhead for purchase, rent, lease, utilities including phone service and other expenses. This can be broken down into separate categories or labeled as Business Expenses. You can save money for future expenses in a Business Expense Fund.
• You can pay travel expenses from a separate account such as Travel Expenses. If you are required to use a vehicle for business transportation you can pay those expenses from this account as well.
• You can pay for the cost of materials, samples and other teaching supplies used in your coaching, demonstrating, educating, empowering, facilitating, instructing, mentoring, supervising, teaching, testing for knowledge, training and tutoring work with association members and the public. This is your Education Expenses fund.
• You can pay yourself a salary, withhold taxes and fees just like any business. You can also provide your services for a fee. The monies you withhold need to be paid to the appropriate tax collection agencies.
• You can provide employee benefits for yourself, the association officers and employees. These benefits can include health insurance and benefits for all health and wellness expenses.
• You can have one savings account and keep track of the funds with your bookkeeping as long as you know how much money is in each fund at any time. Rather than moving money from one fund to another, keep an Emergency Fund for that purpose.
The term "other company" can be a company you own, partially own, work for on a commission basis or for a salary, or for which you are an affiliate or paid consultant. It can be any business you or your association endorses for any lawful reason.
Working with the government makes more sense than trying to outsmart or avoid governmental agencies and employees.
Receiving 501(c)(4) tax exempt status in the USA for an educational association makes more sense than paying additional taxes you do not legally need to pay.
Making truthful claims about your products and services in a private health association makes more sense than illegally making these same claims in public.
Doing business as a private membership association is a good idea for most health, natural therapies, nutrition and wellness professionals.