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tl;dr- How can we legally accept credit cards (to our club bank account) without being able to become a legal entity?

I'm an officer an officially-recognized student-run club at my university. I'd like for students (over 100) to be able to pay their dues through our website, as well as for us to split costs for events and have people pay for those costs using credit card, debit card, etc. We have a bank account through our university's credit union where we keep our funds.

Whenever I go to sign up for any payment processor, be it Stripe, Amazon, Google, Braintree, etc. they all want a Business Tax ID (or a non-profit ID), along with business start date, official address, etc. that they use to send records to the IRS. We're just a student club with members and officers who change every year. How can we sign up for these services and not have to worry about filing taxes or risk being audited / screwing over the one individual who put down their SSN as a sole proprietor?

(Venmo and Paypal are out, they don't work with our website).

Your responses are appreciated!

  • 3
    Talk to your school. They may be willing to help you set this up under their tax/nonprofit IDs, or have some other solution they can offer you. In fact, they may have explicit rules about whether you can do this and how to do it safely. – keshlam Sep 3 '14 at 0:50
  • I answered, but someone decided it was a poor response and down voted without feedback, so I removed it. Good luck with your funding – Noah Sep 3 '14 at 4:50
  • Aw man, I'm sorry to hear that @Noah, could you repost it as a comment? I'm interested to hear anything constructive. – Aaron_H Sep 3 '14 at 7:17
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    Without the school's assistance, there probably isn't a very clean way to do this. If your club is part of a national organization they might have a solution, but they might refer you back to the school. Frankly, accepting the 10% fee and passing it through to members who want to sign up this way may be the best you can do. (There's going to be SOME surcharge no matter how you do it; that's the nature of card processing.) – keshlam Sep 3 '14 at 14:03
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    @Aaron_H The short version is: Talk to Office of Student Affairs or your faculty adviser. CC payments almost always come with associated fees, and sometimes, dues collection can only be done by cash/check/money order. – Noah Sep 3 '14 at 15:36
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Large and small universities have procedures in place regarding the use of the universities name, logo, facilities, and budget. They should have in place guidelines regarding the collection and use of funds from members, and participants.

These guidelines are what allows you to have an account with the university. Generally these are not kept in the credit union but are with the university treasurer.

I would approach this as if I knew nothing about how to get an officially recognized club or organization started. They should then provide you with all the rules and policies regarding money for student organizations. These policies may also discuss how to collect cash, checks, and credit cards. Some universities also allow the use of special card readers to process the special debit card attached to your university ID.

The 10% fee charged by the university is typical. They will need to account for your funds, while maintaining their tax exempt status. If you get fully inline with their policies that will allow you to avoid tax issues.

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Dues

You should check with the Office of Student Affairs (or equivalent) at your University to see if you can accept Credit Cards. Many will only allow you to accept student organization dues paid in cash, check, or money order.

Many universities will also provide your organization with basic operating funds, if you request it.

Your first point of contact should be your faculty adviser, though.

Event Payment

Your best bet would be to just use cash. Learn where the nearest ATMs are. If you are set on using credit cards, set up a PayPal account and just use it to reimburse the person who fronts the money (cover the markup). Everyone will have to have a PayPal account set up, linked to their credit card. You can avoid fees by using a bank account.

If you're so inclined, you can set up a Business account and have a PayPal Debit Card, but you'll want to check with your adviser / University by-laws to see if you're allowed.

Website Implementation

Don't expect any of these to work as website implementations. As you're a University group, you will undoubtedly be meeting in person such that an exchange of cash/check/money order would be trivial

Conclusion

In short, you'll need to check into the rules of your University. Credit cards generally carry processing fees, charged to the merchant, which (on its own) carries some tax implications.

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