I am part of a hobby forum and I am running a non-profit group buy. I'm a little worried how that will influence my taxes.
The group buy works as such: One member wants something expensive, so he gets a bunch of other members to get together who want the same item. They all chip in and give the money to the original person, who then makes a bulk purchase at a discount. The original member then distributes the items to the rest of the participants. My example is a non-profit version. Some people choose to charge a small fee for the amount of work that goes into organizing the group buy. That would be a for-profit group buy.
My case involves the following: I'm in the US. I have about 120 people on board for my group buy, and the total money brought in is about $10,000. I set up a Paypal business account to simplify invoicing people for what they order. Each person pays via Paypal, and I make the purchase. Some parts are coming from an international supplier, some are coming from local suppliers. When I receive the goods, they will be sent by mail to the participants. The entirety of what they spent will go toward the purchase from the supplier and the shipping. Some have elected to send me donations to cover any overages/thank me for doing the leg work. All of the money +/- donations is being used for the group, and none of it (outside of whatever is left from donations) will return to me as a profit.
How do I go about explaining this on my taxes?
I'm worried I will get hit pretty hard. From an outsider's perspective, it appears that I have made $10k and then spent it on big purchases. Compared to my actual source of income (grad student), $10k is about 1/3 of what I actually make before taxes.I'm not doing it for profit, so I'm not a business. I currently have no registration as an LLC outside of being signed up for the Paypal Business version of the site, which should not have implications.