To pick up where we left off (and if you don't know where we left off, you may read part I here): https://thepawandfeatherplan.blogspot.com/2023/07/what-does-having-non-profit-business.html
1.) 501c3 non-profits do pay sales and use tax. -We pay the same 6% sales tax that every other business in the state of Ky. pays... quarterly, via https://onestop.ky.gov/Pages/default.aspx.
In simple terms this means you pay 6% of any and all profits you generate through sales of goods or services (pet adoptions, dog training, sales of collars, anything like that would be taxable). -You do not pay S & U tax on donations received (sometimes I wish I were more of a fundraising-type!).
2.) 501c3 non-profits do pay employer taxes and must issue W-2 forms to W-9 employees at the end of each year.
We're responsible for calculating federal, state, city and social security withholdings from employee's pay. Then we pay the 'difference' that we 'withhold' from the employee's check either yearly or quarterly. I am not comfortable doing this stuff, but I have to suck it up and do it anyway! Hopefully we'll get to a point of being able to pay an accountant to do this one day.
Notes here based on our experience, re: W9 employee:
Thus far I've been able to pay one employee, here and there, for just a few months. Her name is Diane Dickey, and she's an awesome, skinny little animal and nature-loving woman in her late 50's that does odd jobs (house cleaning, lawn mowing, etc.) to make ends' meat.
-And that's all she ever has, if she has that... just enough to put gas in her car, Mike's Hard Lemonade in her belly, and some healthy food in her fridge. Hey, I said she was 'awesome,' not that she was super 'financially-savvy,' ok?! 😄
|Dee's cat, Lena, which I say is her mother reincarnated. Lena learned how to use the toilet on her own, and follows Dee everywhere!|
I was able to 'hire Dee' last winter thanks to the Give for Good Louisville fundraiser. It/we raised approximately $2000, and I wanted that money to help not only the rescue, but also the community... so I offered Dee a part time job with the rescue 'until the funds ran out.'
I also pay Dee to pet sit for us when we travel, but this is out of my own personal money of course, and not the rescue's money. The only exception to that rule would be when we have rescue fosters here too that she's helping care for (and/or adopt out) while we're away, in which case I'm able to use some of the rescue's money to cover those (rescue) pets' daily care.
For the record, and clarity: I pay Dee $15 an hour... when there's money to pay her. She is a W9 employee when she works for this rescue, and I pay her a daily rate of $40 to be our in-home pet sitter whenever we travel (which is a God-send).
So now you know that just because a business owner has a part time employee does not mean that the owner has a new car, is wealthy, or has 'made it' in any shape or form. The financial health of a company and its owner are 2 different things.
I for one drive a 14 year old Honda Accord, and am driving Uber a few hours a week right now to make ends' meat for myself! -When school's in session, I work p.t. as a substitute teacher for our municipal school district. -That's how I make a living at the moment.
-And apart from that, I have this pet rescue.
And I wouldn't have it any other way. I'm an entrepreneur, and always have been.
My vision is far bigger than any -corporate-job-salary could be... I have a very big vision for this rescue and its overall purpose.
Helping people, women in particular, like Dee, is a huge part of that vision. ~I want to make a new sector of animal welfare as an industry that can financially-sustain awesome animal-loving-people, like Dee, as employees, as pet caregivers... offering them the chance to do good work, do what they love, and be able to live comfortably while doing it... all via Pets in Planning.
And if you're doubting me, or just 'can't see it-' then do me a favor and go ahead and close this blog right now :). ~I don't need any negative energy anywhere near my rescue, vision, pets or people!
There's no room for doubt when it's already happening.
We're already starting to support women in otherwise-vulnerable situations via Pets in Planning. -I divert... we'll leave that for a whole separate blog post one day!
Back to taxes!
Once yearly as a nonprofit that earns less than $50,000/yearly, you have to file a 990-EZ. And it really IS easy! You just electronically sign that you're grossing $50,000 or less, and you're done with your federal taxes (unless you have to file as an employer- that's something separate... which we already covered in this blog post, and I do do that too).
Having a nonprofit saves you from paying federal taxes: that's the primary financial benefit of having a nonprofit org rather than an LLC per se (of course you have to be doing nonprofit-status-qualifiable-work- see blog post I to determine if yours would qualify).
Fringe Benefits for Your Nonprofit and Its Supporters:
-It's a tax deduction for your supporters to donate to your org. (we only do one fundraiser/annually; I am NOT that comfortable with fundraising, but it's necessary to some degree when you have a nonprofit)
-You don't have to pay sales tax on items you buy for your nonprofit (think paper products from Staples, cat litter for foster kittens, etc.)
-Your supporters know they're part of something bigger, and with a deeper meaning than just meeting a financial goal at the end of the never-ending tunnel... of life... I almost digress... again. Focus. Focus. Focus Jessica.
Do I Pay Myself? Yes, when I can!
When I read this article https://www.huffpost.com/entry/im-founding-a-nonprofit-s_b_7609074, it was like a lightbulb went off. ~Of course I should pay myself something for all the work I do... because I wouldn't DREAM of having someone else do all of this work without paying them to do it!!! -Scraping frozen poop off the garage floor? $15/hour. -Counseling new pet owners $25/hour -Screening potential adopters $18 hour -Shaving matts off of dogs $30/hour -Cleaning up piss and poop constantly when we have untrained dogs (or cats!) $20/hour -Transporting pets across county or sometimes state lines $25/hour -P.R. work via monthly email creation, etc. $25 hour... these rates seemed, and still seem, fair to me, albeit some of them a little low.
However, I quickly found out that: when I tried to pay myself fairly for all of the varied work I do for this small rescue, and for the varied hours at which I do this work... the rescue wouldn't be able to afford me... or any reasonably-paid employee for that matter. There simply was not enough coming in to pay myself for all of the stuff I was doing... I discovered this a few years ago, pretty early on in this rescue's trajectory thankfully.
So I've done what most nonprofit startups do: pay myself when there's an opportunity to do so (when we have puppies for weeks on end, then I adopt them out, I can typically pay myself a few hundred dollars from that- one example). And for the rest of the time, I hustle. I work other jobs (substitute teacher, Uber driver, dog training here and there, tutoring here and there).
In a perfect world, one should be able to help one's community, pets, people, and make a living doing that, and just that. But it's not a perfect world, so you have to just 'make it work until it starts working better on its own!' I'll end with a couple of quotes here...........
Excerpt from Rebecca Fishman Lipsey's awesome article (link to complete article is 3 paragraphs up):
1.It feels dirty to raise money to pay for yourself.
'I don't think you have to leave your career and take a vow of poverty to help people, but you could support people that have made a similar leap to help the world be a better place.
I invite people who can, to support orgs that you want to be a part of. If this organzation isn't it, then find one that makes you say, 'man that's important work,' and put the resources out there to support us as leaders so we don't have to be running around trying to fundraise, which keeps us from doing the work that we really need to be doing because... first we've gotta keep the doors open."
Inspired to give (even though that's not why I wrote this blog)? Click here: https://www.paypal.com/donate/?hosted_button_id=JHX8NTDE69JA6
our website: thepawandfeatherplan.com
Inspired to start your own nonprofit?! Then do it!!! ...But do your research first. 😉
Footnote: For the record, I enjoy substitute teaching 2-3 times/week. I love working with kids, relearning material myself, then teaching it! So, even when this rescue is more self-sufficient financially-speaking, I'll very likely continue to sub. Thx!