What's the Right Way to Accept Donations? 46
Schapht asks: "Not long ago, SourceForge.net started offering users and projects the ability to accept donations. But there doesn't seem to be much information on the legal implications of accepting donations. Should open source projects start registering themselves as businesses? Would there be fines if they didn't? Are there any options for a project that can't afford the processing fees involved in registering a business?"
Re:The Microsoft way (Score:1)
Open Source Way: I donate to a charity so that everyone can eat (including me).
Re:The Microsoft way (Score:1)
Re:The Microsoft way (Score:1)
Very true. Usually people give money to such projects because they would like to contribute, but don't have the skill, time, etc. This isn't about trying to find a way to make a living for OS programmers, but rather a way for those that want to contribute to be able to do so.
Donations? Store. (Score:3, Interesting)
Yes... (Score:3, Funny)
My Method (Score:3, Informative)
Re:My Method (Score:1)
This is me: "More often than not, a nonprofit corporation begins as a nonprofit association a loosely organized organization ran by mostly volunteers. In a nonprofit association, the members ca
Re:My Method (Score:2)
I have no debts, and I don't think I could reasonably be held liable for anything, because I deal with only with information, which is mostly protected by the Constitution.
I deal with "information" too. I am a lawyer. Just because I deal with "information" doesn't exempt me from taxation on income.
I think that the general sense here is that if the thing that you are pushing is available regardless of whether payment is made or not, then it may
Hobbies (Score:4, Insightful)
Once you start making more than that you need to creat a company get a business number etc. BUT you can now claim more expences and tax deductions.
So if your getting say $10 to $1000 a month from donations. Your supposed to declare it as income. If you don't you may be liable for back taxes but that's about it. If your getting more than that it's worth creating a company for the tax breaks. Computer, Internet and Software are paid for by the company (expense) and your paid from the company.
Basically I'd try to treat it like a small business but if your getting less than $500 a month it's still just a hobie.
Re:Hobbies (Score:2)
The individual getting extra income isn't always clear(say a project of ten people, who agree only two should receive the product of the donations)... Think back on how perl "hires" Larry Wall and other developers... That's a tricky situation methinks. Because the donations go to the project(who is theoretically taxable) who gives it back, without making a dime, to members.
my (Score:1)
In the end, you have two options (Score:1)
I have a side business which I started in 1997. In Seattle, you pay $80/year for a business license. You can register a limited liability partnership with the state. I can't remember what it costs but was under $100 and there are no recurring fees. Get a business bank account ($10/mo) and keep all the money seperate from your own. The only hard part is figuring out the tax returns but you only have to do that
Re:In the end, you have two options (Score:2)
3. Put all the donations in an envelope, use them honestly, and report them as income to the IRS. Then you don't have to worry.
Of course, if a years worth of donations totals $172.43, then you don't have to worry anyway. Just pay part of your ISP bill and be happy.
There's no need to register a business, unless you are actually doing business, and accepting donations for your hobby doesn't qualify.
All of the above assumes you aren't trying to deduct the expenses of your project, of course. If you actua
Re:In the end, you have two options (Score:2)
> Then you don't have to worry.
Well said. Like they say - if you tell the truth, you don't have to remember what you said.
Hrmmm..,. lemmie see..... (Score:5, Informative)
Heres some Goodies:
(many are PDFs)
The law should really be amended to keep up with this, IMHO. We have many [copyright.gov] other [lifeandliberty.gov] laws [copyright.gov] that were to "catch up with the times". Why not one to recognize collaborative efforts of this nature?
Re:Hrmmm..,. lemmie see..... (Score:1)
Non-profit (Score:2)
That's just my opinion and I don't know much about tax laws other than 1040EZ...
Re:Non-profit (Score:1)
Re:Non-profit (Score:2)
Clearly. {smile}
If you register as a non-taxed non-profit (easier said than done), you darn well better spend the money directly on whatever charitable activity your charter said you were forming to undertake.
Your business is not suitable for a 501(c)3 (Score:1)
Profit / Loss (Score:1)
Separately:
In my experience, people don't donate to open source projects often nor largely enough for that to be the reason for doing the project. The real reason for working on open source code is: non-monetar
Re:Profit / Loss (Score:1)
Re:Profit / Loss (Score:3, Informative)
No. You will be smacked down hard. (Think about it: nobody would pay any taxes if you could get away with this, because they would pay themselves to watch TV.)
However, You can structure your OSS Hobby as a business, and that allows you to write off all your computer equipment. DSL line, hosting, etc. This will last for a few years until the IRS shuts you down for being unprofitable. This works even better if you are actu
Re:Profit / Loss (Score:2)
However. You better make sure that the place that you are giving it to has all the paperwork done for being a non-profit. And you better be able to show how many hours you gave, and at what rate and document it well.
The IRS will be more likely to believe you if you aren't the only employee of the non-profit.
You will pr
Re:Profit / Loss (Score:1)
However, you can "donate" your time at a standard hourly wage, and then use that amount as a decuction off of your personal taxes as charitable giving.
This is absolutely false. You should read this from the IRS http://www.irs.gov/publications/p526/ar02.html#d0e 1345 [irs.gov]. If you give your time to a non-profit you are a volunteer.
Re:Profit / Loss (Score:2)
Only if you structure it as a business, and hire yourself as an employee. And that opens up a whole can of worms you don't want. (Think payroll taxes, insurance, social security taxes, income taxes, paperwork to
How to do it right.. (Score:1)
The right way is to promote your project [gnump3d.org] on a big site like /.
Then subtly include wishlist links [amazon.co.uk], and maybe pointers to other software you wrote [steve.org.uk].
Maybe you'll get lucky and somebody will buy you a thing or two ...
Small, unmarked (Score:2)
Re:UK (Score:1)
Ask for gifts instead. (Score:1)
Unless you have a big success of a project I wouldn't worry about it. Most IRS-type gov. agencies go after small fish. Investigators cost money. Does it make sense busting a $10k/year OSS project to extract $5k of taxes (incl.penalties) when it will cost them $20k to perform?
Now, if some corp. gives tonnes of money to some gov. official to go after OSS projects because they are hurting the corp.'s bottom line...You are Frelled!
And if you want to register your projec
Re:Ask for gifts instead. (Score:2)
A corp donateing tons of money to a gov offical and that offical going to the IRS to lean on some little guy is a good way to get on the front pages of the Washington Post.
This is another job for SourceForge! (Score:1)
They more or less created the catch-22 situation. Heck, they could even make a small profit.
This would be a win-in situation:
Pregrammers get to program without having the IRS after them for $50/y taxes.
SourceForge gets a new source of revenue by sorting out the legal mumbo jumbo.
sole proprietorships, etc (Score:2, Interesting)
For instance, my dad and i both do a lot of driving (me a on-the-road computer consultant, him a notary), two cars, 75% of all expenses (mileage, maintenance, gas) are written off as business expenses. Ditto for the net connection, web ho
Cash (Score:2)
Donations for Schools (Score:1)
I've found that creating a Cleveland computer donation [k12.oh.us] page helps inform prospective donators about what we accept. We of