Setting up a Venmo account for a booster club can seem like the perfect way to simplify your club accounting. It’s digital, it’s easy, and almost everyone knows how to use it. Apps like Venmo can be an attractive alternative to cash and are more traceable and less susceptible to fraud or mismanagement.
However, using a personal Venmo account to conduct booster club business may have unintended consequences. Read on to learn more about the implications of using Venmo or other cash apps.
Tax Implications
There are very few transfers of money that don’t trigger tax implications. Even if your organization has 501(c)(3) status, you still have to stay on top of your filing and track your cash flow in and out.
Using a personal Venmo account could mean that you have to declare the money as income. Even if you only use your Venmo account exclusively for booster club business, the IRS may not see it that way. If you do end up having to declare the Venmo transactions as income, you could be left with a hefty tax bill at the end of the year.
In addition, while Venmo has some reporting features, it could be more difficult to run reports or track cash flow than with a bank account or other payment system. If you are using your personal account for the club and personal transacting, it can be a nightmare to file taxes at the end of the year.
Venmo Fees
In addition to the tax implications, using Venmo for a booster club has fees that you’ll have to consider. Many Venmo users link their accounts to a credit card, which means that there’s a 3% transaction fee.
Using other forms of payment can help you avoid these fees and ensure that every dollar from your supporters is going toward your cause.
Checks and Balances
Good accounting practices in a booster club call for having checks and balances in place to ensure accountability. Often that means having multiple officers who have access to the club’s finances.
If you are using a personal Venmo account, it can be difficult to ensure that these checks and balances are in place. If you’re using your personal account for both the booster club and your personal finances, it can prove especially hard to manage.
Alternatives to Venmo
Instead of using your personal Venmo account, you can set up a merchant account with a bank. This will allow you to easily take payments, and it will create a clean record of transactions that you can easily track.
A dedicated bank account makes it easier to be transparent about finances, and it makes filing taxes at the end of the year much simpler. It also prevents mixing personal finances with booster club finances, and you can easily answer any questions club members may have about the budget and cash flow.
If you were wondering, “Can a booster club take Venmo?” now you have your answer. Setting up a separate bank account can seem formal for a small organization, but it’s the easiest way to track your finances and ensure accountability.
