I am in the process of organizing a co-op. We are actually going through another established co-op and establishing a north branch of the existing co-op. They are already a 501(c)(3) and carry liability insurance so we would be under them. We would be the same program but in our location. However, we would need to raise most of our own funds. Do you see any issues or possible issues with this set-up?
How would we go about keeping our money appointed to the correct branch?
I appreciate any help!
I think your set up sounds great. It’s like a store with two locations. You could set up two separate checking accounts, both using the same EIN (Employer Id Number) from the original (parent) group. Your checking account could say “HOMESCHOOL CO-OP NORTH BRANCH”
As for accounting software you might consider an online program such as Quickbook Online which lets you set up multiple “locations” or “departments.” I’ve been recommending WaveApps.com (it’s free) but I’m not sure if they can set up multiple locations/departments like you want. Of course you could set up separate Wave accounts since you’ll probably have separate checking accounts.
I recommend that the Treasurer of parent organization be a check signer on your checking account and be given access to your bank account and accounting software (that’s why online accounting software would be helpful). You need to be open and transparent to the parent group.
Joint IRS Returns
At the end of your fiscal year all your income and expenses will need to be reported to the parent group so it can be added to their income and expenses on the IRS Annual Form 990 Information Return.
Carol Topp, CPA