Non-Profit Setup & Stripe Connect: Decision Guide
Westside Basketball: Non-Profit Setup & Stripe Connect
Decision guide for Marcus & Lucas — February 2026
The Recommendation
Go non-profit (501(c)(3)). Here's why it's the right move for Westside:
| Benefit | What it means for Westside |
|---|---|
| Tax-deductible donations | Sponsors (Puma, Adidas, Anta, local businesses) can write off their contributions. This makes us <strong>much more attractive</strong> to sponsors. |
| Grant eligibility | Tons of youth sports grants out there — Nike Community Impact, Under Armour, state programs. Non-profit status is usually required. |
| Tax-exempt revenue | Tryout fees, monthly dues, tournament entry fees — none of it is taxed at the org level. |
| Community trust | Parents feel better paying into a non-profit youth development program vs a for-profit business. |
| You still get paid | Both of you (and all coaches) get paid as 1099 contractors. You set your own rates. The non-profit pays you for your work — that's normal and expected. |
What You Give Up
- No equity / no selling the company. You can't sell Westside Basketball or take profit distributions. If it dissolves, assets go to another non-profit.
- More paperwork. Annual IRS Form 990 filing + Utah state annual report.
- Board of directors required. Minimum 3 people in Utah. You two + one more trusted person.
This is fine. If down the road you want to build a for-profit business (coaching app, brand, training facility), you start a separate LLC for that. The non-profit and the for-profit can coexist. Many sports organizations work this way.
What Needs to Happen (Setup Checklist)
Step 1: Get an EIN (Employer Identification Number)
- What: A tax ID number for the organization — like a Social Security number for a business
- How: Apply online at irs.gov → "Apply for an EIN" → answer a few questions → get the number instantly
- Who: Either Lucas or Marcus can do this — takes about 10 minutes
- Cost: Free
- Needed for: Opening a bank account, Stripe Connect setup, 1099 tax reporting
Step 2: File Articles of Incorporation (Utah)
- What: Officially register Westside Basketball as a non-profit corporation with the state of Utah
- How: File online at Utah Division of Corporations (corporations.utah.gov)
- Who: Either of you — needs a registered agent (can be one of you with a Utah address)
- Cost: ~$30 filing fee
- Details needed: Organization name, registered agent, purpose statement ("youth basketball development"), initial directors (3 minimum)
Step 3: Draft Bylaws
- What: Internal rules for how the org operates — board meetings, officer roles, fiscal year, etc.
- Who: Lucas can draft these (templates are widely available). Board approves them.
- Cost: Free (no filing required, just keep on record)
Step 4: Apply for 501(c)(3) Status with IRS
- What: Federal tax-exempt status — this is what makes donations tax-deductible and revenue tax-exempt
- How: IRS Form 1023-EZ (simplified version, for orgs expecting under $50k/year in gross receipts)
- Who: Either of you — it's an online form on pay.gov
- Cost: $275 filing fee
- Timeline: Usually 2-6 weeks for 1023-EZ approval
- Note: You can operate as a non-profit immediately after state incorporation. The 501(c)(3) determination just makes it official for federal tax purposes.
Step 5: Utah State Tax Exemption
- What: Register for Utah state tax exemption (sales tax, etc.)
- How: Apply with Utah State Tax Commission after receiving IRS determination letter
- Who: Either of you
- Cost: Free
How This Connects to Paying Coaches
Once we have the EIN, here's what happens on the tech side (Lucas handles this):
- Stripe Connect gets enabled on the Westside Stripe account
- Each coach/contractor gets an email invite — they click a link, enter their bank info and tax info (SSN for W-9) through Stripe's secure onboarding
- Payouts are triggered through our API — Marcus (or Lucas) says "pay Coach KJ $500" and the money transfers directly
- At year end, Stripe automatically generates 1099-NEC forms for anyone paid $600+ and files them with the IRS. Cost: $2.99 per form.
Non-profit status doesn't change any of this. The payout system works the same whether we're a non-profit or for-profit. The only thing we need before setting it up is the EIN.
Who Does What
| Task | Who | Time | Cost |
|---|---|---|---|
| Apply for EIN | Marcus or Lucas | 10 minutes | Free |
| File Articles of Incorporation (Utah) | Marcus or Lucas | 30 minutes | ~$30 |
| Identify 3rd board member | Marcus + Lucas | A conversation | Free |
| Draft bylaws | Lucas | 1-2 hours | Free |
| File IRS Form 1023-EZ | Lucas | 1-2 hours | $275 |
| Enable Stripe Connect + build payout system | Lucas (tech) | A few days | Free (Stripe fees only) |
| Send coach onboarding invites | Marcus or Lucas | 5 min per coach | Free |
Total Cost to Get Set Up: ~$305
After that, the only ongoing costs are Stripe transaction fees (2.9% + 30¢ per payment) and 1099 filing ($2.99/form/year).
Next Steps
- Marcus + Lucas decide: Are we going non-profit? (Recommendation: yes)
- Get the EIN — one of you does this online, takes 10 minutes
- Pick a 3rd board member
- Lucas files the state paperwork + IRS form
- Lucas builds the payout system while paperwork processes
Questions? Text Lucas or reply to the message that sent you this link.