Compiled by the Chinese School Association in US (CSAUS)

建立新学校的一些必要步骤

Basic Steps to Start a New Chinese School

(For reference only, NO LEGAL VALUE)

1. Obtain an Employer's Identification Number (EIN)

Thru SS-4 Form. It can be downloaded from http://www.irs.gov/pub/irs-pdf/fss4.pdf

Reference/Suggested fill-ins:

"8a: Other Non-profit organization": "Educational"

"9: Purpose...": check "banking" & give "checking account";

"14: Principal Activity": "Promote Chinese Language and Culture to general public in spare time" or alike;

"16: To whom...": check "other" and give "those who are interested in Chinese heritage in the general public" or alike.

You may call in (phone number listed for different areas) with the form ready to get the EIN instantly and mail in the form afterwards for a confirmation. With this EIN you may open a bank account and start the school operations.

2. Register at your state government, Chamber of Commerce.

Find the number from your area phonebook and call in for a form for "Articles of Corporation". It usually requires three officers' names and a contact address (no mail box), with $20 fee for new, and $10 for annually renewal (Federal EIN obtained at step 1, and By-laws by your school may be required).

Those two are the most basic steps common for every school. Up to here, your school is an business entity. It needs to file for Tax annually as an independent entity (may not necessarily pay tax if there is no "Net-income").

You have options whether to persuade the next two steps.

3. Apply for Educational Non-profit organization status from your state government, Dept. of Treasury.

The EIN, By-laws and Corporate registration information, obtained from above,?may be needed. If approved, the school may get state sales tax waived for school related purchases/

4. Federal Non-profit Organization status (501 3 C)

For "Federal Tax Exempt" status. This is a more appealing feature and requires a lot of work as well.

Generally, it's easier for a brand-new organization since it needs only to show the financial planning; but more difficult for an already-established one because it then needs to present all the financial records for the past three years to prove that IT IS "non-profit" in nature.

Consultation to or help from a Legal/Financial professional is STRONGLY recommended.

Fee involved: $150-550.

Major Benefits:

1. Ask / accept donations (donor can claim for tax returns);

2. Do NOT need to pay tax if the "net-income" is reasonable;

3. Simple filing for tax if annual income below $25000;

4. Pay no sales tax on operation related purchases

Major disadvantages:

1. A lot of work to get the approval;

2. More formal By-laws and organization structure required;

3. Must keep a decent Financial Records which are subject to public (or IRS) audits at any time.

CSAUS has obtained this status, and has helped many schools with this process. Now CSAUS Service Center offers help on this subject at a very nominal material fee. Contact Grace Li: mailto:yungraceli@yahoo.com; or 281-265-5844

Last modified: Feb. 14, 2001