How to handle Sponsor Money?

I've got a question, I've seen some web sites where hobby racers (us weekend guys that don't get paid to race) are selling spaces on their bikes for sponsor sitckers (non-motorcycle companies).

How do you guys handle the money, is there some federal law dealing with donations and hobbies? ie does't count as income as long as maintained in a separate account started under an incorporated team name?

I have no clue about this, but I am very curious.

Ryan

 

Don't fret....you won't get any.

 

"...selling spaces on their bikes for sponsor sitckers..."

Selling spaces..... Uh-oh.

So... maybe just putting lots of stickers on because they look COOL , might not lead to all that money coming in.... ?

 

yeah i like putting them on cause they look cool,

 

A lot of those stickers are for contingency money – where you get money or more likely certificates for product depending on how well you finish.
If you don’t earn more then $600 from one company, then you don’t get any tax paperwork and it is up to you to be honest and claim it.

 

My non-mc related sponsor (the Microbrewery in Wilmington: BBC) "pays" us with product. I'd sell the product for money if my team mates didn't insist on getting "paid" in liquid form.

 

Spend it as quickly as you can!

Seriously, most of the stickers you see on club racer bikes are contingency stickers.
Every once and a while someone scores a sponsor who pays out right $$$ for space on a bike (they are mostly relatives). But for the most part you have to be fast and semi-pro before anyone will shell out serious money to be a primary sponsor.

 

Hmmm

I saw one response close to being an answer...
if it is under $600 you dont need to fill out tax forms?

Are there any fast guys out there (D'oh) that can answer this question?

Maybe I just need to ask my financial advisor

Ryan

 

If you wanted a close answer maybe you should have...

 

I really shouldent get into this subject again buuuuttttt...... Basically all the awners to this post are crap.
Yes.. you can get a non mc industry sponsor that gives cash.
No, it does not have to be a relative.
no, you dont have to report it unless it was a huge chunk of money. Want to write off your racing? start a biz.( thats a whole new story)
How to find money? Get off your butt, and go find someone with a biz that wants a cool way to advertize or tax write off, use your head when asking for support, dont act like a jerk, be humble and professional.

Yes, it can be done, ive nearly run out of room on my bike and the only non cash paying sticker is the little michelin man and the vesrah sticker. I picked up two new cash sponsors in the last two weeks and im wondering where im going to put there stickers.... ill have to move em around a bit. Some have given sizeable chunks of cash (meaning over 2 k) and other have given only fifty bucks. Dosent matter... every little bit helps.
Im not trying to brag (especially since the money already gone and im broke again hahahahahaha) , im only trying to show you it can be done, anyone that says otherwise is full of it...... flame away naysayers.......

 

"...im wondering where im going to put there stickers.... ill have to move em around a bit."

Hmmm. Are there opportunities here? Velcro stickers? Spell check?

On the other hand, falcn, you wanted a technical answer and you got it:

"...you dont have to report it unless it was a huge chunk of money." I'd hold out for huge = $1,000,000 or more.

Last, slow riders and crappy answers are just part of life's laps.

 

Sponsorship $

My son races go karts.
PEPSI is one on our sponsors, they actually have me fill out a form which asks for my SS# on it. I gladly do this, then they send me a check.
We have five sponsors total. All but PEPSI simply write me a check in my name. We spend all of the money on racing stuff.
I've never been worried about getting audited or anything like that because even with the sponsorship $ I still spend way more than I bring in.
I publish an update that gets faxed or e-mailed to evry sponsor after every racing event. I give them a play by play of the events of the night. They love it because even if they do not make it to the races (very few of them ever do) they still get to hear about how Austin did, and keeping them informed and involved makes it a lot easier for them to write another check next year. We don't just take the money and run. In my weekly update to them I always mention and thank every one of them. At the beginning of every season I update evryone that we are ready to begin our new season and I introduce all of the sponsors and explain what they do and encourage them to utilize each others services.
At the track we display each sponsors name on our trailer and of course on the kart, plus on Austin's race uniform.
Spend it wisely, let them know you appreciate it, keep them informed of your progress, let them feel a certain sense of ownership, don't just take the money and run, work for it on and off the track, this will keep them coming back.
One of our sponsors has doubled their support each year and have now been with us for four seasons, they bought us a 6' x 12' enclosed trailer last year and because of their help we were able to get an even bigger one this year.
Sponsors are precious, handle them accoringly, the biggest thing to remember, most sponsors will help support you not because they give a damn about racing but because they like YOU and they simply want to help you succeed.
Don't worry about Uncle Sam, you will spend more than you receive.

 

"Don't worry about Uncle Sam, you will spend more than you receive."

In all seriousness, won't IRS just treat the support as more "income" unless you establish your racing at some level of a business account? Without that, it would seem like no more than a hobby to them. To claim a break-even or a loss, you may very likely have to document it all.... no?

 

That's what I was wondering...I had thought I read somewhere that donations for hobbyists were ok, but I cant seem to find anything about it on the web as far as the IRS is concerned.

Thanks for the input so far guys. All I have to do is get less sponsor money than Austin, then turn him over if the IRS comes after me, right (JUST KIDDING)

 

Thanks - I thought that I was fast

Sure, you don't need to file with the IRS if you are OK with not following the law.
Will they catch you?
Most likely no.
Would I file, not if I didn’t have to.

But that $600 dollar amount is the key. Think about it, a company isn’t going to give you money and then not write it off as an advertising expense.

If they pay a vendor more then $600 in a year then they are required to send you a tax form.

I think that I got one from WERA for Solo 20 money one year and one from Dunlop.

I know that I got one from a company that I did some side work for.

I am a tax idiot, I have always had someone else do my taxes – maybe someone smarter and faster can answer this better.

Anyway, to finance your racing your best bet is to marry into money.

 

Sponsorship $

OK, how about this? Even if for some reason the IRS decided to take a look and it is decided that the sponsorship money is "extra income" and taxes have to be paid on it, the money left after taxes is still money that I or you can spend on racing stuff and not out of your own pocket.
I have been around long enough that if I had to, we can afford to race out of my own pocket, no problem, however as long as people are willing to give us $ to help pay for his racing, what the hell, I'm taking it. If I had to pay taxes on it, who cares.
I probably spend about eight hours a year trying to get sponsorship $, this year ended up with about 4K, shit, even if I had to pay uncle sam 1K, I still got 3K left. Not a bad gig.

 

Not you!

Oh I wasn't saying you weren't fast, I liked your answer! hahaha


Well, you point me to the rich woman that is into racing that isn't already married, and I am there!!

 

Martha Stewart

 

"...this year ended up with about 4K, shit, even if I had to pay uncle sam 1K, I still got 3K left."

Absolutely correct. But, the problem can occur when a person gets down to the end of the money, BEFORE the taxes have been set aside.

Like you, I can pay my way without sponsors... and at my speed this is indeed fortunate. Twenty years ago, though, my finances were a LOT closer to the bone. If I ended up with owing anything extra then... it became a major trauma.

 

Sponsorship $

Good point, been there.
I guess the thing to do is, if a guy is worried about paying taxes on sponsorship $, then either don't have sponsors or just have a seperate account for racing and keep receipts. I know it can be kind of a pain in the ass but if in the unlikely event of an audit your covered.
You will spend more than you will receive from winnings and sponsorship all put together. If your smart. Just ask your tax advisor.

Racing is not a cheap hobby, sponsorship $ is definetly worth it.

I say if you have someone who wants to give you money to race on...TAKE IT, worry about the other crap later, life is short.