December 9, 2020

How to Set Up A Bank Account For A Youth Sports Team or Club

Youth sports organizations across the country, regardless of sport, need low-cost checking accounts to run their teams effectively. A bank account is important to a youth sports team because it is a hub for the organization’s finances, which enables teams to collect payments, pay for expenses, and much more.

It is essential that the team bank account is NOT a personal bank account. It's important to not commingle team money with your own so that there is a clear distinction in ownership for tax and liability reasons. Here’s what you need to set up an account in the team’s name, rather than an individual’s name.

What You Need To Open a Team or Club Bank Account

What you need to open a bank account depends on how your team or club is set up and each bank’s policies. Banks need to collect a lot of information to prevent financial crimes and comply with federal regulation.

If your organization is incorporated then you’ll typically need to provide the following:

  1. A minimum deposit
  2. An Employer Identification Number (EIN) and sometimes the EIN verification letter from the IRS
  3. 2 Forms of Identification & Social Security Number for Each Person on the account
  4. An Organizing Document like Bylaws
  5. Articles of Incorporation/Organization or 501(c)(3) Nonprofit Status Letter from the IRS

If your organization is unincorporated then you’ll be considered an unincorporated association and will likely need to provide the following:

  1. A Minimum Deposit
  2. A Tax ID number/ Employer Identification Number (EIN) for the team
  3. 2 Forms of Identification & Social Security Number for Each Person on the account
  4. An Organizing Document like Bylaws

Minimum Deposit

Most banks that we talked to required a minimum deposit ranging from $25 to $100 to open a new bank account. Most of the time, this is due at the time of creating the account, though some banks will allow you 30 or 60 days to make the initial deposit.

Tax ID Number/EIN

A Tax ID, also known as an Employee Identification Number (EIN) is required by banks in order to open an account for a team or club that is distinct from you personally. The EIN is a unique number that identifies the organization to the Internal Revenue Service. To apply for an EIN, complete an "SS-4" application through the Internal Revenue Service. You can request an EIN from the IRS and receive an EIN verification letter in PDF format in minutes. The process is easy and can be completed online. Note: if you are unincorporated, you can choose the option “View Additional Types, Including Tax-Exempt and Governmental Organizations” on the Identify step.

IDs & Social Security Numbers

If you are going into a local branch to create your account, each member of the organization who will be on the account will need to be present and bring two forms of identification. Most commonly, one of the forms of identification will need to have a photo, such as a driver’s license or passport. Each member will also need to know their social security number as this will be a part of the account paperwork. Check with the branch to confirm acceptable forms of ID.

If you find a bank willing to set up the account over the phone, the person opening the account via phone will need to gather information from the others who will be on the account. Typically, this information will include their full name, social security number, date of birth, and current street address.

Organizing Document (e.g. Bylaws)

An Organizing Document such as organization Bylaws or Articles of Association is often required as proof of the organization’s existence. The document should include the team or club name, as well as the names of the officers which will sign for the bank account. These documents can be simple to create and written in plain english. You can read more about the basics of unincorporated association bylaws and see a real example here (note: this is not legal advice). Some banks will accept the EIN paperwork in place of an organizing document.

Documents for Incorporated Organizations

If your organization is incorporated (i.e. you are a Corporation or LLC) you will likely need to provide your Articles of Incorporation (for corporations) or Articles of Organization (for LLCs). If your organization has 501(c)(3) status you can likely provide your IRS Nonprofit Status Letter in lieu or in addition to these.

What To Look For In A Bank Account For Your Club

A good team bank account should have low fees and offer all of the perks of a normal bank account, including features such as: a debit card, online banking, checks, and mobile deposits.

Because group bank accounts often fall under the “small business” umbrella for banks, it’s important to get a thorough understanding of the features of the bank account before you apply.

Make sure to find an account that will allow you to make all of the transactions that you need to process on a monthly basis, as some bank accounts have limits on cash deposits or the total number of transactions.

Most banks will charge a small monthly maintenance fee for a group account, but offer to waive it if certain conditions are met. Some of these conditions may include keeping a minimum monthly balance in the account, or using the account’s debit card a certain number of times. This can be difficult for youth sports teams and booster clubs, as bank activity differs greatly between in-season and out-of-season months. It’s worth having the conversation with your bank to find the best way to avoid these fees.

For more on choosing a bank, check out our recent blog post that compares the different bank account offerings of four major banks that we spoke to.

Using Your Team Bank Account

Once your team’s bank account is set up, you can immediately start to collect checks in the team’s name and pay out expenses from the team’s account. We recommend that you read our Guide to Being a Youth Sports Treasurer for more information on keeping a budget, tracking expenses, and all of the other important steps to effectively handle your team’s money.

Open A Bank Account Online With Groundwork

Groundwork’s digital bank account has everything you need to manage your team or club finances. Groundwork helps you budget for expenses, track player dues, accept online payments and track spending all integrated with your digital bank account.

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