Departments can generate income by charging customers for products or providing services. If a department is generating any kind of income, even on a break-even or partial recovery basis, income received should be deposited in an appropriate university deposits bank account. For more information on these deposits, refer to Topic Overview: Deposit Cash and Checks. In addition to meeting processing guidelines, departments should consider the tax implications of the business activity and the services available to support their trade.
Petty cash funds enable schools and departments to keep small amounts of currency and coin on hand for making change when goods or services are paid for in cash. For more information, review Topic Overview: Establishing a Petty Cash Fund.
Tax Considerations
As a not-for-profit educational institution, Stanford University is exempt from income tax under Section 501(c)(3) of the Internal Revenue Code on income from activities that are substantially related to its educational and research missions. However, if a department were to carry out a trade or business activity that is not substantially related to its exempt purposes, it would be subject to tax on the net income generated, which is referred to as unrelated business income.
Support Services
For units at Stanford that sell products and services, a variety of support services are available. Stanford Credit Card Merchant Services is managed by the Office of the Treasurer (OOT) and enables Stanford schools, departments and affiliated entities to establish themselves as merchants. Becoming a merchant allows departments to sell products and services by accepting credit card payments. Bank Accounts and Services also offers guidelines and resources for managing funds.
