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 by cash or check should be deposited in an appropriate university bank account. In addition to meeting processing guidelines, departments should consider the tax implications of the business activity and the services available to support their trade.
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.
For units at Stanford that sell products and services, a variety of support services, systems, and tools are available. Stanford's Merchant Services Program 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, debit, and electronic payments.
Find guidelines and best practices on establishing and managing university bank accounts to safeguard university's assets to minimize risk and prevent potential financial losses.