I am a member of a magic club that is a chartered affiliate of a national 501(c)(3) non-profit but our club does not hold any such status. We are registered with the state as a Hobby Club and pay a fee each year for it. We've been in existence since 1984 and just recently learned we should register with the IRS as a 501(c)(7). We are in the process of learning what that all involves. My question concerns our bank account. We collect dues from members and hold two successful public shows each year as fundraisers. Our expenses aren't much beyond hiring the occasional lecturer, costs of producing the shows, web site hosting, misc printing, and so on. Does anybody know if there is a maximum balance that we are allowed to maintain in the bank and/or carry over from year to year?

There is no maximum balance that a club may maintain in its cash accounts, or carry over as "retained earnings" from year to year. As a non-profit organization it is expected that your cash flow over the course of the years is reasonably close to $0, but of course in any given year you may have a healthy profit or loss.

But you may have different problem to worry about. As a social club it is expected that the majority of your income is from dues or fees that members pay. If you are receiving a substantial portion of income from non-club members as admission fees to your shows the IRS may object. If your receipts from non-members are more than 35% of your overall receipts the IRS may object, and it could result in loss of your non-profit status. You can learn more about it here: Social Clubs (http://www.irs.gov/charities/nonprofits/article/0,,id=96189,00.html)

Thank you ebaines. We will look into that situation right away.