Non-profit organizations have a vital role to play within a larger society. Their efforts can better entire communities, while also supporting causes ignored by other areas. A non-profit can quite literally improve the life of another individual. Unfortunately, not every non-profit succeeds in its goals. The reason? Ineffective financial management and non-compliance!
According to a renowned South Jersey CPA, accounting requirements for non-profits differ significantly from those of for-profit businesses, making compliance essential to maintaining their tax-exempt status and avoiding penalties. This necessitates the involvement of an accounting expert, especially to help nonprofits stay compliant and manage their finances. Here’s what it involves…
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Review and Compile Your Financial Statements
Accounting experts review and compile these financial statements to ensure they meet the specific standards required for non-profits, such as the Statement of Financial Position (Balance Sheet), Statement of Activities (Income Statement), and Statement of Cash Flows. Having accurate financial statements allows non-profits to track income, expenses, and cash flow while maintaining transparency for donors, grant providers, and regulatory agencies.
Design, Install, and Maintain Your Accounting System
An effective accounting system is the backbone of a well-managed non-profit organization. Accounting experts can design, install, and maintain accounting systems that are tailored to the specific needs of nonprofits. This includes setting up systems for tracking donations, grants, and program expenses, ensuring that financial information is easily accessible and accurate.
Weekly, Bi-Weekly, or Monthly Payroll Preparation
Managing payroll for non-profit employees and volunteers can be complex, especially when multiple funding sources or grant-specific payroll requirements are involved. Accounting experts assist non-profits by preparing payroll on a weekly, bi-weekly, or monthly basis, ensuring that all employees are paid on time and in compliance with labor laws and funding stipulations.
Payroll Tax Preparation and Deposits
Payroll tax compliance is crucial for nonprofits to maintain their good standing with state and federal authorities. Accounting experts handle payroll tax preparation and deposits, ensuring that all tax obligations are met in a timely and accurate manner. This includes calculating withholdings for Social Security, Medicare, and other necessary deductions.
Complete and File Your Non-Profit Status Application
Obtaining tax-exempt status is a critical milestone for non-profit organizations, allowing them to receive tax-deductible donations and avoid paying federal income tax. However, the process of applying for non-profit status can be complicated and time-consuming. Accounting experts assist organizations by completing and filing their non-profit status applications!
Provide Training for Your Board on Non-Profit Financial Statement Usage and Effective Budgeting Practices
Non-profit board members play a crucial role in overseeing the financial health of the organization. Accounting experts provide training for board members on how to effectively use non-profit financial statements and implement effective budgeting practices. This helps board members make informed decisions about the allocation of resources and ensures that the organization’s financial goals align with its mission.
Prepare and File the 990 and 990T Tax Forms
Non-profit organizations are required to file Form 990 annually with the IRS to maintain their tax-exempt status. Depending on the organization’s financial activity, Form 990-T may also be required to report unrelated business income. Accounting experts handle the preparation and filing of these tax forms, ensuring that all financial information is reported accurately and in compliance with IRS guidelines.
While non-profits themselves aim to answer to a deeper cause, they are not exempt from traditional economic, financial, and market forces. The success of a non-profit also depends on how effectively it communicates its purpose, the quality of the hired workforce, and success in actual work. All of this, in turn, depends on how much money is available to leverage opportunities! The best advantage for your non-profit is the services of a local accounting expert!
