It’s important that you maintain a health work-life balance, and find hobbies or interests that can distract you from a lengthy email inbox or miscellaneous tasks that can sometimes be frustrating.

That’s why Tosha Anderson, founder and CEO of The Charity CFO, recently went on The John Garrett Podcast to talk about her passion for traveling around the world with her family. In this episode, Tosha speaks on the importance of travelling and how it motivated her to start her own firm.

LISTEN TO TOSHA ANDERSON ON THE JOHN GARRETT PODCAST HERE.

Additionally, Tosha highlights the importance of having a solid company culture, which encourages her colleagues to pursue their hobbies.

Later in the episode, she discusses the benefits of implementing creativity into accounting practices. It’s a light-hearted episode with a lot of cool information, one that you can listen to if you want to learn more about company culture and feeling inspired to follow your passions.

Check out our services if you want help with your nonprofit or its accounting practices, so you can best build a company culture that inspires you to chase your passions- like Tosha has.

Are you gearing up for your nonprofit annual report? Before you do, make sure you look over these 10 basic elements and find ways to put them together

Do you have a service or a cause that you are passionate about? Are you looking for ways to change the circumstances around that cause? If so, then starting a nonprofit is a tremendous idea!

Many people have an idea for a nonprofit that they would be interested in starting, but are unsure of how they should put their plans into action. Fortunately, it is not as difficult as it might seem.

All you need to do is learn the proper steps, then follow them as best as you can. See below for tips on how to start a nonprofit that will be both successful and helpful to others.

1. Set Your Mission

One of the biggest reasons that you might want to set up a nonprofit is due to the glaring need for the cause you are choosing.

Just to clarify, there might already be nonprofits out there to support the same cause that yours will, but your nonprofit might go about it a different way. 

For example, there are many different nonprofits that go towards finding a cure for cancer. However, some of them are focused on raising those funds via marathons, call-a-thons, and many different methods that resonate better with some people.

The mission of your nonprofit should be clear and concise. What are you hoping to achieve? How are you hoping to achieve it? Who will help you on this journey?

2. Perform Market Research

You would not start a business without identifying the need for a specific product or studying your potential competitors within that industry first. It is the same thought process here! Performing market research gives you a clear image of what you’re walking into.

Are there already nonprofits or for-profit organizations that are set up to help your cause? If so, how many of them are there? What is their approach to helping with this cause? What does their mission seem to be? Are some of them well-established?

It is important to remember that a nonprofit collects its cash from donors. If the market is already flooded with nonprofits like yours, you might find it hard to reach donors. They might already have built loyalty with another nonprofit’s brand.

3. Put A Leadership Team Together

Odds are, you’ve already got a few people that are interested in getting involved with your nonprofit when you start it up. These might be friends, relatives, parents of kids that are affected by your cause, and so on.

It is vitally important that you establish a leadership team prior to launch. The beauty of having people willing to help your cause is that you can use their individual talents.

For example, some of them might have experience starting a company or being on the board of a nonprofit in the past. Those types of people are a perfect fit for your board of directors.

You will also want to dive into the finer details of things, such as: Who will be the executive director (even if it’s yourself) be? What are the duties and responsibilities of your volunteers?

You should take this initial stage as an opportunity to write clear and concise duties for anyone that volunteers moving forward. That way, they (your volunteers) know exactly what they are getting into from the get-go. This can also help you when recruiting volunteers.

4. Set Your Finances

One of the most important aspects of creating a successful nonprofit is how you set up and maintain your finances. Do you have a plan for where to put your donations in when you receive them? Are you investing your funds from the start?

Accounting for a nonprofit is much like a business. You need to be strategic in how you invest the money you receive. Some funds need to go towards the cause, and some funds need to go towards processes such as operations, upcoming events, etc.

In order to learn how to start a nonprofit that renders results, you need to be practicing fiscal discipline. 

Of course, you can benefit from getting your finances in order with the help of a professional nonprofit accountant. Be sure to schedule a meeting to learn more about the ins and outs of nonprofit accounting.

5. File Tax Exempt Forms

In order to establish yourself as a legal and reputable nonprofit, you will need to complete a document known as a 501(c)(3) form. 

Filling out this form means applying for the term 501(c)(3) through the IRS, who will rank you as a nonprofit business. This means that your organization was approved by the IRS and is now deemed a tax-exempt organization for charity.

The process can also be performed by yourself. However, you might want to seek help from a nonprofit accountant or a lawyer that specializes in 501(c)(3) forms.

6. Establish a Brand

Lastly, it is time for you to take the time to create a brand that will resonate with your donors, volunteers, and those affected by the cause.

Your brand will be built on things like your nonprofit’s colors, logo, and name. This will help you build a reputation in a crowded marketplace of ideas and organizations. The more people can understand and agree with your brand, the more they will support your efforts.

Take time to think through what brand you are trying to create. What colors can you use to fulfill that? What logo or symbol will best capture your purpose?

Start a Nonprofit With These 6 Steps

Now that you have learned several steps on how to start a nonprofit, it is important that you use these tips and tricks to your advantage.

Be sure to read this article for more information on the characteristics of a successful nonprofit and how you can go about achieving them.

For more inquiries, please be sure to reach out by requesting a quote via the online form at the bottom of this page. We would be happy to help you further!

Are you looking to recruit new volunteers to your non-profit organization, but aren’t quite sure how to do it?

According to a recent survey conducted by the US Bureau of Labor Statistics, only about 25 percent of Americans take the time to volunteer. As a non-profit manager, this can be a daunting statistic. 

How are you supposed to motivate people to give up their time for your organization?

Read on to learn how to recruit volunteers for your non-profit organization. 

Clarify Your Needs 

Time is a very valuable thing. When someone volunteers for a non-profit, they want to know that they’re using their time wisely. And, they want to know that what they’re doing is actually making some kind of impact. 

For volunteers to understand the impact of their work, you need to take the time to understand the needs of your organization. Make sure you’re as specific as possible. 

For example, if you run a non-profit that provides meals to homeless people, it’s not enough to simply say, “we need more helpers”. Instead, ask yourself questions like:

• Do we need more volunteers serving meals at events?
• Do we need help with raising awareness around the issue of homelessness?
• Do we need help with social media and content management to get the word out about our organization?

Whatever your needs are, make sure you define them early on. Then, you can draft a recruitment message that targets the right audience. 

To help hone in on your message, we suggest asking current volunteers, board members, and other staff members what the mission means to them. Why did they get involved in volunteering? What have their experiences taught them?

Asking these questions will help you create a more specific recruitment message that strikes a chord with your target audience.

Get the Word Out 

Once you’ve created a message for your target audience, it’s time to amplify it. 

If you simply post your message on your website and wait for the volunteers to start rolling in, you’ll be sorely disappointed. In addition to posting on your website, we also suggest recruiting volunteers through good old fashioned word-of-mouth. 

People are more inclined to say yes to do something when asked by someone they know. So, encourage your employees to start asking around for volunteers. Oftentimes, a lot of people have the desire to volunteer. But, they don’t take the initiative to research volunteer organizations/events in their own time. 

If a volunteer opportunity is presented to them via a friend or family member, they’ll be much more likely to take the bait. 

Beyond word of mouth, we also suggest posting your recruitment message on your social media channels. Twitter, Facebook, and Instagram are all great places to reach volunteers you otherwise wouldn’t. 

In addition to posting on your organization’s page, ask your staff members to repost your recruitment messages. This way, they can reach a wider audience. It’s also a good idea to attend volunteer fairs and connect with websites that list local volunteer opportunities.

You can also post information about your volunteer needs on sites like VolunteerMatch, VolunteerHub, and LinkedIn. 

Here are some other hot spots for recruiting new volunteers:

Schools and Universities 

Students tend to have more flexible schedules, and college students tend to have more free time on their hands. Plus, many students are eager to volunteer not just because they want to help out, but also because they want to boost their resumes and widen their experiences. 

We suggest getting in touch with the student services department for help in recruiting volunteers. You may even find a school that wants to partner with your non-profit in some way to make the exchange beneficial for the both of you. 

Businesses 

Many large corporations and businesses are looking for ways to get their employees involved in the community. 

While it’s partially true that businesses like to lend a helping hand, it’s also true that businesses know that volunteering and working with the community is good for their brand image. You can approach the community affairs, community relations, or corporate giving department within a company to discuss volunteer recruitment. 

Community Groups and Clubs 

Many community groups and clubs are also happy to lend their hand to volunteer. You can reach out to social clubs, professional clubs, campus-based fraternities and sororities, and other organizations for help. 

Make the Onboarding Process Seamless 

If the onboarding process is confusing and disorganized, you’re going to have a hard time recruiting new volunteers. 

Now, this doesn’t mean your onboarding process needs to be as simple as putting down your name and number on a sheet of paper. You should still take the necessary steps to vet your volunteers by conducting interviews, asking for references, and completing background checks if necessary. 

However, the onboarding process should be clear and straightforward. Dedicate a section of your website to explain what qualifications you’re looking for in a volunteer. 

Your website should also have volunteer applications readily available that can be downloaded and set back in via email. After sending in an application, clearly communicate what the next steps will be. 

Also, make sure you respond to volunteer applications in a timely manner. If you wait a month or more, someone’s schedule might change. Show people that you’re eager for their help by responding in a prompt manner. 

Make it Fun 

While volunteering for your organization may involve some nitty-gritty and emotionally exhausting work, you still want to make sure that your volunteers are enjoying themselves. 

In addition to regular volunteer events, you should also organize fun activities that allow your volunteers to cultivate relationships with one another and let loose a bit. For example, at the end of a big volunteer season, you could organize a pizza party for all of your volunteers to attend. 

How to Recruit Volunteers: Are You Ready to Recruit? 

Now that you know how to recruit volunteers, it’s time to put these tips into action. Before you know it, you’ll have volunteers lining up at the door to help you out!

Also, if you’re looking to do some fundraising for your non-profit, be sure to check out these essential rules. 

When it comes to fundraisers for non-profit organizations, they are especially important because it’s how you receive the funding to raise awareness for your cause. The key to fundraising is persuading people to believe in the cause you’re fighting for as much as you do.

If this is still proved to be challenging for you and your organization, there is no need to worry. We’ve designed this financial guide to help you run successful fundraisers for your cause and organization.

How To Run Fundraisers For Non-Profit Organizations

The point of a non-profit organization is to raise awareness about a particular cause that they believe is worthy of recognition. The only issue that organizations face is getting people to donate to the cause. However, there are some amazing tactics that your organization can implement to help raise that money!

Choosing An Engaging Theme

It is vital that when you decide to have a fundraiser, the theme of the event is exciting and engaging for all that come to the event. Not only is this helpful in creating more excitement surrounding your cause, but it will also persuade people to donate. If your event is engaging, they’ll want to attend more events hosted by your organization.

Connect With Sponsors

The best part about partnering with sponsors is that they can donate some of their products for your organization. The benefit that they get from partnering with your cause is free advertisement for their business. You get extra supplies to use during your event.

Sell Event Tickets In Advance

Giving potential donors the ability to purchase tickets ahead of time helps you to increase the number of people that attend your event. In today’s world, people enjoy buying things in advance so that they don’t have to worry about waiting in line or selling tickets at the door.

The other benefit of selling tickets in advance is that it increases revenue before the event taking place.

Create A Budget

It is essential that when you’re setting up a fundraiser, your organization sets a budget. Establishing a budget will keep you from overspending during the planning stage of the fundraiser.

It will also keep you from purchasing an excess of supplies, which results in wasted resources because they won’t be used. The budget will also set parameters with event vendors about what you’re able to spend in planning the event.

Ensure The Website Is Captivating

A website for your fundraiser should not only be informative; it should also be engaging. No one wants to visit a website that is bland and makes them feel like they are reading a school book.

Keep the website brief and to the point. This helps potential donors understand what your cause is and why they should donate to it.

Let’s Get Fundraising

Fundraisers for non-profit organizations can be challenging if you don’t know what goes into an engaging fundraiser. Remember that the hard work of an event is done before the night of the event.

If you need help when it comes to planning and conducting your non-profit organization successfully, please contact us via our website.

Is your organization equipped to get through difficult financial times? We have put together the nonprofit financial stress test to help board members and funders determine real risk factors for nonprofits.

We have outlined some of the financial metrics your nonprofit should be monitoring.

Financial Management

It’s important to ensure we have a solid system in place to account for and track various sources of revenues and related expenses. Some key considerations for sound financial management include:

• Does the organization have an accounting system?
• Does the organization have an annual audit?
• Does the organization have the ability to track restricted funds within their accounting system?
• Does the organization track their programs separately within the accounting system?

Sustainability

A healthy organization wants to ensure that our revenues are reliable and consistent. Ideally, we would be ensuring we have a plan to break even or create surpluses consistently. Here are a few considerations to ensure your organization is financial sustainable:

• Does the organization have at least 25% operating reserves?
• How highly concentrated is the organization’s revenue?
• Does the organization has legal issues including liens or garnishments?
• Does the organization have delinquent tax issues?

Liquidity

How quickly could an organization come up with cash to get through difficult economic times. Some things to consider:

• Does the organization have at least 30 days of unrestricted days in cash?
• Does the organization have a line of credit?
• What is the debt to credit limit on existing debt?
• How much of accounts payable is over 90 days?
• How much of accounts receivable is over 90 days?

In addition to the considerations listed in the Nonprofit Financial Stress Test above, there are many other key metrics for determining whether your nonprofit can get through tough economic times. If you haven’t already, consider working with your finance committee to determine which of these make sense for your organization.

If you need help addressing some of your risk factors, let’s talk!

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Our firm has experienced tremendous growth over the last 4 years. The Charity CFO expands leadership to better serve clients including promoting two individuals and adding to two more staff accountants. We are now up to

Tim Hudson, CPA

In March 2020, we were beyond thrilled to make Tim Hudson our Chief Operating Officer. He will help me co-lead this business and work on training our team to be the best accountants we can.

Before this role, he helped me build the infrastructure we needed to triple the size of The Charity CFO in 2019 and serve countless clients. He started working with us 2 years ago and we immediately knew he was exceptional.

But check this out! Out of 75,000 people that took the CPA exam, only 133 people scored 95.5 or better. Tim was one of those 133! That’s the top 0.2% This legitimizes our claim that he is a bona fide genius!

We are so proud to have you co-lead this team and bring your brilliance to benefit the underdog industry we service. You could work anywhere but we love that you chose us and our clients! If you know and love Tim, congratulate him!

Brett LeClair

Brett was one of the first full-time employees we hired. Brett joined the firm as a staff accountant in pursuit of working with an industry and job that had more satisfaction and meaning. He is used to giving back to his community after spending time in the military, including deployments. After getting out of the military, he started building his accounting expertise in the gaming and casino industry. Wondering if he could apply those skills to something greater than himself…he was led to apply for a job with The Charity CFO!

Brett has a technical eye and commitment to refining processes for improvement. He has developed into one of our top accountants and was promoted as Accounting Manager in January 2020. Brett will oversee a team of staff accountants and serve as a financial thought leader for many of our clients.

We are thrilled to have you continue to grow in this company. You could have continued your service anywhere, but you chose to work with our team and clients!

The Charity CFO expands leadership to better serve our existing clients and make sure our new clients get the same level of service. In addition to Brett and Tim, we continue to expand our team of accounting staff. In March 2020, we added two new staff accountants to serve our newest clients.

We cannot thank our existing clients enough. The Charity CFO has grown organically through referrals and existing networks. Thank you so much for your support! If you have a colleague looking for a better accounting solution, have them contact me.

Tosha Anderson

Founder and CEO

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What is the difference between for-profit and nonprofit bookkeeping? Find out in this article and why you need bookkeeping services for your nonprofit.

[/vc_column_text][vc_single_image image=”29731″ img_size=”large” alignment=”center”][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]When you think of a nonprofit, you might think that finances don’t matter. However, nonprofit bookkeeping is essential for having a thriving organization.

Whether you’re the founder of a nonprofit or want to work for one, nonprofit bookkeeping is a good skill to have.

You can use your skills to help the nonprofit manage finances so that the group can serve as many people as possible. But you should know the basics before you start bookkeeping.

What Is Nonprofit Bookkeeping?

Nonprofit bookkeeping is similar to bookkeeping for a for-profit business, but there are some differences. Bookkeeping requires tracking revenue and expenses for the nonprofit.

You should track whatever donations you receive as well as other forms of income. Since some nonprofits may not have much of a bookkeeping budget, you may need to use a free or low-cost method for tracking the revenue.

Also, like any organization, nonprofit bookkeeping involves tracking expenses. Of course, many nonprofits will want to keep these low.

However, every organization will have operating costs. Depending on the type of nonprofit, you may also have to account for other expenses, like major equipment purchases.

Nonprofit bookkeeping tracks all of these things for tax time.

How Does It Differ From For-Profit Bookkeeping?

While nonprofit bookkeeping is similar to bookkeeping for a for-profit business, there are some important differences.

The first difference to consider is who owns the organization. For-profit businesses typically have shareholders who invest in the business to help it grow.

However, nonprofits don’t have any owners, and the founders won’t benefit financially from the nonprofit.

The income a nonprofit receives is primarily from donations and grants. On the other hand, a for-profit company usually sells goods or services to make money.

Tracking the income for a nonprofit isn’t as easy as tracking inventory and sales.

Nonprofit bookkeeping also involves tracking assets that the organization can use to grow the organization or help the people the nonprofit serves.

Also, nonprofits are usually exempt from paying taxes. While nonprofit bookkeeping is still important, the exact software and methods differ.

Bookkeeping Software

A large for-profit corporation can afford to spend money on a robust accounting program. Corporations can also afford to hire a team of accountants and bookkeepers to manage finances.

However, a nonprofit doesn’t have this ability. The majority of a nonprofit’s income should go toward the primary mission of the organization.

To keep nonprofit bookkeeping costs low, an organization can opt for a free or low-cost accounting program. At first, the founder of a non-profit may want to handle the bookkeeping.

However, as the nonprofit grows, it can help to hire a bookkeeper. Then, a specialist can manage the finances for the organization.

Nonprofit Taxes

Many nonprofits qualify for a tax exemption. However, that doesn’t mean that a nonprofit doesn’t have to file taxes.

Most nonprofits still have to file taxes, even if they don’t have to pay anything. Still, certain nonprofits don’t have to file at all.

Churches, church conventions, and church associations all don’t have to file taxes. If an organization is part of a group return for taxes, they won’t need to file separately.

Another exempt group includes organizations that have to fill a different return.

Unless your nonprofit falls into one of those categories, you will need to file a nonprofit Form 990. The filing deadline is the 15th of the fifth month after the end of the fiscal year.

One tax to be aware of is the excise tax, which applies to private foundations that have investment income. When doing nonprofit bookkeeping, it’s important to track investments to note how much the organization might need to pay.

How to Do Bookkeeping for Nonprofits

The method you use to do nonprofit bookkeeping can depend on your organization. Factors that affect it include the size of the organization, whether it’s exempt from filing taxes, and more.

Each year, you should research the changes made to laws surrounding nonprofits. Then, you can use that information to inform how and what you track.

And as your organization grows, you can decide if you need to switch to a different bookkeeping method.

If you’ve never done nonprofit bookkeeping, you should also be flexible. Because of the differences, you may need to relearn how to track revenue and expenses.

Understand the Status

Depending on the nonprofit, you may have a slightly different tax status. You should understand your status both in your state and federally.

When it comes time to file taxes, you need to make sure you file them correctly. If your organization can’t afford an accountant, understanding your status is especially vital.

You should know what the tax designation is for your organization. Of course, there are 501(c)3 organizations.

However, there are many types of nonprofit organizations with different designations. The specific designation can determine what the IRS requires for taxes.

Get Organized

Unless your nonprofit is one of the special types that doesn’t have to file, you need to file taxes each year. If you don’t file, you might have to pay a fee.

Go too long without filing, and the organization could lose its tax-exempt status.

By organizing forms and tracking revenue and expenses throughout the year, you can stay on top of your nonprofit bookkeeping.

It will also be easier to train a new bookkeeper on a system you already have going. If you need to hire help with bookkeeping, you can make it easier for everyone.

Use Technology

The creation of multiple accounting programs has helped businesses and organizations with their bookkeeping. Since many nonprofits have small budgets, it can help to find an affordable accounting program.

Hiring a professional team of bookkeepers can get expensive. While you may need one or two people, using technology to manage the books can help everyone.

Not only will it reduce costs, but it will be easier for the board of directors to access financial records.

Bookkeeping Made Easy

Whether you have bookkeeping experience or not, you should understand the basics of nonprofit bookkeeping. Many nonprofits are tax-exempt, but managing the books is still important.

If you don’t keep track of revenue and expenses, it will be much more difficult to grow the organization. You may also risk losing the nonprofit’s tax-exempt status.

You don’t have to be a financial expert to get into nonprofit bookkeeping. However, you should be willing to learn so that you can keep track of everything.

Want to learn more about nonprofit finances? Check out our recent blog posts![/vc_column_text][/vc_column][/vc_row]

If you have a nonprofit, you have the option to file as a tax-exempt nonprofit. If you’ve filed for nonprofit in the past, be prepared for some changes in 2020.

In the past few years, the IRS has spent some time updating its data analysis capabilities. 

This year, 2020, they will focus on six major areas. This brings on a few changes to consider if you are filing for nonprofit status.

• Compliance Strategies
• Data-Driven Approaches
• Referrals
• Claims and Other Casework
• Compliance Contacts
• Determinations

Exceptions to Filing For Nonprofit Status

Some nonprofits are not required to file with the IRS. The exceptions are:

• Organizations included in a group return
• Churches, their conventions, and associations of churches
• Organizations that need to file a different return

When to File

Your nonprofit Form 990 needs to be filed by the 15th day of the 5th month after the close of your fiscal year. The sooner you get on organizing your documentation, the less room there will be for error. 

The Further Consolidated Appropriations Act, 2020

Also known as H.R. 1865, Congress has passed this law that will have a significant impact on nonprofits. It includes two major provisions. These are excise tax simplification and benefits repeal. 

Excise Tax Simplification

Previously, the law required private foundations to pay excise tax on their investment income. This was a 2% tax. However, nonprofits did have the opportunity to lower the tax to 1%. This would happen if they made distributions over the minimum amount.

For years, nonprofits have hoped for a more simplified process. The Further Consolidated Appropriations Act, 2020 does just that.

As of this year, the excise tax rate is fixed at a flat 1.39%. This amount won’t change no matter what the distributions are. Nonprofits no longer need to carefully monitor their distributions. There is no more questioning if they qualify for a lesser amount or not. The tax percentage is the same for everyone.

Qualified Transportation Fringe Benefits Repeal

This act gives something else nonprofits have asked for years. It repealed the unrelated income tax on qualified transportation fringe benefits.

Furthermore, the repeal is retroactive back to the date it originated. You could be entitled to a refund. If your nonprofit had to pay this extra tax any time since December 31, 2017, consider filing an amended 990T. 

New Inflation Adjusted Rates

2020 also has some new, inflation-adjusted rates.

Low-Cost Article

A low-cost article is an item typically given as a “thank you” for a donation. The amount that qualifies as a low-cost article is directly tied to inflation. This means, what qualifies changes every year.

For the 2020 tax year, a low-cost article is anything that costs $11.20 or less. This is a ten-cent increase.

Other Insubstantial Benefits

If a donor receives something in return for their payments, he or she can still deduct the donation if:

• The donation was $25 or more and the donor didn’t receive anything that costs more than $5 or the price of a low-cost article.
• The value of the benefits given isn’t more than 2% of the donated amount, or $50, whichever is the lower amount.

Lobbying Expenditure Notice Exemption

Law requires nonprofits to offer members and supporters an estimate of dues nondeductible lobbying payments.

In 1998, the IRS ruled that there are some exemptions. These include social welfare organizations, agricultural, and horticultural organizations. They are exempt if more than 90% of their yearly dues are $75 or less.

This limit has increased for the 2020 year. Now, these organizations are exempt if their annual dues are $119 or less. 

Mileage

Mileage is one area that hasn’t changed for nonprofits. For 2020, you can still deduct 14 cents per mile on a nonprofit vehicle.

Failing to File

If you fail to file your 990 on time, you could see penalties and income tax liability. If you fail to file three years in a row, your tax-exempt status will be revoked. 

The IRS does keep a list of nonprofits with a revoked status for up to three years. If you need an automatic six-month extension, you can request one with a Form 8868. 

You cannot extend a 990-N due date, but you also won’t pay any penalties for submitting it late.

Losing Your Tax-Exempt Status

If you have lost your tax-exempt status, you are no longer eligible to receive any tax-deductible contributions. You might also have to bite the bullet and pay corporate income tax.

Going Digital

The IRS is implementing enhanced digital records on nonprofits for public access. They are also working to develop more secure communications vehicles to reduce any paper files.

Form 1023

Starting in January 2020, IRS Form 1023 will go electronic only. This is the Application for Recognition of Exemption Under Section 501(c).

Fraud

The IRS is also working to reduce tax fraud by enhancing its digital investigation. In 2019, there were 90,000 employee plan determinations. This has given them a reason to streamline investigations. 

The IRS will also look into potential private benefit and inurement in nonprofits. They have collected data that raises red flags in certain areas. This year, they plan to use this data digitally to find cases to look into.

Nonprofits in 2020

If you are filing for nonprofit status in 2020, take note on the changes. You might find that you are owed money thanks to the new law in place. Take note on the minimum numbers when it comes to low-cost articles. Alert donors when they qualify claims on their donations. 

Keep in mind, these changes can affect your nonprofit for the better. Contact us today for more information on how to seamlessly run your nonprofit. 

If you run a non-profit organization, contrary to popular belief, it doesn’t mean that you don’t have to worry about taxes. 

In fact, stay on top of your tax issues to the best of your ability if you don’t want to get hit with fines or have your organization shut down altogether. 

When you understand the charity that you run and how to handle the business aspects, your organization will thrive and grow. With that said, there are several tax-related mistakes that non-profit organizations often make. 

Consider these mistakes below so you can avoid them and handle your tax matters properly. 

1. Failing to Get Organized

To get the most out of your nonprofit tax filing and accounting, you need to get organized.

This is something that every company needs, too many fail to master. Whether your goal is to get a great tax refund or to pay off debt, getting organized is the key to it all. 

Develop a record keeping process that works and that you can easily stick to. This could mean keeping both physical copies of records and digital copies, and you should definitely make use of software when at all possible. 

By having a process that you can stick to, you are far less likely to make mistakes with your taxes that can cost you dearly later. 

2. Not Truly Understanding Their Non-Profit Status and What It Means

There are so many situations in which a nonprofit manager doesn’t truly understand their status and ends up failing to satisfy requirements.

The most common situation by which your non-profit loses its tax-exempt status as a whole is because the manager failed to file a return from the previous year or from previous years.

It’s also important to understand that your tax designation affects both your state and federal requirements. If you simply follow the non-profit articles of incorporation in your state, you are not necessarily satisfying the requirements of the Internal Revenue Service.

You also need to be mindful of integral documents, such as Form 990, which should be filed the year you form the non-profit.

By understanding your status and what it requires, it becomes easy for you to avoid a plethora of mistakes that many fall prey to. 

3. Doing it Yourself When You Should Hire a Professional

There’s a time to go the DIY route and there’s a time to bring in the pros. 

Hiring a tax professional that is versed in bookkeeping and accounting can be just what you need to manage your taxes in a productive manner. Since the success of your company depends on accuracy and proper accounting, you can’t go wrong bringing a Certified Public Accountant (CPA) on board. 

Hiring some professionals is necessary since tax laws change from time to time. The last thing you would want is to have tax law specific to non-profits change in a way that impacts you, yet you were none the wiser because you didn’t keep up with these laws.

When you have access to a CPA, they will assist you in managing your organization’s debt, boosting your credit and bond rating, managing your investments to the fullest, and ensuring that you always stay organized.

4. They Forget About Their Local and State Taxes

Non-profit organizations often forget about taxes that pertain to their city or county as well. While they may have certain tax-exempt classifications, it doesn’t necessarily mean that they will be exempt from these local taxes. 

This also means that non-profits overlook other such tax obligations — such as sales tax, personal property tax, and taxes on real estate. 

5. Having a Board of Directors That is Subpar — or Not Having One At All!

Every non-profit worth its salt needs to have a strong government in place. This government, known as its Board of Directors, is integral to decision making and the objective sharing of ideas. 

By having a trusted board, you’ll have firm direction and the ability to tackle all of your issues head-on. What’s worse is that so many non-profit organizations don’t have a Board of Directors at all. 

Being loose with this detail makes it that much easier to be loose with details related to your taxes and accounting. 

6. Not Embracing Technology

Finally, so many non-profit organizations also remain stuck in the past in their willingness to embrace technology. Simply put, your non-profit will get left behind if it isn’t embracing this technology to the fullest. 

There are several mobile apps you can look into that will help you with your accounting and finance. Even more intriguingly, Artificial Intelligence (AI) is now helping non-profits optimize their fundraising, make the best use of their staff and decide on the best ways to shape company policy and initiatives. 

When you stay ahead of the game with the technology of the industry, you can count on your non-profit to be all the better for it. 

Understanding the Charity and the Tax Mistakes That Non-Profits Make

When you want the charity or non-profit that you run to stay at its best, handle your taxes. These are the tips that will carry you far in that regard and keep you from getting into trouble with the IRS.

If you plan to run a successful non-profit, we’d love to show you what kinds of financial services we can provide you with. 

Get in touch with us to request a quote for whatever kind of non-profit accounting work you need.