SBA Loans Available for Nonprofit Emergency Funding.

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SBA loans available now for nonprofit emergency funding in response to the COVID-19 closures. You can apply for up to $2M at an interest rate at 2.75%.

Many nonprofits are struggling with finding resources to cover gaps in their funding. In some cases, we are waiting to hear from funders on a decision to continue funding. In other cases, we have no ability to earn revenue. While we wait for answers and release and deployment of other resources, we are left questioning how we can find additional cash to continue paying employees, facilities, finance other debt, etc. The SBA (Small Business Administration) has released a large pool of funds. Nonprofits are eligible for this funding.

From the SBA website that recaps the nature of the loans:

If your business or private, nonprofit organization has suffered physical damage or your small business or private, nonprofit organization of any size has sustained economic injury after a disaster, you may be eligible for financial assistance from the U.S. Small Business Administration. If your business—regardless of size—is located in the declared disaster area, you may apply for a long-term, low-interest loan to repair or replace damaged property.

https://disasterloan.sba.gov/ela/Information/FactSheetBusinesses

Even if your property was not damaged and you are a small business owner or a private, nonprofit organization, you may apply for a working capital loan from the SBA to relieve the economic injury caused by the disaster.

https://disasterloan.sba.gov/ela/Information/FactSheetBusinesses

For more information, here is a 3-Step application for SBA loans available for nonprofit emergency funding.

Most importantly, loans up to $2 million will be offered, and can be used to pay fixed debts, payroll, accounts payable or other bills that can’t be paid due to the disaster’s impact. Repayment terms can be up to 30 years.

Collateral is not required, however, if assets that can be collateralized exist, it is possible that will be required to process the loans.

In addition to the SBA lending program, here is a list of additional business relief programs.

The application process can be overwhelming. If you need help filling out this paperwork, reach out to us.

The Informative Guide on Nonprofit Bookkeeping

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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]

Automating Communication for Nonprofits – A Short Guide

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From wildlife funds to children’s charities and the ASPCA to international NGOs, no matter what they support, most charitably oriented organizations have at least one thing in common: a resource deficit. There are only so many staff members nonprofits are able to hire; only so much space they can rent, and never enough time in any given day. 

Well, never fear. Automation is here and it’s got all the timesaving, cost-cutting, tech you need to bulk up your nonprofit’s resources and boost productivity when you need it most – particularly when it comes to marketing and communications efforts. And in case you don’t quite know where to begin, here are a few thought starters from the Charity CFO’s research library. 

A different approach to marketing

Marketing is an invaluable resource for nonprofits, whose sole mission is to reach out to likeminded people who are willing to lend support. And automation in the information age has made connecting with people at the touch of a button a real possibility. 

The first question that may spring to mind is, “But how can a machine replace real human interaction?” The answer is, it doesn’t have to. All it does is make meaningful interaction more accessible. 

For starters, marketing automation means that you can connect with your database in the following ways:

  • Automatic email messages – Crafted by humans, managed and sent by machines, whenever you need them to be.
  • Automatic responses to queries – Depending on the tech you choose, these can range from simple, “We’ve received your message and will get back to you” responses, or AI-driven responses that can answer more complex questions.
  • Automated birthday messages – These are a great value-add for donors and other supporters; a personal touch that (ironically) can be done automatically. 
  • Targeted or Programmatic Advertising – These are tools that will effectively bring potential donors to you, based on their searching and browsing habits.

Tools to take a look at

The digital age is a Shangri-La for communicators. Anyone old enough to think back to the 80s or 90s will remember terms like “The check is in the mail” and “Just fax it through”. Nowadays, paper has disappeared for the most part. Letters are rarely sent through the mail anymore and checks have given way to electronic funds transfers, online credit card payments, and PayPal. 

Mailchimp, Emma, and ActiveCampaign are just three examples of email marketing platforms that have taken the communications world by storm over the last few years. In 2019 alone, over 340 billion mails were sent from Mailchimp’s platform, making it the most popular contender on the list. But that’s not necessarily to say that it’s the best. Mailchimp does have great features and is quite user friendly, but it all comes down to personal preference. 

The common denominator is that these platforms have made creating email templates and mail design something anyone can do. And you can schedule emails well in advance plus automate several communication processes. 

Salesforce.org is a large CRM (Customer Relationship Management) platform that has designed automated tools specifically geared at NPOs. Their Power of Us Hub is a resource center that helps nonprofit organizations communicate – both internally and externally – and connect through training and employee engagement initiatives. 

Salesforce’s Nonprofit Success Pack provides subscriber access to operations systems, donor management programs, and cloud-based communication platforms like Marketing Cloud and Pardot.

Salesforce isn’t your only CRM automation option, though. Bitrix24 offers up to 12 users in your organization FREE access to email and telemarketing tools, reports, and quite a bit more. Neon CRM has combined CRM and fundraising platforms, and Salsa CRM offers their own branded CRM, fundraising, and relationship management tools. 

Content is king

That’s just the beginning of the automated solutions that are available for nonprofits who want to ramp their communications efforts up to the next level. But one thing that’s always important to bear in mind is that, because all of these amazing tools are now available to communicators, it’s easier for messages to get lost in the clutter. 

That’s where the human element comes in. Marketing tools in the right hands are like paintbrushes in the hands of a master. It needs to be said that automation is not actually robotic. Before anything can be automated, a communications framework must be laid so that everything your organization needs to say is driven home effectively. 

So, before you go fully automatic, consider the importance of copywriting (not to be confused with copyrighting), to make sure that your messaging is on point; design and corporate identity, for an aesthetic that will appeal to all stakeholders and stay consistent; and marketing strategy, so that you have an ultimate goal in mind for what you’d like your communication to achieve. More detail on all of that in a future post!

Trust the experts

The Charity CFO is a leader in managing business and accounting processes for nonprofits. We’re consistently updating our knowledge of nonprofit industry trends so that we are able to provide nonprofit agencies with the resources they need, when they need them. 

Subscribe today for more informative business-related articles. And follow us on Facebook @thecharitycfo, and LinkedIn @tosha-anderson for regular updates.

Looking Ahead: 5 New Changes To NPO Tax Law You Should Know

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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. 

We’re Hiring!

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Have you ever considered yourself wanting to work in a position that allows you to use your accounting experience but also be able to apply creativity and business acumen? Are you someone who likes to do more than just what the job description requires? Do you love helping people and want more fulfillment in the work you are doing? I need someone to tackle and solve client accounting needs and help with our firm growth and innovation obstacles.

We’re hiring a non-profit accountant to work with us! If you are interested in being part of a fast-growing firm committed to thinking outside of the box, solving client solutions, and helping us be an innovative firm of the future, keep reading.

Only candidates that complete our prospective employee survey will be considered. Follow this link: https://toshaanderson.typeform.com/to/kWGI8C

You need to have…

….Ability to recognize when something doesn’t look right. And follow up on the cause until you figure out why it doesn’t.

….Enjoy working with clients. You refuse to be bitter with clients and their requests because you recognize they have problems and they hire US to find the solutions. This role is very client facing, therefore, you will need to be comfortable with a high volume of communication.

….You are okay with preparing and presenting financial information to clients.

….Have a passion for working with non-profit organizations. You are committed to finding the best solutions to the problems to keep costs low and quality high – so that our clients can keep their focus on what really matters – THEIR MISSION.

….You don’t have to know everything you’re going to be assigned. You do have to be committed to researching, being resourceful, asking questions, and anything else to FIND THE ANSWER.

….You need to value generosity and be willing to put in whatever it takes to get the job done.

….Must be committed to efficiency and productivity in a remote work environment. Self-discipline and motivation are critical to the success of this job.

What would you be helping us with?

· Entering daily transactions for all of our clients using a number of software platforms

· Responding to requests from clients on general accounting needs (i.e. running reports, responding to requests, etc.)

· Prepare reconciliations (i.e. bank reconciliations, credit card reconciliations, general ledger accounts, etc.)

· Perform self-review to ensure that accounting is accurate

· Prepare financial statements and provide overview to client

· Establish, document, and evaluate internal processes for the best client experience.

· Assist in helping our clients get through audit and tax preparation

Qualifications

· Energized by working with non-profit organizations

· Experience with Quickbooks Online

· Experience in non-profit accounting, preferred.

· Tech savvy. Must be able to learn software quickly. Experience working on a Macbook is preferred.

· Bachelor’s degree in accounting or equivalent experience

If you think you would be a good fit, please apply!

TO APPLY

Please paste the below link in your browser to submit a resume and complete pre-interview questions.

https://toshaanderson.typeform.com/to/kWGI8C

Job Type: Full-time

Salary: $18.00 to $20.00 /hour

Experience:

  • Macbook: 1 year (Preferred)
  • Accounting: 2 years (Required)
  • QuickBooks: 2 years (Required)
  • nonprofit: 1 year (Preferred)

Education:

  • Bachelor’s (Preferred)

Location:

  • St. Louis, MO 63108 (Required)

The Charity: 6 Common Tax Mistakes that Non-Profits Make

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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. 

Do Nonprofits Pay Taxes? This is What You Should Know

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There are more than 30 different types of nonprofits within the federal tax code and not all of them are exempt from taxes.

So, you may be wondering… do nonprofits pay taxes? The answer is a bit complicated.

Each type of nonprofit is different when you are considering lobbying and tax-deductible contributions, among other things.

To learn about how nonprofit taxes work, keep reading below and find more information that may help.

What is a Nonprofit?

A nonprofit is something that is often talked about, but not often understood in the context it should be.

People often believe that nonprofits are automatically tax-exempt, but this is not the case. With over 30 types of nonprofits, it can be difficult to determine which nonprofits fall into which category.

In the different sections of the tax code, you will find the different types of nonprofits.

For example, in section 501(c)(4), the social welfare organizations, volunteer fire companies, and homeowners associations can be found. In section 501(k), you’ll find child care organizations.

By being in a specific section, an organization is stating that it meets certain requirements and is or is not exempt from paying federal taxes. The biggest thing to remember is that nonprofits will not be paying out profits (which is why they are called nonprofits in the first place).

Donations that others make to nonprofits are generally tax-deductible for those individuals, but the nonprofit won’t pay taxes on those donations.

What Does a Nonprofit Do?

The purpose of a nonprofit is to serve the public.

This may be through offering goods to the community or providing services that are needed by the local population. Some nonprofits are capable of doing both.

The financial information, as well as operational information, has to be made public.

This is to ensure that businesses or individuals that choose to donate are aware of what the organization they are donating to is doing behind closed doors. They also want to know how the money they’ve donated previously is being put to good use!

Before a nonprofit is able to become tax exempt, it must request and complete a 501(c)(3) status from the IRS directly.

Once it is registered and starts operations, the organization has to maintain compliance. This compliance will be with the state agency that regulates the charitable organizations within that state. 

A nonprofit may also receive grants from the public, government, or other foundations to do specific types of work. If your nonprofit wants to do a big project, for example, you can apply for grants to get money to pay for resources.

To do all of this effectively, you may need to have a knowledgable and dedicated accounting team on your side.

Do Nonprofits Pay Taxes?

While nonprofits typically will not have to pay taxes, they still have to submit annual tax returns with the IRS.

Being tax exempt means an organization doesn’t pay federal taxes, but they still have to provide the IRS with the information they need. This is true for any nonprofit, no matter their status.

A nonprofit that identifies as a 501(c)(3) is the most common type you will find. It will include any type of organization that is educational, scientific, religious, literary, or charitable. 

If you have a nonprofit of this type, you would use the IRS form 1023 and file taxes each year. Contributions are generally going to be tax exempt.

Any organization that falls into this category will have to be:

  • A public charity that people may donate to, such as the Red Cross
  • A private foundation, such as the Getty Foundation

Keep in mind that there are other types of nonprofits. While these are the most common out there, your nonprofit may fall into a different category.

IRS Form 990

Since nonprofits have to report every year, they will submit a variation of the IRS Form 990. This form helps the IRS (as well as the public) look at what the nonprofit is doing and how it is operating.

The information included on this form would be the nonprofit’s mission, the programs provided, and the overall financial history for the year.

Depending on the filing year and the gross receipts of the organization, there are different types of the 990 form. These include the Forms 990, 990-EZ, and the 990-N.

An experienced accountant can help you determine which option is right for your nonprofit. You will get additional information that you may not be able to find on your own, but you’ll also have the chance to ask questions and know your forms are being completed correctly.

If a nonprofit that is required to file a Form 990 does not do it for 3 years in a row, the IRS removes the tax-exempt status from the organization.

Exceptions to this rule may include faith-based organizations, government corporations, or certain state institutions.

What Does Your Nonprofit Need to Do?

Trying to answer the question “do nonprofits pay taxes?” is a little confusing, but there are experts out there that can help.

With all of the options you have, you need expertise on your side. You also need accountants that know and care about what you’re doing for others. 

If you have accounting needs, the Charity CFO wants to help you continue to improve our communities. 

Get some more information on our policies and practices, but most importantly, find out why you should choose us to help you with your accounting and tax return by contacting us today.

Nonprofit Accounting Tips, Tools, & Tricks Your Organization Needs to Know

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When people think about the nonprofit world, they often think about the work they do to help others. Their mission and impact come to mind, but the way they’re actually run rarely comes up. 

A nonprofit may not make money the way a traditional business does, but money still plays a significant role in the nonprofit world. Donations need to be made, some employees may need compensation, and the books need to be balanced.

Proper accounting is important for the longevity of any organization, but luckily, it’s easy to handle with the right background.

If you want to learn the best way to handle finances in the nonprofit world, you’ve come to the right place. Keep reading to learn some simple accounting tips and tricks that can help you in the long run.

The Simple Guide to Nonprofit Accounting 

A financially healthy nonprofit is one that has the right accounting setup. 

If you want to know how to handle accounting at your nonprofit, make sure you pay close attention to the tips in this post.

Understand the Law

Accountants that don’t understand IRS tax law could be losing the organization thousands in exemptions and filings. 

If you want to handle accounting right at a nonprofit, you need to understand the differences between managing money for a regular business and a nonprofit organization. 

The IRS has a comprehensive and free resource guide that nonprofits can use to educate themselves on the ins and outs of handling finances for their organization. 

Everyone on your finance team should be familiar with tax guidelines. Even if they aren’t necessarily handling filing your taxes, encourage them to take advantage of the IRS’ free courses. 

Have a Solid Budget

A budget is important for any business or nonprofit organization. It’ll help you set goals for the coming year, and ensure that you’re operating your business in the most financially healthy way possible.

A realistic operating budget is the first step to handling accounting the right way in your organization.

Keep in mind that an ideal budget should be able to evolve throughout the year. Money from donors can ebb and flow depending on the time of year and market forces that are out of your control. 

Think about the best and worst times to limit expenses. There are some times of the year where you can expect a lot of cash flow like the holidays, and other times where you’ll have to be leaner.

It’s also important to make sure that your board members understand and approve the budget. 

We all know how important the siting board is in a nonprofit organization. If they understand the rationale behind why you’re setting certain expectations and limits, they’ll be able to better understand upcoming initiatives and support them.

Have Several Checks and Balances 

Fraud can occur in any organization, but frauds for nonprofits and charities can be absolutely devastating.

Aside from taking money from an important cause, it can also undermine people’s faith in your organization. They may think that their money isn’t being spent correctly, and you could see your donations quickly dry up.

One of the best ways to protect against fraud and to keep your accounting books balanced is to have plenty of eyes on the numbers. This means creating a series of checks and balances to ensure that everything literally adds up. 

Never have one person only handle financial matters in your organization. Always have someone else that can double-check their work and make sure that their numbers, bank deposits, and projections make sense. 

Having a professional with no financial stake in your nonprofit can be a great way to keep things balanced. Some nonprofits go the extra mile to bring in an external accounting consultant during tax time or when they’re planning budgets. 

Get Software

Getting solid accounting software is one of the best things a nonprofit can do. Software doesn’t just make it easy to track expenses, it also gives everyone the opportunity to access important financial information. 

Take time to think about the kind of software you want. Some accounting software can come with special features like payroll and benefits tracking help. Others can hone in on specific nonprofit areas like fundraising and donations.

The Nonprofit Plus Account Suite is one of the highest-rated niche accounting software packages you can use.

Aside from this software being specially designed for non-profits, it can help you handle nearly every financial aspect of your business. You can manage donations, handle employee payroll, and use its stellar forecasting capabilities. 

Stay in the Loop 

Do you know whenever someone in the marketing/communications department goes to an event and charges their Uber to the company card? Could you easily find receipts from operations during their last office supply shopping trip?

Having a deep understanding of what’s happening in every department is critical for the financial success of every nonprofit.

You won’t be able to read people’s minds or be around for every purchase. That’s why it’s important to create simple systems for people to report expenses and keep key people informed about purchases. 

This is where having solid software can come in handy. A software system that makes it easy for people to report their expenses and easily track spending can save people in accounting a lot of time and stress.

Start off by training people in other departments the right way to keep you informed about expenses. Let them know that reporting small expenses and big purchases are equally important.

Get Help 

We covered a lot of ways to handle nonprofit accounting in this post, but there’s one surefire thing that will always be helpful for nonprofits: hiring the right people to handle accounting. 

If you’re in need of experts that can manage your accounting needs, we’re here to help.

We offer services that can cover every financial aspect of running a nonprofit. Be sure to contact us today so we can talk about the best way to handle your accounting and finance needs.