Last year over 330 billion dollars were contributed to charitable organizations. The Internal Revenue Services (IRS) has approximately 1,300,000 nonprofit organizations registered as 501(c)(3) organizations in accordance with IRS guidelines. In 2011 about a quarter of a million nonprofit organizations had their tax exempt status revoked because they failed to file legally required documents.
Nonprofits are organizations that do not distribute their end of the year profits to board members or directors but rather they take those profits and reinvest the money into further achieving its purpose or mission. Their primary mission is most often to provide services needed by society. Organizations like the American Youth Soccer Organization and United Nations International Children’s Emergency Forms (UNICEF) are examples of nationally recognized nonprofits but local food closets and rotary clubs are nonprofit organizations too. They all depend on fundraising efforts, generous contributions, membership dues, grants they qualify for, and investment income.
Because of this nonprofits have strict tax code rules they must abide by. Nonprofits can have a tax exempt status if the IRS approves, and occasionally, they also get approved to have all of their donors’ contributions classified as tax write-offs.
Nonprofit recordkeeping can get a bit challenging, however, as financial statements are still required by Financial Accounting Standards Board (FASB) but are different from regular statements that for-profits must complete. An example of this is the Income Statement. Instead of preparing an income statement, nonprofits have to prepare a statement of activities. They are also required to file a Form 990, Form 990T a California Form 199 and Form109 annually.
Here at Islip + Company Sacramento CPA firm we offer comprehensive nonprofit auditing and accounting services, payroll processing, elimination of any hidden costs which are unnecessary expenses that are difficult to detect but still waste your valuable resources, management advisory services (that means answering all of your questions regarding running your nonprofit as efficiently as humanly possible), guidance regarding IRS, Franchise Tax Board, and other governmental agencies requirements.
We know that keeping your organization financially fit, safe, and in compliance is a full time job. We will keep your financial statements in conformity with Generally Accepted Accounting Principles (GAAP) to keep organizations like the Internal Revenue Service (IRS), Franchise Tax Board (FTB), the Department of the Interior (DOI), Employment Development Department (EDD), and Board of Examiners (BOE) off your doorstep.
If you are not a Certified Public Accountant (CPA), please don’t try to be one for your organization. You’ll waste time you could be spending taking care of your clients and you’ll miss details in your accounts and reports that a professional wouldn’t.
Don’t wind up being another bad statistic on the IRS website. Let us handle your nonprofit organization’s financial well-being so we can keep it healthy and thriving.