Accounting Services for Nonprofits:
Bookkeeping Services for Nonprofits:
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At FinancePal, our experienced non-profit accountants are very familiar with the various aspects of accounting for non-profits of all sizes and sectors.
It’s easy to think of accounting as a necessary evil to keep the IRS off your back. however, good accounting is the key to better financial decision-making, increased cash flow, and improved asset management.
Tax Considerations for Non-Profits
Non-profit organizations are taxed differently than for-profit companies and corporations. Non-profits fall under Section 501, which exempts them from federal taxes. Before you apply for exempt status from the IRS, you must obtain non-profit status from your respective state.
Tax-exempt nonprofits are still subject to employment, sales, real estate, and other applicable taxes. Consult with an expert; different non-profit organizations will be on the hook for different taxes.
Even if you do everything right, your non-profit may still be selected for audit by the IRS. When this happens, meticulous accounting will save your organization from heavy fines, penalties, and further inquiries. Our accountants are trained in audit defense and know how to properly handle dealings with the IRS.
Considerations for Non-Profit Accounting
Non-profit organizations must use fund accounting, an accounting system specialized for recording resources whose use has been limited by the donor. Fund accounting is important because nonprofits will often receive funds earmarked for a specific purpose by the donor.
Additionally, non-profit organizations must employ the use of purchase orders in order to provide detailed and adequate documentation of how funds are used.
Non-profit organizations must also account for what is known as in-kind donations. In-kind donations are donations that are charitable gifts that do not consist of money. In-kind donations are valued at market value. The IRS defines market value as “what willing buyer would pay and a willing seller would accept for the property, when neither party is compelled to buy or sell, and both parties have reasonable knowledge of the relevant facts.”
For example, if an attorney volunteers their time for your non-profit, this in-kind donation is valued at their regular hourly rate times the hours they gave.
Small in-kind donations (defined by the IRS as totaling under $5,000) can be valued internally. However, in-kind donations totaling over $5,000 must be appraised by an independent expert.
If you are in charge of a larger non-profit, you will likely have staff that needs to be compensated. Your staff may be comprised of hourly, salaried, or commissioned workers. FinancePal will impeccably track and report payroll, hours worked, and commissions to make annual payroll tax filing a breeze for your business.
Impeccable non-profit accounting is vital for smooth and efficient operations. That is why non-profit organizations trust the accounting and bookkeeping experts at FinancePal. For a free consultation and custom quote, click here.
Who We Work With
We partner with tech-driven industry leaders to bring advanced financial services to businesses like yours. By aligning with these innovators, we’re able to integrate with other business tools and enhance our service offerings. Some of our prestigious partnerships include: