Running a non-profit organization is a rewarding opportunity. Not only do you get to apply your skills and experience in the ‘real world’, you also get to work for an organization that is serving a greater cause. If you want to be able to feel good about what you have done at the end of each day, starting a non-profit organization is a great idea.
Of course, you don’t get a pass on accounting responsibilities just because the organization works in the non-profit space. In fact, if anything, you might need to keep an even tighter reign on the books to maintain your non-profit status. Making even minor accounting and bookkeeping errors can lead to major trouble in this sector.
With that in mind, the following list includes some basic tips to keep in mind when it comes to non-profit taxes and accounting reports.
You Aren’t Tax-Free
Many people associate non-profit status with some kind of a permit to not pay any taxes at all, but that isn’t the case. Even if you have received a non-profit designation, you may still be required to pay specific taxes that relate to your operations. Those taxes will depend on the field that you are working in, and the nature of your organization. As you are getting your accounting system set up and in place, make sure you speak with someone qualified to give you accurate advice for your tax responsibilities.
Record Revenues Accurately
As a non-profit, you may receive a part (or even all) of your income in the form of donations. If that is the case, you need to be sure that your accounting software is set up correctly. It needs to denote these revenues as donations rather than categorizing them as some other sort of income. This is an important point when it comes time to prepare your taxes. It is also important from a reporting perspective, as you want to have a clear picture of your financial situation at the end of each year. Again, this is another point that you can get ahead of from the start. If you know that you will be receiving donations regularly, position your accounting system to record those incomes.
This is a tip that should apply to all businesses in general, but it is particularly important for those operation non-profit organizations. In order for your organization to be trustworthy to future donors or volunteers, your financial reports at the end of each year should be complete and accurate. No one will trust a non-profit who isn’t providing accurate and honest reports. It is going to be in your best interest to maintain a great accounting system right from day one. When others can see the precise financial situation within your organization – and where the donated money is going – they will be more likely to help.
Speaking of accurate accounting, your organization is going to need to rely on a quality bookkeeper to make sure all transactions are entered correctly. Unfortunately, human bookkeepers can’t always be trusted to get it right – which is why you should consider turning to a robot. The service offered by botkeeper will handle all your basic bookkeeping duties quickly and easily, so you can focus on the task of running and growing your non-profit.