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Strategies for Managing Non-Profit Taxes and Accounting

If you are responsible for the financial management of any organization, then you know that it can be a daunting task. However, there are many important things to consider when it comes to non-profit taxes, accounting, and bookkeeping – and it can be hard to know where to start. 

We’re digging into some of the key components of Non-profit accounting strategy, as well as tips for finding the right CPA for your organization. We’re also sharing some best practices for many of the unique challenges non-profits face today. But, with the right planning and guidance, you can rest assured that your finances are in good hands!

Key Components of Your Non-Profit Tax and Accounting Strategy

When it comes to Non-profit taxes and accounting, there are a few key components that you’ll want to make sure are part of your strategy. 

Understanding Your Financial Position

First and foremost, you’ll need to have a clear understanding of your organization’s financial position. This includes having accurate records of all income and expenses, as well as any assets and liabilities. 

Building and Managing a Non-Profit Budget

You’ll also need to create a budget and forecast for the future. This will help you make informed decisions about where to allocate your resources and how to best support your organizations mission.

Bookkeeping and Accounting

Another important aspect of Non-profit accounting is bookkeeping and accounting. This includes keeping track of all donations, expenses, and income. It’s important to maintain accurate and up-to-date records throughout the year so that you can prepare financial statements and tax filings with ease.

Non-Profit Tax Planning and Compliance

Another important part of Non-profit accounting is tax planning and compliance. Non-profits are subject to different tax rules than for-profit organizations, so it’s important to work with a CPA who is familiar with these rules. 

You’ll need to file annual tax returns, as well as any required state and local filings. And, if you receive grants or other funding from the government, you may also be subject to audits.

Audit Preparation and Guidance

Non-profit organizations are required to undergo an audit every few years. This is a comprehensive review of your organization’s financial statements and records. It’s important to be prepared for an audit and to have all of your documentation in order. 

Audits can be performed by the IRS, state agencies, or private organizations. If you are selected for an audit, it’s important to work with a qualified CPA who can help you navigate the process.

Finding the Right CPA for Your Non-Profit

When it comes to Non-profit accounting, it’s important to find a CPA who is familiar with the unique rules and regulations that apply to your organization. 

Experience Matters

You’ll want to consider CPAs who have experience working in the Non-profit sector. This will ensure that they are familiar with the unique challenges that Non-profits face and the specific regulatory requirements that Non-Profits must comply with, annually. 

An Understanding of Tax Laws for Non-Profits

The right CPA for your Non-profit will also have a unique understanding of Non-profit tax rules and regulations and best practices for filing your Form990 with the IRS each year. This form provides information about the Non-profit’s finances and is used to determine whether the Non-profit is in good standing.

A Dedication to Non-Profit Organizations

When you’re looking for a CPA, you’ll want to find someone who is dedicated to Non-profit organizations and they should also be familiar with the resources available to Non-profits, such as grant funding and government programs.

Tips for Planning for the Future of your Non-Profit

Once you have the key components of your Non-profit accounting strategy in place, you can start planning for the future. Here are a few tips to get you started:

Develop a Long-Term Plan

It’s important to develop a long-term plan for your Non-profit. This should include your goals and objectives, as well as a timeline for achieving them.

Create a Budget and Forecast

As part of your long-term plan, you’ll need to create a budget and forecast for the future. This will help you track your progress and make informed decisions about where to allocate your resources.

Develop Fundraising Plans

If you’re relying on donations to support your Non-profit, you’ll need to develop a fundraising plan. This should include a strategy for soliciting donations, as well as a stewardship plan for ensuring that donors are kept informed about how their donations are being used.

Managing Donations and Major Gifts

If you receive donations or major gifts, you’ll need to have a plan in place for tracking and managing them and properly allocating the funds across your organization.

Fiduciary Responsibility

As employees and Board Trustees of a Non-profit, you have a fiduciary responsibility to the Non-profit and its donors, which means that you must use donations wisely and in accordance with the donor’s wishes.

Need Non-Profit Tax Guidance? SME CPA is here to help

At the end of the day, finding the right CPA for your Non-profit is essential to the success of your organization. With the right planning and guidance, you can reduce the stressors of managing Non-profit accounting and tax filings. 

For over 70 years, SME CPA has partnered with businesses and Non-Profit organizations across the Aiken-Augusta region to help them build accounting strategies focused on their needs today and planning for growth opportunities in the years ahead.
Our team of Non-Profit Accounting experts is here to help your organization put its best financial foot forward. Get in touch today.

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