Non-profits face unique accounting and reporting requirements. When they work with a CPA service, they can access a pool of learned experience to help them solve their problems and meet their goals.

For example, many non-profits must carefully track and value employee benefits that may count as taxable income. They also need to be vigilant about complying with tax reforms that affect the non-profit industry.

They Can Help You Meet Regulatory Requirements

Non-profits have to adhere to many state and federal regulations. A CPA specializing in non-profits, professionals such as Porte Brown can help you navigate these requirements. For example, non-profits are required to file IRS Form 990 each year. This information is available to the public and is used by government agencies to determine grant eligibility.

Non-profits also need to track and report their spending. A CPA can help you establish best practices for tracking spending and revenue, including developing budgets and financial forecasts. This can help you meet your regulatory obligations and ensure that you are using funds as intended by the grantmaker.

Accounting is often considered the “language of business” because it allows executives and stakeholders to understand a company’s operations and finances. A CPA is a skilled professional who can interpret and communicate this information to others clearly and concisely. This can be invaluable to a non-profit organization looking to gain the trust of donors and foundations. They can then feel confident that their incoming donations are being used responsibly to accomplish a specific mission.

They Can Help You Maximize Your Tax Credits

Non-profits face unique challenges when it comes to accounting and reporting. In addition to keeping up with ever-changing tax laws, they must track deductions and ensure they are not misusing donated funds. They must also have a solid system for tracking labor and services and ensuring that volunteer hours are properly recorded. A CPA can help you address these issues by providing expertise and advice.

Many non-profits rely on bookkeepers for their day-to-day accounting needs, but they may need more specialized education or licensing to address more strategic business issues. A CPA specializing in non-profits is familiar with the specific problems these types of companies face, and they can provide valuable insights into improving the organization’s financial health.

A CPA can also help your non-profit maximize its tax credits by identifying any that it might be eligible for. For example, the earned income tax credit (EITC) is a dollar-for-dollar reduction in federal taxes for people with moderate to low incomes. A CPA can help you determine eligibility for this credit by analyzing your data and preparing the proper paperwork.

They Can Help You Save Money

Non-profits have to meet a lot of regulatory and accounting requirements. In some cases, these can be costly. But working with a CPA can help your organization save money in several ways.

For example, they can help you track costs and properly categorize all expenses. They can also help you segregate grant funds and other donations from regular operational spending. This is essential for ensuring that your non-profit can meet donor expectations.

Additionally, a CPA can help you file your annual 990 forms accurately. This is important because if your non-profit fails to file its 990 for three consecutive years, it will lose its tax-exempt status. 

Finally, a CPA can also help you reduce your overhead. They can do this by recommending cost-saving methods for obtaining your required audit reports and preparing financial statements. They can also help you save money by outsourcing your bookkeeping and accounting needs instead of hiring an in-house accountant.

They Can Help You Manage Your Budget

Non-profits face unique accounting requirements and can have a harder time balancing their books than for-profits. A CPA with experience in non-profits will be familiar with the considerations specific to your organization. They can help you set up internal controls, solve tax problems, budget resources and prepare financial data for fundraising.

Your non-profit will likely have multiple budgets throughout the year, with different timeframes to determine when you anticipate earning revenue and incurring expenses. A yearly expense budget is important, but you may also want to set shorter-term goals for individual events or campaigns. A CPA can assist you in setting realistic metrics for these short-term initiatives and forecasting your overall expenses and revenue.

Donors expect the money they donate to a non-profit will be spent effectively. Your accountant can help you create a statement of functional expenses that organizes your expenses into three function categories: program, administrative, and fundraising. This can help you track how your funds are used and comply with donor restrictions. They can also help you manage tax code changes and regulations affecting your non-profit.

They Can Help You Manage Your Finances

Non-profits are faced with stringent accounting, reporting, and regulatory requirements. Meeting these requirements can feel like a major task, especially for small non-profits that need more resources to hire a full-time accountant. A CPA can help you manage your finances, freeing you to focus on your mission.

One of the most important tasks non-profits must complete is filing annual tax forms. A CPA can help you compile your financial information and submit it to the IRS on time. This includes preparing your Form 990, an annual report that tax-exempt organizations must file to demonstrate compliance with regulations and requirements.

Additionally, a CPA can help you prepare other annual reports for your non-profit. These include your statement of activities, which lays out your organization’s revenue and expenses by restriction, and your statement of financial position, which details your net assets.

Another important report for non-profits is their functional expense report, which shows donors how their donations are being used. Many donors prefer that their money goes towards programs and operations rather than administrative costs, so a CPA can help you allocate your expenses properly to avoid overstating your administrative expenses.

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