Sacramento and Roseville Accounting Services for Nonprofit
Nonprofit corporations operate differently than for-profit corporations and are subject to different rules and regulations. They are exempt from federal taxation based on a 501(c) designation. Because they receive federal funding, nonprofit organizations are required to undertake an OMB A-133 audit. This is to ensure that the organization is using federal funds in compliance with the federal program’s requirements. The Sacramento and Roseville accounting services at the Cook CPA Group have expertise in nonprofit accounting and its unique needs and requirements.
Nonprofit Status and Tax Exemption
Nonprofit organizations are entities that do not engage in profit-sharing among members, i.e. those who support or control them do not earn profits. Nonprofit organizations are able to earn profits and invest in those profits, but all of the money that is made must go back to the organization. California laws dictate whether an organization is issued status as a nonprofit entity. Tax exemption status is granted strictly by the federal government. The 3 types of nonprofit organizations that the federal government recognizes for tax exemption purposes are:
- Unincorporated organizations
The charitable tax exemption, 503(c)(3), exempts organizations from federal income and corporate taxes for most categories of revenue. Organizations that are designated as 503(c)(3) are eligible to receive tax-deductible contributions. Being designated as 503(c)(3) is not ideal option for organizations that are involved in substantial lobbying and political campaigns. These activities are prohibited by statute.
Filing a Form 990 with the IRS
Most tax exempt organizations that have assets worth at least $500,000 or gross receipts of at least $200,000 must annually file a Form 990. An organization must disclose its mission, activities, and financial details including expenses, assets, revenues, and liabilities. Other information that a Form 990 must disclose include:
- How the organization is governed
- Activities engaged in during the year
- Names of officers, highly compensated employees, directors, and other individuals involved in the management of the organization
A Form 990 also has a provision that requests documentation that is based on the answers provided in previous sections. Examples of these documents include:
- Schedule A – information about public support and public charity status
- Schedule B – lists contributions the organization receives during the year
- Schedule C – report of political activity an organization engages in during the year
- Schedule D – detailed financial statements
- Schedule E – benefits, facilities, and policies of a school organization
- Schedule F – activities engaged in outside of the United States during the year
- Schedule G – professional fundraising services, events, and gaming
- Schedule H – benefits, activities, and policies of hospital organizations
- Schedule I – information on grants and assistance made by the filing organization during the tax year to other entities
- Schedule J – compensation information for officers, directors, key employees, etc.
- Schedule K – outstanding liabilities associated with tax exempt bond issues
- Schedule L – financial transactions between the organization and individuals disqualified under section 4958; determines if a member of the governing body is an independent member
- Schedule M – non-cash contributions
- Schedule N – losing more than 25% of net assets through exchange, sale, contraction, or other disposition
- Schedule O – in depth explanations of prior questions
- Schedule R – information on related organizations and unrelated partnerships who the organization engages in activities with
Nonprofit Organization Accounting
Retaining the services of an accounting firm for your organization is the best option for ensuring that you are in compliance with state and federal statutes. The Cook CPA Group can help your nonprofit organization in a variety of ways including:
- Audit preparation
- IRS Form 990
- Reviews, audits and compilations
- Preparation of financial statements
- Analyze accounts
Maintaining and growing a nonprofit organization has its own unique set of challenge. Cook CPA Group understands the intricacies and nuances of the laws and regulations that govern nonprofit organizations. Our goal is to use our expertise and technology to help you secure funding and grow your business. Whether you are interested in forming a nonprofit organization, or you simply need advisement on staying current with your accounting practices, Cook CPA Group is here to help. Let us handle your finances so you can focus on your mission and growth.
Sacramento and Roseville Accounting Services for Nonprofit Organizations
If you are part of a nonprofit organization that needs assistance from a talented group of CPAs, look no further than Cook CPA Group. We provide accounting services to existing nonprofits in an effort to further their goals and missions. Cook CPA Group also assists businesses who are trying to secure funding and new businesses who are trying to apply for tax exemption status. To learn more about our financial services in the Sacramento and Roseville areas, call Cook CPA Group at (916) 724-1665. We will not charge a fee for your initial consultation, and your information will be kept confidential. Learn more about us, and let us help your business prosper.