September 2018 – Laurie Szilagyi, Principal
Bookkeeping and accounting are much more than posting bank deposits and debits to the check register. Today’s plethora of software options make tracking these easy to do, but there is more work to be done. After monthly bank reconciliations are completed, financial reports should be prepared and reviewed for accuracy. A chart of accounts designed with board reporting as well as annual filing in mind saves time in preparation of an annual return. Supporting documentation should be routinely filed, as well.
A balance sheet and income statement that conveys clear financial activity goes a long way. Handing off accurate financial reports to an accountant for preparation of the annual return can save money. Otherwise, you may end up paying a high rate for bookkeeping services provided by an accountant to bring your books up to date before preparing the annual return.
As you know, a tax-exempt organization is required to make annual tax returns publicly available. It is in the organization’s best interest to ensure accurate tax returns are filed, and that begins with well-maintained books.
If your organization’s books are not current, start working on them a few months before your annual filing deadline. The time it takes to bring books up to date is often under-estimated if they are not routinely maintained. Going forward, weekly and monthly bookkeeping makes annual return filing a lot less stressful.
Here are some good resources for nonprofits relative to financial tracking, activities that could put tax-exempt status in jeopardy, payroll and record-keeping. There is also good information on the various types of tax returns to assist in determining which one(s) are right for your organization.
Compliance Guide for Tax-Exempt Organizations (other than 501(c)(3):
https://www.irs.gov/pub/irs-pdf/p4221nc.pdf
Exempt Organizations – Required Filings:
https://www.irs.gov/charities-non-profits/exempt-organizations-required-filings
Life Cycle of a Public Charity:
https://www.irs.gov/charities-non-profits/charitable-organizations/life-cycle-of-a-public-charity
The Lexian Management newsletter is for informational purposes only.
Always consult your attorney, accountant, and/or insurance provider to obtain advice with respect to any particular issue or concern.