AccountingX has been providing complete accounting services to nonprofit organizations across the U.S. for more than a decade. From youth organizations to churches to the chambers of commerce, nonprofit organizations make our cities more enjoyable and livable. Unlike for-profit businesses that generate profits for their owners, nonprofit organizations pursue missions that address different needs of our society.
When it comes to accounting and bookkeeping for nonprofit organizations, they require a completely different set of reporting and accounting functions that need to be addressed.
AccountingX specializes in the financial aspects of any nonprofit organization and therefore know exactly what is required by FASB (Financial Accounting Standards Board) and the financial statements required by US GAAP (U.S. Generally Accepted Accounting Principles).
Statement of Financial Position, statement of activities, statement of cash flows, and for some nonprofits, a statement of functional expenses are just a few of the US GAAP statements required. Knowing what subparts are reported as, and that expenses are reported by functions like; fundraising, program, management and general.
Some people assume that if an organization is a nonprofit, it legally cannot earn profits. In fact, having revenues that exceed expenses (earning profits) is somewhat a necessity if the nonprofit hopes to withstand things like uneven flows of revenue, rising costs due to inflation, purchase or replace equipment, unexpected expenses, a decrease in revenue can all require revenue that would exceed the organization’s expenses.
Nonprofit organizations can apply to be exempt from the IRS (Internal Revenue Service) so they do not have to be subject to federal income tax. There are some nonprofits that do qualify to be exempt but the contributions from their donors don’t qualify as charitable deductions but may qualify as business expenses. Some of these organizations would include social, sororities and fraternities, chambers of commerce, employee organizations, amateur sports clubs, and more.
A nonprofit that is exempt from federal taxes doesn’t mean that their employees are not subject to employment taxes and depending on which state the nonprofit operates or are incorporated in will determine if they are exempt from taxes like, sales tax, real estate tax and other types of taxes.