What to Know about CPAs for Non-profit Organizations
As a non-profit organization, you may be scratching your head and wondering if you need a CPA to work for you. Well, it really depends. You may be able to get away without the help of a CPA, but if you’re having a tough time staying on top of your finances, you may need one! Apart from that, CPAs alone can offer a ton of benefits for your non-profit organization just as they would for a for-profit business.
That said, if you’re curious to know what CPA for non-profits is all about, let’s talk about non-profit accounting:
What Is Non-profit Accounting All About?
Non-profit accounting is all about keeping track of the financial resources and expenditures of a non-profit organization. This includes recording and reporting on all donations, grants, and other forms of income, as well as tracking expenses related to running the organization. Non-profit accounting also involves preparing financial statements and tax filings.
What’s the Importance of Non-profit Accounting?
Non-profit accounting is important because it provides transparency into how a non-profit is using its resources. This helps donors and other interested parties make informed decisions about whether or not to support the organization. Non-profit accounting also helps to ensure that the organization is complying with all applicable laws and regulations.
Concepts to Understand about Non-profit Accounting
There are a few key concepts that are important to understand in non-profit accounting. These include:
1. Fund Accounting
This is a special type of accounting that is used by non-profit organizations. Fund accounting tracks resources by their source, or “fund.” This is different from traditional accounting, which tracks resources by their function or department.
2. Expense Classification
Non-profit organizations must track their expenses in a way that allows them to show how they are using their resources to further their mission. This means that expenses must be classified according to their purpose. For example, expenses related to program activities would be classified differently than those related to fundraising.
3. Financial Statements
Non-profit organizations must prepare financial statements that show their income and expenses, as well as their assets and liabilities. These statements are used by the organization to track its financial health and performance.
4. Tax Filings
Non-profit organizations are exempt from paying federal and state taxes. However, they must still file annual tax returns. These tax returns provide information about the organization’s finances to the IRS.
Non-profit accounting can seem like a lot to keep track of. However, it is an important part of running a non-profit organization. By understanding the key concepts and keeping accurate records, non-profits can ensure that they are using their resources effectively and in compliance with the law.
Do I Need a CPA for My Non-profit Business?
So, are you wondering if you need a CPA for your non-profit? The answer to this question depends on a number of factors, including the size and complexity of your organization, your financial needs, and your goals for the future.
If you have a small non-profit with simple financial needs, you may not need to hire a CPA. However, if your organization is growing and you need help with financial planning and management, hiring a CPA can be a wise decision. CPAs can provide valuable advice on a variety of topics, including bookkeeping, tax planning, and financial reporting.
If you are considering hiring a CPA, be sure to interview several candidates to find the right fit for your organization. Ask each CPA you interview about their experience working with non-profits, their fees, and their availability. Once you’ve found a CPA you’re comfortable with, develop a working relationship with them to ensure your organization’s financial success.
All in all, CPAs play a huge role in non-profit and for-profit organizations. Whether they’re your staff member or outsourced help, they’ll ensure that your organization stays afloat financially, keeping you on top of your taxes, making the most out of each dollar, and so much more! So, if you do not have a CPA working for you just yet, find one today and reap the benefits.
Ash CPA offers trusted CPA accounting and tax services in Framingham. If you are looking for CPAs for non-profits, work with us today!