Accounting Pitfalls – 11 Your Nonprofit Ought to Stay clear of
Accounting Pitfalls – 11 Your Nonprofit Should really Stay clear of
All board users are liable for making certain that your nonprofit is in compliance with state, federal, and global restrictions and rules. Several boards select accountants as their Treasurers and they defer entirely to the accountant’s judgment in all places of finance. This is wonderful for the bookkeeping that you want but there may be some unique features of the nonprofit entire world with which your Treasurer is not acquainted.
Make guaranteed that this record of probable accounting pitfalls receives to your board Treasurer. Or, far better yet, give it to the Finance Committee and make it element of the committee’s Annual Motion Plan to make sure that you have not fallen into just one of these pitfalls.
Start these days and check with the Finance Committee to evaluate this list of probable pitfalls. Request a Finance Committee presentation at your upcoming board meeting that evaluations each individual item on the checklist, discusses its applicability to your business, and acknowledges that you are in compliance with the acceptable state, federal, and international legislation.
Below are 11 Accounting Pitfalls you want to prevent:
1. Inadequate books and data
2. Incomplete or Incorrect Federal Tax Return (Type 990)
3. Failure to report modifications in officers or operations to the IRS
4. Managing workers as Unbiased Contractors
5. Non-compliance with state-unique Solicitation of Contributions (donations)
-a. original software and once-a-year submission to state officials
-b. donors receipts and proper disclosure statements
-c. http://www.nasconet.org and click on on US Charity Offices to discover your state regulator
6. Failure to complete (federal) Community Inspection Prerequisites
-a. yearly self-examination
-b. 33 1/3 % or extra will come from general public cash
-c. no single sourcing of income
7. Failure to heed audit charges or no audits
8. Failure to comply with Lobbying Regulations
9. Improper Allocation of Revenue and Expenditures among routines
10. Failure to take into account UBIT (Unrelated Business Profits Tax) -ex. Hospice sells clothes (involves paying out federal tax on earnings)
11. Difficulties relating to similar entities or joint ventures