Keeping Up with IRS Requirements

The IRS requires a bit more of you, as a non-profit organization. Aside from your regular returns and/or employee taxes, you are required to file a form 990. This is essential to file every year, otherwise, you will end up with a not so friendly letter informing you that you will lose your non-profit status. Fortunately, this is a service that we can assist you with.

UBI: Unrelated Business Income

I know it can be confusing, you’re a non-profit, but chances are pretty high that you don’t completely understand UBI. The IRS has generated a three-step guide to determine if an activity may be considered unrelated business income:

  • “Is the activity a trade or business?”
  • “Is it regularly carried on?”
  • “Is it substantially unrelated to the exempt purpose of the organization?”

If you answered yes to all three of these, then it will be considered taxable income. We can also help you with the filing of these returns.

Documents: To Shred or Not to Shred?

Documents to always keep according to the IRS are your Articles of Incorporation, Form 1023, and your non-profit determination letter for your permanent records. Then keep tax returns for at least three years after you have filed them.

The IRS also suggests non-profit organizations keep four other types of financial records including all documents detailing: incoming funds, outgoing funds, employment taxes, and asset records, keeping each at least three years. Have a clearly labeled filing system that anyone who might be filing can understand quickly and easily. If you are in doubt about whether to keep it, just ask your accountants, we are here to help.

Inaccurate Record Keeping

In a study done in 2015, Accounting Errors in Nonprofit Organizations, the alarming fact was brought to light that non-profits are approximately 60% more likely to commit an error in accounting than a for-profit business. The majority of the errors were made in “recognizing transactions,” which, unfortunately, means that non-profit bookkeepers and/or accountants are either inexperienced, ill-trained, rushed, or just don’t care. This can be costly and time-consuming when it comes to amending records and tax filings.

We at Complete Tax and Notary offer Bookkeeping and Accounting services to go hand-in-hand with our Non-Profit services to ensure that your status remains non-profit. We urge you to contact us with any questions or concerns you may have regarding your non-profit organization and any general accounting or tax needs.