Happy holidays to our friends and clients in the nonprofit sector! As another year draws to an end, we’re sharing our blog’s greatest hits of 2021. Each of these blog posts were written by one of our talented team members, drawing on their combined decades of nonprofit-specific accounting experience.
We’re proud to offer these blog posts as a free resource for nonprofit organizations. Just as our team is continually learning and growing in our service to nonprofit organizations, we hope you’ve all learned something new this year too!
Top Blog Posts of 2021
Internal Controls for Electronic Payments
Electronic payments have many benefits: they are faster and cheaper than checks, they can’t get “lost in the mail,” and they can be processed remotely – a crucial part of the pandemic working environment. But switching from paper checks to ACH payments can sometimes cause a breakdown in an organization’s internal controls. The systems that you have in place to prevent check fraud may need to be adjusted for electronic transactions.
Employee Retention Credit and Other Credits for Nonprofit Organizations
To assist our nonprofit clients, Altruic Advisors has compiled some helpful information on the Employee Retention Credit (ERC), which includes the Notice 2021-20 guidance released by the IRS on March 1, 2021. This new guidance clarifies how and when employers who received a PPP loan can also claim the Employee Retention Credit, and what is required to substantiate that claim.
Preparing To File Your Form 990
The Form 990 filing deadline for not-for-profit organizations is the 15th day of the 5th month following the end of the organization’s fiscal year. For organizations that operate on a calendar year, this means your Form 990 is normally due on May 15. If your fiscal year ends on June 30, your Form 990 would be due on November 15. While the preparation of your Form 990 is often best left to a CPA or accounting professional, there are many things that your organization can do to get ready for your Form 990 and help things go more smoothly for your tax preparer.
Nonprofit Income: Revenue, Support, and Other Changes
On nonprofit financial statements, there are three different types of income that should be considered: revenue, support, and other changes. While these terms may sound interchangeable, they are actually quite different and it’s important to use the correct language in defining them.
501(c)(3) Organizations: How Do They Differ From Other Types of Nonprofit Organizations?
While the most common type of nonprofit organization is a 501(c)(3), other types of nonprofit organizations include those that are defined under section 501(c)(4) – advocacy and social welfare organizations; 501(c)(5) – labor unions and agricultural organizations; and 501(c)(6) – business leagues such as chambers of commerce and real estate boards.
Accounts Payable in a Paperless World
While some organizations still prefer the “old fashioned” way – paper bills, paper checks, pens and rubber stamps – more and more organizations are switching to a paperless AP system. Paperless systems provide convenience and time savings, as well as additional transparency and security. But even the best paperless AP platforms can run into problems if you’re not following proper fiscal guidelines for Accounts Payable.
Your Public Support Calculation: What It Is and Why It Matters
There are many specific requirements that a nonprofit organization must fulfil to be considered a public charity and tax-exempt under section 501(c)(3). One important requirement that can easily be overlooked is ensuring that your organization receives funding from a diverse pool of donors. This is what makes your organization “publicly supported.” To be considered a public charity, at least one-third (33.3%) of your support must be the result of contributions from the general public.
Managing Charitable Solicitation Registrations and Renewals
In the United States, different states have different laws regulating the solicitation of funds for charitable purposes. These laws typically require nonprofit organizations (with some exceptions) to register with a state agency before soliciting donations or contributions from the residents of that state. Currently, 37 states and Washington D.C. require charitable solicitation registration and renewals.
Does A Nonprofit Pay Payroll Taxes?
Unlike many areas of nonprofit operations, payroll is one area where nonprofit and for-profit organizations are subject to very similar regulations. Just like for-profit businesses, a not-for-profit organization must register for employer accounts, withhold the necessary payroll taxes, file returns and remit taxes.