Tax Preparation – Beck & Company

Are You Feeling Overwhelmed Performing Accounting and Tax Service for Nonprofits?

Are you feeling just a little overwhelmed performing your own accounting and tax services for your nonprofit?

A Forbes survey found that 14% of nearly 3,000 people surveyed worldwide feel chronically overwhelmed. If you are, you’re not alone. Feeling overwhelmed is common today.

Oh, and by the way – the age bracket feeling the most overwhelm? Those 41-50 years old, or roughly, the age bracket for most senior nonprofit financial management types.

But it doesn’t have to be that way. We’re guessing you went into nonprofit financial management because you love finance, accounting, and the mission-driven culture of a nonprofit organization. You can rekindle that passion for your work again and manage that feeling of overwhelm with a few simple steps.

The Myth of Multi-Tasking

In the book “Scrum: The Art of Doing Twice the Work in Half the Time”, authors Jeff and J.J. Sutherland provide insight into why many people feel overwhelmed. They are trying to multi-task, thinking it boosts productivity. Their studies indicate the opposite.

A chart on page 91 provides statistics that indicate that as one’s attention is divided, productivity decreases. Working on two projects at once means a 20% loss in productivity due to switching gears; three projects at once, and you lose about 40% due to context switching. Context switching leads to feeling overwhelmed because the mind is never at rest, confident it can finish a project. It’s always jumping to the next open action item – which in turn makes you jumpy!

Accounting and tax service for nonprofit providers and nonprofit financial management professionals aren’t immune to this lost productivity. They may actually be at greater risk for lost productivity due to context switching due to the amount of concentration required to process accounting and financial data.

In addition to the focus needed to do your job, something is always clamoring for your attention. Messenger apps, emails, phone calls, colleagues dropping by your office – it’s a never-ending barrage of items competing for your attention.

Focus on One Thing at a Time

Multi-tasking doesn’t work. It’s a lie. So why do we buy into it?

We think it should work because, after all, if you’re busy working on seven tasks, that’s seven projects underway. However, time and time again, studies demonstrate that it is better to have one open task, complete it, then turn your attention to the next one.

Commit to single-tasking rather than multi-tasking. Turn off the television or music while you work. Shut down the instant messenger apps and sounds that ping and bong when emails arrive. Focus on one thing at a time.

Build a Set of Rules

Do you have an open-door policy? That’s a useful and common management technique. However, it can lead to people interrupting you and breaking your concentration. It is helpful to build out a set of rules and guidelines for your team so they know when they can interrupt you.

Some managers choose to post ‘office hours’ or leave their door open as a signal to their staff that they may interrupt them. Another technique is to use a shared calendar such as Google Calendar or an Office calendar and post your office hours there while blocking out time for work requiring deep concentration. Experiment to find the method that works the best for you.

Yes, You Can Turn Off Your Phone

Nearly everyone carries a cell phone today. It makes it convenient to call someone for a quick answer, dial AAA when your car breaks down, or find your coworker after hours. It can quickly turn into an invisible umbilical cord connecting you to the office 24/7. Cut the cord. Tell your coworkers you plan to switch your phone off at night and follow through. Make the hours after 7 p.m. or whatever time you choose “off limits” so you get some downtime.

You Have Permission to Take Vacation, Weekends Off, and Holidays

Nonprofit accounting and tax professionals often work long hours right before tax season. That may be inevitable. At other times of the year, those extra hours may be unnecessary. Take a vacation, weekends off, and holidays.

Workaholics are lauded in American culture, but they also get sicker faster and burn out. Don’t be a statistic. Close the office door, turn off your phone, and head to the beach or the mountains so you give your mind and body a rest. You’ll be better off for it, as will your nonprofit organization if you return refreshed.

Beck & Company

Beck & Company is an independent certified accounting firm offering accounting and tax service for nonprofits, nonprofit financial management, auditing services and more. Since 1987, we have helped many nonprofits in the Washington D.C. area and along the Eastern seaboard with their accounting and financial management needs. We provide audit, tax, accounting, and consulting service that addresses all aspects of a small to mid-sized nonprofit organization’s business. Contact us or call 703-834-0776 x8001.

Federal Tax Withholding Update

Beck & Company provides accounting and tax service for nonprofits, and as part of our services, we offer informative updates on IRS tax regulations. Updates from the IRS this year include a new W-4 form and a new withholding calculator. It is important for you to investigate these and other IRS updates and inform your nonprofit employees so that they can make informed judgments on their personal withholdings.

Withholding Changes and the New Calculator

The Tax Cuts and Jobs Act made significant changes to tax law including increasing standard deductions, increasing the child tax credit limit, removing personal exemptions, limiting or discontinuing certain deductions and changing the tax rates and brackets.

How do you know if you should double check your withholding? Anytime you have a major life change, such as marriage, divorce, widowhood, new children or similar changes in marital or family status, it is time for a withholding checkup.

Others who should check their withholding amounts by using the new IRS withholding calculator include:

Individuals with two or more jobs at the same time or who only work for part of the year.
Individuals with children who claim credits such as the Child Tax Credit.
Individuals who itemized deductions in 2017.
Individuals with high incomes and more complex tax returns.
Anyone who works more than one job.

There are certain instances when the withholding calculator may not be adequate to help you assess your taxes. In this case, you should speak with a tax advisor. Situations that may be too complex for the withholding calculator include people with capital gains, those who owe an alternative minimum tax, and self-employed people.

The new withholding calculator asks people to estimate how much they will make in 2018. It also asks questions about other items that may affect taxes. It’s easier to use if you have a recent pay stub handy. The information on your recent pay stub helps you determine how much you are currently withholding and any potential changes you may need to make in the current year.

Of course, the new IRS withholding calculator is only as accurate as the information that you enter. If you enter incorrect information, you won’t get accurate results. Use your best judgment and when in doubt, speak with your tax advisor or an accountant.

W4 Forms

IRS form W-4 helps your employer to withhold the proper amount of taxes from your pay. Nonprofits and those working for nonprofits must withhold and pay proper individual and employment taxes. Being a “not for profit” or having “tax exempt” status does not mean that employees are tax exempt or that an organization is exempt from reporting proper taxes. If a nonprofit has such a designation, it means that the organization does not to pay certain taxes. The people working for the nonprofit must still pay applicable employment taxes.

What to Do if Withhold Information Has Changed

If your withholding information has changed, it is time to update your W-4 information. Human resources managers should be ready to help employees update W-4 information and assist them with any questions they may have regarding the new tax law changes, withholding, and other payroll and personnel requests.

Anytime changes affect income taxes, it’s time to check your withholding. Checking your W4 now may save you from the inconvenience of under or over-paying employment taxes.

Beck & Company

Since 1987, we have helped many nonprofits in the Washington D.C. area and along the Eastern seaboard with their accounting and financial management needs. We provide audit, tax, accounting, and consulting service that addresses all aspects of a small to mid-sized nonprofit organization’s business. Contact us or call 703-834-0776 x8001.

Uh-Oh: What to Do If Your Organization Loses Tax Exempt Status

It’s with a sinking feeling that you learn your nonprofit’s tax exempt status has been denied. You’ve got two tasks before you now: figuring out how it happened so that you can prevent it from happening again in the future, and appealing the decision to get your nonprofit’s tax exempt status active again.

Tax-Exempt Status: What Does It Mean?

Non-profit status is granted to your organization by the state. It is a business designation, not a tax designation. Once your organization has non-profit status, you can then apply for tax-exempt status.

Reasons Why You Can Lose Tax Exempt Status

The IRS lists six reasons why you can lose your tax exempt status. These fall into the following categories:

Deriving private benefit from charitable activities: This is a big no-no with the government. As a nonprofit organization, the benefits derived from your organization must flow to the groups you say you serve. You shouldn’t personally profit from the activities or the organization.
Lobbying: Nonprofits must not engage in political lobbying.
Political activity: Nonprofits must also refrain from any other political activities.
Unrelated business income: Income that’s derived from avenues not directly related to your nonprofit’s mission or activities can also be cause for losing tax exempt status.
Failing to file an annual report: Even if your organization doesn’t have to pay an annual income tax, in order to maintain your tax exempt status, the government requires specific information be reported each year. Failure to file an annual report can be problematic because it contains much of the required information to maintain tax exempt status.
Deviating from tax-exempt purposes: An organization sets forth specific reasons why it should be tax-exempt. Deviating from these purposes, or changing too much of what it does, is another reason why it can lose tax-exempt status.

Regaining Tax Exempt Status

It goes without saying that losing your tax exempt status is a serious problem. It shows that someone in your organization isn’t filing the right documents or that the group has lost sight of its mission. It may be time to meet with your leadership team and make sure everyone is on the same page.

After the dust settles and you can figure out where the mistakes occurred that led to losing nonprofit status, it’s time to roll up your sleeves and regain your status.

The National Council on Nonprofits recommends that you consult the IRS’s publication, Revenue Procedure 2014-11, and consult with your accounting firm for help regaining your nonprofit status. You must also clearly communicate with your members and donors, who may worry that their donations or dues aren’t being used properly. Let them know what is going on and the steps you are taking to fix the problem.

Going forward, be sure to take the following steps to safeguard your nonprofit status:

Maintain accurate records in a central location, and update those records periodically.
File all paperwork at the state and federal levels by the due date. Leave nothing to chance. Make it a priority!
Screen all potential new projects according to the rubric of how well they meet your current mission. Be tough. If they don’t fit the mission, you may need to pass on them.
Make sure that no one at your organization derives monetary gain from their work at the organization. Make it clear as part of your HR policies that such actions aren’t tolerated.
Hire external counsel, such as a CPA firm, to review your annual reports and your record keeping. An annual audit conducted by a reputable firm is a necessity.

It can be disheartening to learn that your organization has lost its nonprofit status. Take steps to rectify the situation and prevent future problems, clearly communicate those steps to your constituents, and soon you should be back on track to serve the people or causes that need you the most.

Beck & Company Certified Public Accountants and Business Advisors

At Beck & Company, our team of certified public accountants can guide you on how to apply for and maintain your tax-exempt status. We provide auditing services, consulting, business advice, workshops, and seminars for the nonprofit world. For more information, contact us or call 703-834-0776.

Hints and Questions to Consider when Choosing a Tax Advisor

Finding the right tax advisor can have a significant impact on your organization. Working with the wrong advisor can lead to a litany of issues and hassles, resulting in additional work and unnecessary headache for your board of directors. However, finding a tax advisor that is the right fit for your organization can save you time, and ultimately – money.

Here at Beck and Company Certified Public Accountants and Business Advisors we are experienced and qualified to help your organization with their tax preparation and can offer further advice on securing a tax advisor as well. Learn more about our tax service offerings here.

Whether you choose a Beck and Company CPA or someone else to serve as your tax advisor, keep the following hints in mind when choosing the right tax preparer or advisor to do your taxes. Finding an advisor who is truly committed to your business success is absolutely paramount. Selecting the right advisor should be a process not unlike selecting a full-time employee who’s the right fit for your organization. These hints are intended to help you to secure the right person with the right intentions which will ultimately save you from major headaches down the road. With that in mind, consider the following:

Helpful Hints When Choosing a Tax Preparer/ Advisor

Use a reputable tax professional who signs the tax return and provides a copy.
Consider whether the individual or firm will be around to answer questions about the preparation of the tax return months, or even years, after the return has been filed.
Check the person’s credentials. Only attorneys, CPAs, and enrolled agents can represent taxpayers before the IRS in all matters, including audits, collection, and appeals. Other return preparers may only represent taxpayers for audits of returns they actually prepared.
Find out if the preparer is affiliated with a professional organization that provides its members with continuing education and resources that also holds them to a code of ethics.
Be cautious of tax preparers who claim they can obtain larger refunds than other preparers.

Don’t rely on these hints alone, you will also want to be sure to interact with and communicate with three or four options in tax advisors before making a final decision. When you interview, consider the following questions to ask. Their answers will offer guidance and insight into your ultimate tax advisor selection. In addition to these guiding questions that are found below, a few key qualities you should discuss during an interview are availability, qualifications and experience, client longevity, and price.

Questions to Ask when Choosing a Tax Advisor

What is the candidate’s educational background? Do they have an advanced degree?
What qualifications does the candidate have?
Do they have expertise in areas relevant to your organization?
How long has the candidate been doing tax advising?
Do they have any licenses? If so, which licenses do they have?
Will he or she provide at least three references of current clients?
Have they been cited by any professional or regulatory body for disciplinary reasons?
How and what do they charge? What fees will they charge?
Do they provide ongoing reviews and planning strategies for you?
Will they represent you if you are audited?
Are you comfortable with your prospective accountant/ tax advisor?

There is not a one-size fits all answer to the above questions. Rather, there will be a right answer for your unique situation and needs. The best advice we can offer is to be diligent about doing your research. This will provide you with the information you need to make an educated decision when it comes to choosing a tax advisor. For more information about the process or to find a tax advisor for your organization, contact us here at Beck and Company CPAs.

Preparing Your Nonprofit for Tax Season

The onset of Tax Season often creates stress and worry, particularly for nonprofit board members and responsible parties. The gathering of documentation, sorting through expenses and receipts, understanding tax laws and changes, etc. are reason enough for this anxiety. Particularly if there is disorganization or lackluster record keeping.

We understand that filing and preparing to file taxes can be challenging; that is why we’ve provided several tips to ease the burden of tax preparation and ensure that you make the April 15th deadline. Keep the following in mind as you prepare for tax season (and remember to practice your deep breathing):

Always separate personal and organizational expenses.
The Internal Revenue Service (IRS) keeps a close eye on personal expenses that could be claimed as organization expenses (such as using a vehicle for personal reasons). Protect yourself by maintaining separate bank accounts and credit cards for your expenses. Maintain good records to back up your claims. If the IRS does inquire about a particular expense, you will have the information you need to substantiate your claims.

Maintain good financial records year-round and research available deductions.
Proper record-keeping is crucial to ensuring that your taxes are filed accurately. Be diligent about maintaining your records all year so when it comes tax time, you have everything you need to file confidently. Make sure to save all essential paperwork that may be needed to back up deduction claims in the event of an audit. Remember that tax credits and deductions change each year, so be sure to stay up to date on the latest information.

Take advantage of the tax credits within the Affordable Care Act.
According to the Council of Nonprofits, your nonprofit organizations may be able to take advantage of the same tax credits as small business. This credit will cover up to 50% of the health premiums you pay to cover your employees.

Avoid common audit traps.
It’s important to know the red flags that may capture the IRS’ attention. The IRS commonly targets certain types of nonprofits for special scrutiny. In the past, these have included:

nonprofits that conduct gambling fundraisers
nonprofits engaged in joint ventures with for-profit companies
nonprofits that sponsor travel tours
credit counseling agencies
donor advised funds
hospitals
colleges and universities
community foundations
nonprofits engaging in political activities
student loan organizations, and
nonprofits that fail to file required IRS returns.

If your organization falls under one of these categories you will want to make sure that you have the evidence to back up your claims.

Here at Beck & Co. we understand that preparing your taxes can be daunting and overwhelming. In fact At Beck & Company we specialize in nonprofit accounting and auditing. If your organization could use some guidance in this area, let us help. We have a team of experienced accountants and CPA’s that can assist you in making sense of tax regulations and avoid common mistakes and audit traps. Contact us to learn more about these services and how we might be able to help.

New Tax Considerations for Nonprofit Special Events

Events such as annual galas, 5k run/walks, trips, and dinners are a great source of revenue for nonprofit organizations. They gather stakeholders and constituents together and give organizations an opportunity to showcase their charity or cause and invite others into investing in it. One thing to consider when hosting such events are the potential tax ramifications that go along with these types of events. With proper planning there is no need for alarm. Today we will look at some of these tax ramifications and ways you can ensure you’re covered.

A great place to begin is with an understanding of what exactly constitutes a fundraising event according to the IRS. According to their website, the IRS states that fundraising events are dinners, auctions, and other events conducted for the sole or primary purpose of raising funds.

Before you plan

Fundraising efforts are of course, an important part of any nonprofit organizations strategy. Particularly now, it is imperative to brush up on potential pitfalls from such events. Things like unrelated business income and its corresponding filings and taxes for such income. Additionally you will want to become well versed on Form 990, in particular Schedule G.

Oftentimes corporate sponsorships result in the most lucrative fundraising. However, when hosting an event where a corporate sponsorship receives promotion, that can be considered “advertising”, those dollars could be considered taxable. It is allowed at an event to display a sponsor’s logo, company name, provide an address, website and phone number, or list their product line. Should you advertise for them, (induce a product for purchase, offer discounts etc.), designate a sponsor as an exclusive provider, give a sponsor facilities, services, or other privileges, or grant exclusive or nonexclusive rights to the sponsor’s asset, then that could be considered advertising and is taxable.

Form 990 and Special Events

Another challenge when hosting special events is Form 990 and Schedule G. This is the supplemental information Regarding Fundraising or Gaming Activities. In the past, special events were reported on Form 990, Part 1, Line 9 in which a five-column reporting format was presented as an attached statement. However, the new Form 990, requires that any amount raised over $15,000 from a special event or gaming, or both, require reporting more information that was previously required. In some instances detailed reporting for the top two events specifically, as well as a collective report for all other fundraising events. Another change is they are asking for a breakout of amounts for cash prizes, non-cash prizes, facility rental costs, and other direct expenses for each event.

In addition, if you hold any sort of gaming event, think Bingo or Casino nights, the schedule G, Part III requires additional breakdowns for expenses and prizes. If this is the case and an event is categorized under the gaming definition, you will be asked to answer nine special, multi-part questions regarding the activity. These questions will include the name and compensation provided to the “gaming manager”.

Although these new rules and requirements are tricky and may seem overwhelming, it still remains true that this is a great time to host fundraising events. Don’t let these new regulations scare you from holding them. Rather, be prepared. Raising funds through these means can be fun, and the more creative and innovative you are the more funds you will likely raise. Ensure your safety by knowing the tax laws ahead of time or partner with someone who can help walk you through them.

At Beck & Company, Certified Public Accountants and Business Advisors, we are an accounting and consulting firm delivering specialized expertise, creative thinking, and unsurpassed service to ensure that our clients’ financial endeavors flourish.

Serving small and mid-sized organizations and individuals, we provide audit, tax, accounting, and consulting service that address all aspects of your business with one goal in mind – exceeding your expectations. We are able to do this by drawing on our combined business backgrounds and experience in public accounting to help you in virtually any area of your business. If you would like help walking through these new tax ramifications, contact us, today.

Tax Planning & Preparation Services

Beck & Company, Certified Public Accountants and Business Advisors is an independent certified public accounting firm serving the Greater Washington D. C. metropolitan area with clients also along the Eastern Seaboard. Our firm has been built upon a tradition of service, technical expertise, and creative thinking. Did you know that here at Beck & Company, Certified Public Accountants and Business Advisors, we provide audit, tax, accounting, nonprofit, and consulting services? Our goal is to help our clients’ financial endeavors flourish while exceeding their expectations. Our background and experience in public accounting and business allow us to offer qualified assistance in practically any area of your business. Over the past few weeks we have taken a deeper look into the services we provide so that you can take full advantage of our expertise, to help your organization meet its business and personal financial objectives. We have delved into the different client accounting, audit services, and nonprofit services offered here at Beck & Company, CPAS. In this article we want to highlight our Tax Planning and Preparation Services.

Whether you are an individual, partnership, corporation, or a not-for-profit organization, our experienced staff can develop tax strategies that take advantage of new tax laws and legislation. By seeking to provide individualized, quality tax services in a way that best suits your goals and vision for the future, Beck & Company can provide you with innovative tax solutions.

Our efficiency and cost-effectiveness are further strengthened by our use of computerized tax tools to support our staff, which can, in turn, yield tangible benefits to you. Beck & Company utilizes the latest in tax research tools.

We provide innovative tax compliance and consulting solutions utilizing automated tax tools to enhance our efficiency and cost-effectiveness for our clients, including:

Tax compliance and return preparation for individuals, corporations, partnerships and not-for-profit organizations
Tax planning and preparation to develop tax strategies that take advantage of new tax laws and legislation
Advising on the tax effects of buying/selling a business
Providing representation before taxing authorities as needed

We will help you realize your goals and achieve success through:

Investing in ongoing learning and education that keeps us current on regulations, standards and emerging issues that will help our clients maintain compliance, improve processes, and achieve their financial goals.
Uncompromising commitment to the highest standards of quality on every engagement and participation in the American Institute of Certified Public Accountants Quality Review Program that requires us to maintain quality control systems over our accounting and auditing practice.
Development of service methodologies that achieve the highest standards while maximizing efficiencies for our clients.
Ongoing communication between our staff and clients throughout each engagement to resolve issues as they are identified so we accomplish your financial goals in the timeline committed.
Creative and innovative approach to developing solutions for our clients based on our understanding of your unique circumstances, needs and objectives.
Team of experienced professionals with senior or owner involvement in all client engagements so you know you have direct access to specialized expertise on which you can rely and trust.

At Beck and Company, CPAS we’re different because we’ve been where you are – either in our professional experience in running our practice and business or we’ve seen situations similar to yours when working with clients much like you. Our broad base of managerial accounting and systems experience and our deep understanding of business process and technology enable us to apply knowledge from the past, together with up-to-date best practice know-how to help you solve your challenges and capitalize on the opportunities you face. Our creative and innovative team of experienced professionals with senior or owner involvement in all client engagements ensures you know you have direct access to specialized expertise on which you can rely and trust.

Important Tax Forms to Complete this Summer

It isn’t just April 15th that is an important date for taxes. There are deadlines for various forms and tax documents throughout the entire year that individuals and businesses need to be aware of. For this upcoming summer in particular, you will need to be aware of two important forms and due dates. These are the Foreign Bank and Financial Accounts (FBAR) forms that are due on June 30, 2015, and the Form 5500 series returns for employee benefit plans for calendar year employers that are due on July 31, 2015. Let’s take a closer look at what these forms are and what they involve. Most of all, be sure to keep the important filing deadlines in mind.

Report of Foreign Bank and Financial Accounts (FBAR)

If you, as a United States person, had interest in a foreign financial account or signature authority over a foreign financial account (including bank or brokerage accounts, mutual funds, trusts, and other foreign financial accounts) at any time during the last calendar year, you likely are required to file the FBAR. A United States person includes U.S. citizens, U.S. residents, entities, and trusts/estates formed under United States laws. According to regulations, if the aggregate value of all foreign financial accounts exceeds $10,000 at any time during the calendar year, you must file an FBAR. For FBAR filing purposes, even an LLC is required to file an FBAR report with interest in or signature authority over a foreign financial account. Please note that you may be required to report even if your foreign account did not generate any income.

The FBAR must be filed electronically with FinCEN. This form is not filed with income tax returns and must be RECEIVED by the Department of the Treasury on or before June 30th. No extensions are granted for the FBAR, and postmarks are not considered evidence of timely filing.

Form 5500 Series Returns for Employee Benefit Plans

The Internal Revenue Service (IRS), the Department of Labor (DOL) Employee Benefits Security Administration (EBSA), and the Pension Benefit Guaranty Corporation jointly require nearly all employee benefit plans to file some version (Form 5500, Form 5500-SF, Form 5500-EZ, etc.) of the Form 5500 report each year for employee benefit plans. This satisfies annual reporting requirements. This form reports profit sharing or money purchase pension plans, individual 401(k), and ERISA 403(b) plans. The version of the form that must be completed depends on the number of plan participants and the type of plan. These forms are the annual returns/reports of employee or small employee benefit plan forms. The return must be filed with the EBSA by the last day of the seventh month after the end of the plan year that began in 2014. For calendar year plans, this year’s filing due date is July 31, 2015.

Beck and Company Certified Public Accountants and Business Advisors know that tax documents and forms such as the FBAR and the Form 5500 are certainly complicated and can be confusing. It can even be tricky to know if they are required to be filed and which version needs to be filed, if required. The good news is that you don’t have to figure this all out alone. Beck and Company CPAs offer a large variety of tax services including tax planning and preparation to meet your needs. For more information about our tax consulting services, visit here.

Contact us here at Beck and Company CPAs if we can be of assistance to you or help you as you fill out these summer tax forms. We are happy to answer questions you may have about the forms and filing as well.

Form 990: What Nonprofit Key Constituents Need to Know

As a key constituent at your nonprofit, protecting yourself and your organization is no easy task, and inaccurate tax preparation and filings on forms such as the Form 990 are one way that your organization can easily be in trouble. The good news is that you don’t have to figure it all out alone. Beck and Company’s Certified Public Accountants and Business Advisors are trained in these areas and are here to help. Our tax services are designed to help you file all of your nonprofit-related forms with peace of mind.

Last week, we took a look at how Form 990s are often misunderstood or not sufficiently understood, what risks these misunderstandings could create, the importance of seeking professional help in filing Form 990s, and what Form 990s include. To learn more about the Form 990 and what you need to know on general terms, visit here.

By now, it should be clear that protecting yourself and others from penalties is important, but how do you ensure that this happens (in addition to the help you receive from a professional CPA)? How do you actually know what must be filed on Form 990 returns? The following information will help you to be informed when it comes to filing Form 990s and all of their nuances. The questions below are meant to assist you with any future tax compliance filings and the process of informing and education boards and management teams alike. All key constituents (officers, directors, trustees, key employees, management, presidents, board members, etc.) should be sufficiently informed to be able to answer these questions.

Do all members of the governing body of your organization have a complete copy of the Form 990 that is supplied prior to filing?
Did your organization become aware of or engage in any excess benefit transactions in the past tax year?
Did your organization have any receivables from or payables to key constituents recorded on its financial statements?
Was any grant or assistance given to any of these key constituents or their families by the organization?
Was your organization a party to a business transaction with any of these current or past key constituents, employees, or their family members?
Do any donor-advised funds, where the right to advice on distribution or use of funds/accounts was granted, exist?
Did your organization hold assets in endowments of any kind?
Has your organization had any international financial accounts?
Did any key constituent have a relationship (familial or business) with any other key constituent?
Have substantial and significant changes been made during the tax year to governing documents?
Is a written conflict of interest policy in place that requires annual interest disclosure that could give rise to conflicts? If so, was this monitored and enforced regularly and with compliance?
Does your organization have written policies for: whistleblowing, document retention, and document destruction?
Does compensation determination follow a review and approval procedure with sufficient data and deliberation before a decision is reached? (A review of Form 990, Part VII is highly recommended.)
Does your organization have an audit, review, and compilation committee responsible for oversight of financial statements and independent accountant selection?
Is a gift acceptance policy used for non-standard contributions?

If key constituents can answer these questions, they will be on the right track to completing the Form 990 or reviewing it with sufficient information to avoid penalties and give accurate reporting information. With some education, information, and review, you can save your organization from lots of headaches and potential disaster in the eyes of the public, press, and IRS. Don’t leave your key constituents uninformed.

Beck and Company CPAs would like to assist any key constituent with filing the Form 990. Contact us to get the nonprofit tax assistance you need to be successful at tax time.

Form 990: An Overview for Nonprofits

With tax time looming, tax forms and reporting are likely on your mind to some extent by now and will become even more prevalent in the next few weeks and months. Tax reporting issues can be costly in many ways, both financially and to the future health or even existence of tax-exempt and nonprofit organizations. Over the years, Beck and Company’s Certified Public Accountants and Business Advisors have seen that many nonprofits and their boards are not as aware as they should be of what data and information is expected to be reported and needs to be reported on Form 990 returns. Without proper understanding of this information, there is also a risk of not being aware of the penalties that are possible to incur if these Form 990 forms are filed late, are inaccurate, or are left incomplete.

As a member of the board of directors, a trustee, or a staff member of a nonprofit, it is your duty and responsibility to review the Form 990 sufficiently to help protect both yourself and your organization from penalties. Although not an IRS requirement, it is certainly a best practice and strongly encouraged that boards review Form 990 information. By submitting proper information in a timely manner, you offer three forms of protection. You protect your organization from losing its exempt status. You also protect the organization from incurring potential financial penalties. Finally, you protect board members from the possibility of owing money personally from personal penalties.

Beck and Company’s Certified Public Accountants and Business Advisors understand that these forms are confusing, complicated, and overwhelming. Not only that, but it is difficult for those of you working at nonprofit organizations, who should be focused on the important work and mission of the organization, to truly understand them and what is expected on them. The intricacies necessitate trained professionals who are well versed in the forms and understand the legalities and complexities well. As you can see, inaccuracies can be costly to your organization’s future, but you don’t have to worry about those if you solicit the help of a professional tax advisor. Learn more about Beck and Company CPA’s tax services and the ways we can help you so your tax preparation and filing are done correctly.

Now that you understand that Form 990s and other tax forms are often misunderstood or not understood by boards and nonprofit staff members, that there are risks to inaccurately filing Form 990s but also ways to protect yourself, and that a professional tax advisor or Certified Public Accountant (CPA) is likely a necessity in helping taxes get filed properly, let’s take a quick look at a general overview of Form 990 including what it is, when it needs to be filed, and what is included on the form.

What is the Form 990?

The IRS Form 990, officially referred to as the “Return of Organization Exempt from Income Tax,” is the tax document that tax-exempt, nonprofit organizations file each year with the IRS. The Form 990 allows the IRS and the public to evaluate nonprofits and how they operate.

The Form 990 requires disclosure of potential conflicts of interest, compensation of board members and staff, and other details having to do with financial accountability and avoidance of fraud.

When do you file the Form 990?

Your filing depends on your fiscal year end date. You are required to file by the 15^th day of the 5^th month after your fiscal year period ends.

What information is required on the Form 990?

Besides general contact information, the form includes a Statement of Program Service Accomplishments, a Checklist of Required Schedules, Statements regarding other IRS Filings and Tax Compliance, Governance, Management, and Disclosure information, Compensation figures, a Statement of Revenue, a Statement of Functional Expenses, a Balance sheet, Reconciliation of Net Assets, Financial Statements and Reporting.

Next week, we will take a closer look at what key constituents truly need to understand and know about Form 990 information that is filed so they can differentiate that from what they can leave to the professionals. Beck and Company CPAs would like to assist you and your organization in filling out the Form 990. Contact our CPAs today to get the nonprofit tax assistance you need.