Financial Best Financial Best Practices Practices 2009 Leadership Conference October 30, 2009 Harrisburg, PA
Feb 03, 2016
Financial Best PracticesFinancial Best Practices
2009 Leadership Conference
October 30, 2009
Harrisburg, PA
Financial Best Practices 2008 2
Not-for-Profit vs. Tax Not-for-Profit vs. Tax ExemptExempt
• Not-for-Profit = no net proceeds to individuals in control
• Tax Exempt designation by IRS– Twenty-five possible classifications
• 501(c)(3) – Charities• 501(c)(6) – Business leagues (professional associations)
• May still owe some taxes on unrelated business income
• File IRS Form 1024 to obtain status
Financial Best Practices 2008 3
Incorporate or Not?Incorporate or Not?
• Limited liability
• Incorporation governed by State Law
• Unincorporated professional association
Financial Best Practices 2008 4
Employer Identification Employer Identification Number (EIN)Number (EIN)
• Tax Identification Number for non-persons (associations, corporations, etc.)– 25-1542364
• File Form SS-4 with IRS to obtain
• Form W-9
Financial Best Practices 2008 5
Form W-9Form W-9
Financial Best Practices 2008 6
Liability InsuranceLiability Insurance
• Errors & Omissions (E&O) liability insurance – protects volunteer leaders
• Incorporation is a prerequisite to obtaining E&O insurance
• SHRM endorses
Financial Best Practices 2008 7
Accounting & FinanceAccounting & Finance
• Cash basis or Accrual basis– Cash basis is most common
• Fiscal year = Calendar year?
• Document, Document, Document
Financial Best Practices 2008 8
Financial StatementsFinancial Statements
• Statement of Financial Position (Balance Sheet)
• Statement of Activity (Income Statement)– SFAS 116
• Deals with contributions, particularly restricted funds• Example: Scholarship donations
– SFAS 117• Deals with presentation, particularly for restricted funds• Also requires a functional allocation of expenses
• Budget
Financial Best Practices 2008 9
Accounting SystemsAccounting Systems
• Quicken
• Microsoft Money
• Several on-line systems available for small non-profits
Financial Best Practices 2008 10
ControlsControls
• Approval of disbursements
• One or two signatures on checks?
• Reconcile bank statements regularly
• Audit annually
Financial Best Practices 2008 11
Tax FilingTax Filing
• Federal– Gross Receipts < $25K – not required– $25K <= Gross Receipts <$100K –
Form 990EZ– $100K <= Gross Receipts – Form 990
• Pennsylvania – BCO 10 & BCO 23
Financial Best Practices 2008 12
Tax FilingTax Filing
• www.Efile.form990.org– On line expert system for filing federal and
state forms– Like TaxCut or TurboTax– Free if gross revenue is less than $100,000
• There are many other free, on-line systems for filing Form 990. Look on the IRS website (www.irs.gov) for a list
Financial Best Practices 2008 13
Tax FilingTax Filing
• Form 1099 Misc to individuals if– Paid >= $600, and– A person (not a corporation)
• Payroll (if employees)– FITW– FICA OASDI– FICA HI
– SITW– UI– Local Withholding