Accounting Procedures For Non Profit Organizations

By Author: Verna Derosier
Total Articles: 5
Comment this article

Even though your goals and intentions are probably upright and noble in having a non profit organization, you can find yourself with the Internal Revenue Service, a member of your own organization or the public, if you cannot handle and maintain proper accounting processes. Unfamiliarity on basic accounting is not an excuse just because you are running a non profit organization. You have to protect your organization and yourself through smart accounting procedures.

As the owner of a non profit organization, you have to be registered with the Internal Revenue Service as a recognized organization. This spares the organization from income taxation, but does not provide exemption from filing taxations, if you fail to file taxes at both state and federal levels, you may not find yourself facing tax bills with penalties and interests assessed on you organization.

Another thing to consider is to have proper accounting of all monetary values that comes into the organization and its purpose. The law states that any organization acquiring revenue from public support must maintain its accounting books showing what and how ...
... much revenues are generated.

Further cataloging of revenues, as a part of procedures for accounting for non profit organization, engages in generation of revenues from exempt-purpose actions. These are the activities defined in the mission of the organization as registered with the Internal Revenue Service. If your organization's mission changes, you must update the Internal Revenue Service of your new mission to properly account your revenues. You must also catalog revenues that come from other resources, such as fundraising activities, membership fees and investments. Investors and sponsors must receive tax receipt in the amount of the donation.

For all the monetary values that come in, it is a must to have accurate accounting for non profit organizations. The Internal Revenue Service has specific regulations about how many fundraising activities an organization is allowed to hold, in regard with the amount of activities they offer based on their mission statement. This aspect will be a part of your accounting and historical documentation.

Also a must in accounting for non profit organizations, you must keep track of the difference in expenditures, salaries, fundraising and other activity costs, and all other expenses. For any non profit organization, the money that goes out should be chiefly spent on activities with a small percentage, which is ten percent spent on the cost of running and managing the organization.