Not-for-profit organizations are compelled by federal and state wage-and-hours laws to perform a certain amount of time tracking. Funders may also stipulate timekeeping practices. Fortunately, timekeeping software can make the job a lot easier for staffers and managers. Here’s how to ensure your nonprofit complies.
If you’re thinking about setting up a retirement plan for yourself and your employees, but you’re worried about the financial commitment and administrative burdens involved, there are a couple of options to consider. Let’s take a look at a “simplified employee pension” (SEP) or a “savings incentive match plan for employees” (SIMPLE).
Once you file your 2022 tax return, you may wonder what personal tax papers you can throw away and how long you should retain certain records. You may have to produce those records if the IRS audits your return or seeks to assess tax.
It’s a good idea to keep the actual returns indefinitely. But what about supporting records such as receipts and canceled checks? In general, except in cases of fraud or substantial understatement of income, the IRS can only assess tax within three years after the return for that year was filed (or three years after the return was due). For example, if you filed your 2019 tax return by its original due date of April 15, 2020, the IRS has until April 15, 2023, to assess a tax deficiency against you. If you file late, the IRS generally has three years from the date you filed.
Despite recent accusations that the IRS targets certain types of tax-exempt organizations for audit, not-for-profit audits generally are rare. That’s because most nonprofits owe no or very little tax. However, as the IRS receives funding as part of the Inflation Reduction Act, it’s expected to hire new agents for all divisions, including the Tax Exempt and Government Entities Division. So nonprofit compliance checks and audits potentially could become more common.
What should you do if your nonprofit hears from the IRS?
Summer is around the corner so you may be thinking about hiring young people at your small business. At the same time, you may have children looking to earn extra spending money. You can save family income and payroll taxes by putting your child on the payroll. It’s a win-win!
Here are four tax advantages.
If you’re an art collector, you may wonder about the tax breaks available for donating a work of art to charity. Several different tax rules may come into play in connection with such contributions.
Basic rules
Your deduction for a charitable contribution of art is subject to be reduced if the charity’s use of it is unrelated to the purpose or function that’s the basis for its qualification as a tax-exempt organization. The reduction equals the amount of capital gain you would have realized had you sold the property instead of giving it to charity.
To control your not-for-profit’s expenses and improve operating efficiency, you need to keep an eye on the numbers. This should come as no surprise. But which measures are important? Which ratios can help you identify how much currently goes toward programming (as opposed to administration), how much you spend on fundraising (compared to funds raised) and how much your nonprofit needs in operating reserves?
If you’re starting a business with some partners and wondering what type of entity to form, an S corporation may be the most suitable form of business for your new venture. Here are some of the reasons why.
A big benefit of an S corporation over a partnership is that as S corporation shareholders, you won’t be personally liable for corporate debts. In order to receive this protection, it’s important that:
When preparing your tax return, we’ll check one of the following statuses: Single, married filing jointly, married filing separately, head of household or qualifying widow(er). Filing a return as a head of household is more favorable than filing as a single taxpayer.
For example, the 2023 standard deduction for a single taxpayer is $13,850 while it’s $20,800 for a head of household taxpayer. To be eligible, you must maintain a household, which for more than half the year, is the principal home of a “qualifying child” or other relative of yours whom you can claim as a dependent.
According to the Association of Certified Fraud Examiners (ACFE), not-for-profit organizations make up 9% of all defrauded organizations. Such attacks — and losses — can be enough to destroy a nonprofit. Although the best defense against fraud is a strong offense in the form of internal controls, you should also have a recovery plan should fraud occur. Here are some best practices to consider.