Now that your nonprofit organization is approved by Google for a free enterprise account, what to do next?
Ten ideas are included in this article.
The next step may be to set up a Google Adwords account following these instructions.
I posted a comment to Wall Street Journal’s coverage FASB Updates Accounting Rules For Not-for-Profits
“The new accounting standards update makes it clear that this is the first update step in a planned two step process. On first reading of this update it would appear that the majority of the nation’s smaller non-profit organizations that have only one class of assets and issue financial statements on a basis of accounting where management elects to omit substantially all disclosures would be largely unaffected by these changes. From my perspective it seems like a lost opportunity to make a real difference in communicating to stakeholders. It would be great if the accounting profession could have an influence on the financial statement communications of these many smaller non-profit entities as well”.
This FASB announcement is the first update step in a planned two step process to update non-profit financial reporting standards.
Non-profit organizations are subject to the same substantiation requirements of business expenses as for-profit firms.
The problem with your deductible business expenses for travel, meals and entertainment is that you believe that you can support the tax deduction in an audit. The IRS knows that you can’t. As a result, tax professionals report that they are seeing more of these audits and are often unable to prevail on behalf of their client.
IRS regulations require a concurrent log containing specific information that most taxpayers do not have available. It is not permissible under the law to create these supporting documents later in the event of an audit. Taxpayers are often surprised to learn that the strict IRS-required documentation rules have been tested and upheld in tax court.
As a practical matter few of us have time to separately record details like who we were with and what was the business purpose of our activity each and every time we travel for business. More likely we say “I meet Bob every Monday morning over coffee to review sales of the past week”. Therein lies the problem. It makes sense. It is legitimate and fair business expense and certainly meets the ‘ordinary and necessary’ standard. Yet without a concurrent log, you cannot legally deduct the cost of your travel and coffee meeting.
This post skips the details of the tax requirements but I would be pleased to review them and help devise a personalized audit defense plan for your business.
This is a list of the information that you will want to have on hand before you start setting up an electronic accounting system for your small business or non-profit organization. The list may vary depending on the type of organization and legal setup.
|Company legal name and address|
|Federal EIN or social security number|
|Fiscal year dates|
|Name of the income tax form the client files|
|Accounting basis (cash or accrual)|
|Names, numbers, and descriptions for the chart of accounts (use the existing chart of accounts, if available)|
|Financial statements as of the end of the prior tax year|
|Trial balances as of the QuickBooks start date|
|List of department or location classifications (for the Class list)|
|Numbers and balances (from the start date through today) for the following types of accounts: bank, credit card, loan, and lines of credit|
|Value of assets (including original cost and accumulated depreciation for fixed assets)|
|Equity information including all owner’s contributions, plus retained earnings for each year the company has been operating|
|Customer numbering scheme|
|Information to complete the Customer list: names, addresses, contact information, taxable status, etc.|
|Customer payment terms|
|Customer shipping methods|
|Open balances or outstanding invoices as of the start date|
|Vendor numbering scheme|
|Information to complete the Vendor list: names, addresses, other contact information|
|List of 1099 vendors and their tax ID numbers|
|Vendor payment terms|
|List of outstanding bills as of the QuickBooks start date|
|List of all inventory, non-inventory, service, and other items to complete the Item list|
|Price list for all items|
|Inventory numbering scheme|
|Quantities on hand and values for inventory as of the start date|
|Desired reorder points for all inventory items|
|Taxable status for each item|
|List of states in which the company pays sales tax|
|Sales tax rates, sales tax agencies, and the sales tax liability as of the start date|
|Frequency of sales tax reporting (monthly, quarterly, annually)|
|Sales tax calculation basis (cash or accrual)|
|Type of sales (wholesale, retail, out of state)|
|Manufacturer’s part numbers for client’s vendors|
|Account used to track the asset|
|Purchase date, cost, and vendor|
|Description, location, and warranty information|
|Employee numbering scheme|
|Information to complete the Employee list: names, addresses, telephone numbers, social security numbers, etc.|
Assemble the following:
|YTD information for each employee as of the start date|
|Accrued benefits including sick and vacation time for each employee as of the start date|
|Earnings, additions, and deductions for payroll processing (SEP, union benefits, 401(k), reported tips, etc.|
|Employer federal, state, and local tax identification numbers|
|YTD payroll liability payments|
|Accounts receivable transactions|
|Accounts payable transactions|
|Historical payroll transactions|
|Bank and other transactions|