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Accounting 101 for Non Profits

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by

Mark Cerulla

on 19 September 2017

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Transcript of Accounting 101 for Non Profits

Statement of Financial Position
(Balance Sheet)
Statement of Financial Activities
(Income Statement)
Budgets
Final Budget

The Structure of a Non-Profit
Financial
Challenges?
Accounting Software
"This is how we always do it."
Unused reports...
Structure of a Non-Profit
Today's Topics
Building blocks of Accounting
Financial Statements
What is really important?
Statement of Cash Flow
Statement of Financial Position
( Balance Sheet )
Statement of Activities
( Income Statement )
100's / 1000's - Assets
200's / 2000's - Liabilities
300's / 3000's - Net Assets [Fund Balance]
400's / 4000's - Revenue - [Income]
500's / 5000's - 9000's - Expenses
Organize Accounts Properly
Ensure Accounts Reflect Transactions
Remove "Black Holes" - Miscellaneous Accounts
By: Mark J. Cerulla, CPA
Director of Operations / Comptroller
Method of Accounting
Cash Basis
Accrual Basis
Rename accounts that don't make sense
Group accounts when appropriate
Remove old, unused accounts
General Ledger
A s s e t s
Liabilities
Revenue
Expenses
Assets
Cash
Liabilities
Accounts Payable
Net Assets
Investments
Contribution Receivables
Fixed Assets
Deposits
Current Assets
Line of Credit
Current Portion of Mortgage
Note Payable
Mortgage
Current Liabilities
Unrestricted Funds
Temporary Restricted Funds
Permanently Restricted Funds
Double Entry Accounting
Change = $ 10,700
Net Income from the Income Statement
Revenue
Expenses
Revenue
Expenses
Employer Contributions
Program Revenue
Tuition / Textbooks
Grants
Investment Income
Contributions
(in-kind)
Program Expenses
General & Administrative
Net Income or Loss
2015 Net Assets - $472,500
2014 Net Assets - $461,800
How well does the organization manage their assets?
Operating Budget
Cash Budget
3 % Increase
Steps to forecasting
Start with the known
Move to fairly known
Less Certain
Unknown
Historical Analysis
Identify correlations / trends
# of Apprentices
2015 2014 Difference
Cash $ 115,300 $ 92,000 $ 23,300
Net Income 472,500 461,800 10,700
(Change Net Assets)
Net Income / (Loss)
Change in Cash
Questions?
Accounting 101
For Non-Profits
It is a tax exempt entity
Determined by the IRS
Exempt from Federal Income Taxes
501c(3) - Exempt from FUTA
IRS Determination Letter
501 (c) 5
501 (c) 3
501 (c) 5 - Organizations
Labor Organization
Contributions not tax deductible
Can be politically involved
501 (c) 3 - Organizations
Exclusively Educational
Contributions are tax deductible
No private benefits
No substantial attempt to influence legislation
Trust Agreement
Determination Letter [IRS]
By-Laws / Statement of Policy
Original Filing with IRS
Form 1023 / 1024
What are you required to file?
- Form 990
- Form 990T (UBIT)
- Form 941 (Quarterly)
- Form 940 [501c(5)]
Form 5500 - one time exemption
Why does the IRS care?
Med.
1.45%
6.2%
Soc. Sec.
E.R. Match
7.65%
Employee Withhold
10% to 39.5%
FUTA
Employee
Independent Contractor
Follow the Money
Where's it from?
Original Mission
Unrelated to original mission?
UBIT
Selling products to end users?
Collect State Sales / Use Tax
Money being spent on Mission
No private benefits
Can a Non-Profit (Tax-Exempt) Make Money?
You Better.
How much can we make?
Income relates to originally filed function
Look at Schedule A
on 990
"Reason for Public Charity Status"
Type of income / expenses change
Assets
Liabilities
Net Assets
Cash - $50,000
$ 0
$50,000
Laptops - $10,000
Cash - $48,000
Note - $8,000
Net Assets
$50,000
Payment

$250
A/P - $250
Note - ($200)
Interest
Expense
($50)
Depreciation Expense
(Accumulated
Depreciation)
Full transcript