From the beginning James Knutzen recognized that non-profits occupy a unique challenge, need, advice, and specialized attention to succeed with their stated mission.
The Forde Firm is proud to continue this tradition! Our staff has the experience with non-profits to advise and help guide their progress in an ever changing accounting environment. Housing organizations that exist as non-profits are generally highly government regulated and have specific government auditing, accounting and compliance requirements. These corporations serve specific demographic populations. The Forde Firm is an AICPA Not-for-Profit II certified CPA firm and specialize in the knowledge required to prepare not-for-profit audits, single audits, and to assist you in the HUD and RD requirements. We are experts in filing Forms 990 and 990-T with the IRS. We also have a certified Quickbooks Proadvisor on staff.
When you are starting a nonprofit, your passion can take you far in the opening process; however, you still have to have some items in place to meet the requirements of a charitable organization. There are many items to discuss but these 5 are critical.
The first step in beginning your nonprofit journey is to complete Form 1023 or 1023EZ. This form is required unless you are a church. It registers you with the IRS and gives you the tax-exempt status your donors will be looking for. Remember, this status is not only so your organization doesn’t pay taxes; it is also so you can receive donations that are deductible to you donors! Many donors are looking for that tax deduction. The form must be filed online via pay.gov on the IRS website but I recommend completing the form on paper first to make sure you have all of the information needed. https://www.irs.gov/forms-pubs/about-form-1023
If you are a Florida nonprofit you will need to register with the Department of Agriculture to legally solicit contributions. They have an online registration tool that is for charitable organizations, professional solicitors and professional fundraising consultants. Small charitable organizations can complete a small organization application if they have less than $25,000 in total revenue in the prior year; however, as soon as you cross that $25,000 threshold, you will need to register via the online registration. There is a great FAQ on the Department’s page that you should review as well. https://www.fdacs.gov/Business-Services/Solicitation-of-Contributions
It is critical that you understand that you will need to complete a version of form 990 and what each version requires. These forms now must be filed electronically. There is a 990N, which is for organizations with less than $50,000 in income in the year. The form 990EZ is for organizations with less than $200,000 in receipts and assets less than $500,000. The full form 990 and schedules is for everyone else. There are a few exceptions to the electronic filing requirement such as: a name change, a short period, that your 1023 application is pending or if the return was rejected and errors cannot be corrected.
Along with submitting your 1023 and your 990 you will describe your programs. It is critical that you tell your story on these forms with all of the passion and clarity that you can. Facts and data about number of clients served and impact are critical once you have the data. These forms are made public and are often a donor’s first source of information about your nonprofit. This article from the Journal of Accountancy has some great examples and details who your likely readers will be. https://www.journalofaccountancy.com/issues/2016/dec/irs-form-990-for-not-for-profits.html
Finally, while it isn’t fun, or program related, it is critical that you start with proper records retention. Keeping the right records and for the right period will allow you to support your Form 990 and allows you to gather the data that you need to tell your story effectively. The IRS requires that you keep specific items for between 3 and 7 years. The IRS has a publication with information about all types of compliance for charities. Records retention starts on page 14; however, I recommend reading the entire guide and asking your board to read the guide. https://www.irs.gov/pub/irs-pdf/p4221pc.pdf
There are so many resources available for nonprofit entities it is easy to get overwhelmed. I highly recommend connecting with a CPA who specializes in nonprofit accounting early in the set-up process and stay connected with them throughout your first several years. Not all CPAs specialize in nonprofit accounting, so it is important to make sure they work for enough organizations to have the needed expertise.