Whether your firm is a profit-making organization or non-profit making, you need an accounting specialist. But when it comes to NFP, the accounting specialists require to learn some different aspects. If you are planning to start your NFP then you have landed on the right page. Here, you can find the details of not for profit accounting specialists.
What are Non-Profit Organizations?
Any organization that is set up for society’s welfare by any means and any section of the community are known as not for profit organization. These organizations mostly run on charities. Some examples of Not-for-profit organizations are:
- Unincorporated association
- Charitable trust
- Charitable Incorporated Organization (CIO)
- A company limited by guarantee
- Charitable company
- Community Interest Company
- Community Benefit Society
- Cooperative Society
- Schools and colleges
If you are wondering that there is no sale, no profit-making, then why do you hire an account for your non-profit organization? Then here, we have listed the reasons why not for profit accounting specialists for such organizations:
- To Calculate the Rebates in Taxation: Not for profit accounting, specialists must adhere to different taxation concessions. At the same time, the commercial accountant would not be aware of these aspects. Commercial organizations are subject to much higher taxations depending on the nature of their business. In contrast, non-profit organizations have to show the government how much funding they have received in a financial year along with their expenses. As an owner of a nonprofit organization, you cannot invest your funds in a profit-making financial scheme. On the contrary to commercial organizations, both NFP’s and the donors get tax rebates. Calculating these rebates is a difficult job and it can only be done by an experienced account only.
- To Keep the Account of the Income & Expenses: All the non-profit organizations are not involved in selling any products and services like commercial companies. Yet, they need money to run their organization. This money is spent on the salaries of the staff, the board of directors, and the purpose these organizations are set up for. It is essential to keep a track record of income and expenses, and you need to hire an account for the same.
- Objectives or Organization & Standard of Accounting are Different: The non-profit making organizations’ objectives are much other than that of profit-making companies. The difference is so vast that if you try to keep the accounting method the same for NFP’s and it may create confusion. Thus, to maintain the records correctly, you must hire a not for profit accounting specialists.
- Weak Accounting can Ruin the Organization: If the accounting is weak, and there are loopholes, such companies slowly die. Inadequate accounting also opens up the chances of fraudulent activities. On the other hand, if you are looking for hiring not for profit accounting specialists, you would save yourself from financial problems. If the accounting records are not crystal clear, you can face legal issues with the state and local bodies. You may end up paying fines, or in worse cases getting your organization sealed due to false record-keeping.
These are a few reasons to hire not for profit accounting specialists. But when hiring an accountant for NFP, make sure that he is well qualified, experienced, and reliable. Not for profit accounting, specialists would be able to keep your accounts clear, and he will warn you if there is a situation of lack of funds. Thus, you would be able to plan your company’s future and implement some new strategies in your organization. So, if you own any type of nonprofit organization, you should hire an accountant.