Hughey's Debits & Credits: Bookkeeping. Payroll. Taxes.

All posts tagged Nonprofit

Gavel (1)As a nonprofit organization, you have the option to take advantage of your state’s tax exemption status for sales taxes. This exemption will allow your organization to not have to pay sales taxes on purchases. This is a great way to save on the almost 10% sales tax here in Tennessee. However, are you or your staff guilty of tax evasion?

As an accountant, I am often making purchases for our nonprofit clients. I have copies of all the necessary documents in order to save our clients sales taxes. Your organization may have staff such as Program Managers or Executive Directors that has an exemption card with their name on it because of their frequent purchases for the organization.  Over the years, we have encountered countless times where staff members have been using the agency’s tax exemption card to save money on personal purchases. However, this is illegal and unethical to use the agency’s tax exemption card for personal use. The consequences could be years in prison and large fines for the State of Tennessee in addition to possibly losing some of your civil rights, such as the right vote or carry a firearm.  Contact your state’s sales tax division to determine your state’s consequences. Read more

Chicken LittleIn smaller nonprofit organizations, outsourced accounting functions are normal because of fund restrictions. Did you hire Chicken Little as your accountant? Keep reading to find out if you did.

A nonprofit organization decided it was time to outsource their accounting and fiscal duties. Once they chose their accountant, a system was created. The director, John, would deliver the organization’s documents monthly to the accountant’s office and in return the accountant would prepare financial statements. One day, John received a letter from the Internal Revenue Service (IRS) stating that the nonprofit had not paid payroll taxes in several quarters. John contacted his accountant immediately to ask about the letter. The accountant said not to worry about it and that he would take care of it. Soon after, an IRS agent arrived to the nonprofit organization’s office asking why the payroll taxes had not been paid. Again, John called the accountant. Once the accountant heard John say that the IRS was at the agency, the accountant became Chicken Little and declined to speak to the IRS on behalf of John’s organization. John later found out that the accountant had not looked at the agency’s documents in months! The documents were in boxes in a corner! Sadly, the organization had been paying the accountant for over 2 years for a job that was not being performed which cost them thousands of dollars in penalties and interest! Read more

Time for ChangeThis is the time of the year for reflection and resolutions.  The beginning of a new year is a great time to make important changes and get a fresh start!  Have you taken a good look at your accounting practices lately?  So many people hit the gym this time of year, but what about your organization’s financial health?  You may need a fiscal health assessment.  It’s time to fix some common accounting mistakes NOW to start strong in 2016.

Top 3 mistakes we’re called in to fix at NonProfits:

We’re often hired to assist nonprofit organizations because of accounting mistakes within the organization.  Let’s shine a light on what we’ve learned from our experiences to help YOU avoid financial instability: Read more

W-2 Form
Have your employees started to ask “When will I receive my W-2?”

January is speeding by and you realize it’s nearly halfway through the month when that big question starts looming. Pretty soon, everyone will be seeking your immediate answer.  You may think to yourself “Didn’t we JUST ring in the new year?”  Yes, there’s one thing you can count on, everyone on your staff excited about an anticipated refund wants their W-2 FAST.

It’s time to get that important task off your plate and it’s best to start ASAP. Read more

 

Not everyone can be a financial expert, but board members should be inquisitive and keep an eye on these three areas to spot red flags:

  1. Dip in Cash Flow – Is this normal? Is this unexpected?
  2. Financial reports with unfavorable variances and deficits
  3. Increasing liabilities – Is this a trend or pattern?  Why are debts ballooning?

According to Kate Barr, the Executive Director of the Nonprofit Assistance Fund, “Boards pay too much attention to income statements and budgets, both short-term information, and not enough attention to the long-term perspective of balance sheets. Yellow flags are on the income statement. Red flags are on the balance sheet.” Read more

It’s the holiday season and the spirit of giving is heartwarming!  Now is the time to ask for that last contribution of the year!  If you haven’t asked, it is not too late!  Get those letters in the mail, hand signed by the Executive Director or Development Director.  Increase your donation chances by including a self addressed envelope.  

No time to print and send them out?  A nicely worded email outreach to your current donors and contacts is better than no communication at all.

Here’s a few tips on asking for a last minute donation:

  1. Don’t just ask, give a reason for your ask. Provide the reason why your organization should receive some of their holiday cheer.  
  2. Make it short and sweet. Your donors are probably getting bombarded with holiday emails from other sources so make it worth their while to open your email.
  3. Be sure to thank them in advance but most importantly after the donation. As a donor, I am always excited to receive a handwritten card to say thank you for my hard earned money. Wouldn’t you?

From our family to yours, warm wishes,
Ronda & Cortez Hughey

During year endNonProfits Review-Year End Checklist- Accounting-Nonprofits-Hugheys Debits & Credits, we all need help remembering what all is required of us or is it just me? This checklist is to help my fellow Nonprofit Accountants remember what’s needed to close out the year. Follow this checklist to save time so you can spend it with your family during the holidays!

 

We strive to make your life easier, so if you would like this checklist in PDF form, click hereContact us today to assist you with your Nonprofit needs.

-Ronda

 

When we work with our NonProfit clients, one of the biggest struggles they face is properly accounting for cost allocation. 

From staff to board members, we often find a lack of detail and planning when it comes to cost allocation. What you don’t know CAN indeed hurt your organization when it comes to State Agency approval.

Let’s talk about why you need to have a deep understanding of this process.  We never want an organization to lose their state funding, risking everything for lack of accountability.

Cost Allocation: What Does That Mean?

Cost allocation is an accounting method used to determine cost to cost objects. In nonprofit accounting, it is used to determine the percentage of shared items that should be billed to each program. Read more

Are You Giving Back? 3 Tips on How to Give While Protecting Your Budget

As we all give thanks for our loved ones and the blessings in our lives, we want to take a moment to give back by thanking our clients because we consider you family. The relationships we have developed are based on care, trust and dedication to growth.  We are so very thankful and wish you and your family success and well-being.

As we move into the season of joy, praise and giving, we leave you with three tips for navigating the holidays successfully: Read more

Employee or Contractor?

One of the largest expenses in your nonprofit is payroll and all that goes with it. In addition to payroll, you also have to pay payroll taxes, unemployment, leave, insurance benefits, and training.

On more than one occasion, a client has wanted to switch an employee to an independent contractor in order to save money. However, that decision is not mine or even yours to make. The Internal Revenue Service (IRS) determines the difference here in a more extensive definition while the Department of Labor only uses 6 determining factors here.

Like my clients, I am sure you do not have time to research the difference or read the monstrous qualifications detailed by the IRS. Therefore, I am going to give you my version of the difference in these top 3 points: Read more