Some Non-Profit Accounting Guidelines

I recently spoke to the director of a non-profit agency which was involved in some lobbying activities.  It caused me to wonder how many non-profits know what the guidelines are on that issue.  It is important to know the rules for non-profit accounting.  Albuquerque has many non-profits that I believe could benefit from the following synopsis.

The tax code makes a differentiation between political and legislative activities.  Political activities involve such actions as endorsing candidates.  501(c)(3) organizations are strictly prohibited from participating in political activities if they wish to maintain their tax-exempt status.  Legislative activities, however, are permitted with certain limitations.  These include activities such as lobbying and asking the public to support or oppose certain legislative measures.  An organization can participate in educational activities without falling subject to the legislative limits, as long as no particular legislation is being discussed.  Other types of 501 organizations, which are not 501(c )(3) organizations, do not have limits on legislative activities as long as the activities are congruent to the purposes of the organization.

If the legislative activity limits are exceeded, an organization may be liable for an excise tax of 5% of the lobbying expenditures, and, if the limits are exceeded by 150% or more, may have their tax-exempt status revoked.  Most 501 (c )(3)s, barring churches and private foundations, have the option of using an expense-based limitation.  The limitation varies depending on the total amount of expenditures.  The limits are 20% up to the first $500,000 of expenditures, then 15% up to the next $500,000, after that, 10% up to the next $500,000, and 5% on any amount above that.

This is, of course, a brief synopsis of the issue.  For more help on making sure your organization is in compliance with IRS rules in any area of accounting, Albuquerque firm Hinkle + Landers is a great resource.

Hinkle + Landers, PC, one of the leading Albuquerque CPAs and accounting firms, stays up to date on news that has an impact the accounting industry and our community.  The previous is a blog by Sara Heppler a Staff Accountant of Hinkle + Landers, PC related to the political and legislative activities of non-profits.

Firm Profile:  Hinkle + Landers, CPAs is one of Albuquerque New Mexico’s leading accounting firms.  Hinkle + Landers, CPAs has been operating for over 40 years in Albuquerque as well as all parts of New Mexico.  Hinkle + Landers, CPAs also provides audit, fraud and forensic accounting services as well as tax preparation

Tax Preparation - Top 5 Items Your Accountant Needs

Hinkle + Landers is a small business, so we know how stressful tax preparation can be. Trying to sort through all the receipts and remember everything from the year before can bring on headaches. There are 5 main items that we recommend preparing before you give your CPA all your receipts and logs for taxes.  These items will make the whole process smoother on both you and your accountant.

1. Financial Statements — Preparing a basic set of financial statements, including the balance sheet, income statement, and cash flow statement, ahead of time will help your accountant understand what happened with your business during the year.    

2. List of Capital Asset Activity — If, during the year, you bought, sold or retired any capital assets, you will need to account for it in your tax return. You will need to prepare a list of those capital asset changes, so your accountant can properly account for it in your tax return.  Most of the time the software you use for your business, can easily print out the activity that took place in your capital asset account(s).

3. Vehicle Log — We get a lot of questions regarding vehicles, and when a vehicle is used for personal and business purposes.  When you used your vehicles for business purposes, you can claim a portion of the vehicle’s expenses as a tax deduction on your business income.  This deduction can be calculated by two different methods, which your accountant can help you with.  For both methods, you need to keep track of your business miles that are driven each year.  You can do this by creating a log.  Then when your accountant begins working on your tax return, you can give the log to your accountant.

4. Summary of Home-Office Expenses — When you have your office in your house, and you regularly meet your clients there, you can claim some of your home/office expenses as business expenses.  Your accountant can help you with the calculations of determining how your home expenses are broken out into business expenses. You should talk to your accountant early in order to find out what your accountant will need regarding receipts, or other documents.

5. 1098 Forms for Mortgage Interest and Property Taxes — If you have an office in your home that is used as your primary place of business, you will need to provide the 1098 form that you received from your mortgage company, to your accountant.  This way your accountant can take into account any deduction related to your home office being your primary place of business.  Also, your accountant can claim the mortgage-interest deduction that you are entitled to as a homeowner on your personal tax return.

Firm Profile:  Hinkle + Landers, CPAs is one of Albuquerque New Mexico’s leading accounting firms.  Hinkle + Landers, CPAs has been operating for over 40 years in Albuquerque as well as all parts of New Mexico.  Hinkle + Landers, CPAs also provides audit, fraud and forensic accounting services as well as tax preparation, and bookkeeping in Albuquerque New Mexico.

2014 Non-Profit of the Year - Accounting Clients

Each year Albuquerque Business First, hosts an event for non-profit of the year, last year Hinkle + Landers was one of the sponsors of this award and this year they are excited to be the main sponsor for 2014.   Hinkle + Landers invited all of their non-profit accounting business clients to submit their entry for this prestigious award.

All applications will be evaluated on mission, innovation, impact and sustainability. The types of outstanding non-profit accounting businesses that will be considered are those that represent the arts, culture and humanities; crisis resources; education; environment and animals; family services; health and human services; and public and societal benefit.

Those selected as honorees will be celebrated at the event on September 18^th and in a Business First special publication in September 2014.  You can find more information about this event at AlbuquerqueBusinessFirst.com/events.

There are 32 submissions this year and Farley Vener, President of Hinkle + Landers, is currently reviewing all information to be submitted to the panel of judges.  Judging begun Monday July 14^th.  Hinkle + Landers believes in and appreciates non-profit organizations who serve New Mexico and they are excited to find out who will be the new 2014 Non-Profit of the Year!

Hinkle + Landers is very proud to serve their clients and provide them with solutions they need to gain financial stability and ultimately reach their goals.  As a local New Mexico CPA firm they appreciate helping other New Mexicans, especially in the difficult economic times. 

Hinkle + Landers has been working with non-profit accounting businesses in Albuquerque and throughout New Mexico for over 40 years.  Hinkle + Landers specialize in audit, tax, fraud examination and business consulting and serve non-profits local and state governments, small businesses, and health care organizations. 

    

New Single Audit Circular

New Single Audit Circular

Hinkle + Landers, PC, one of the leading Albuquerque CPA and Audit firms, stays up to date on news that has an impact on the accounting industry and our community.  The following is a blog by Maclen Enriquez, an Audit Manager of Hinkle + Landers, PC related to the new single audit OMB Circular which relates to non-profit accounting, non-profit organizations, state and local governmental accounting, and state and local governmental audits.The Office of Management and Budget (OMB) recently published its Super Circular in the Federal Register. The circular makes several changes, summarized below, to the guidance previously known as Circular A-133. These changes will apply to audits of fiscal years beginning on or after December 26, 2014 (fiscal years ending December 31, 2015).

The most significant change is the consolidation of eight circulars into one conformed set of cost principles and one conformed set of administrative requirements.

Also, the threshold for the need for a single audit will increase from $500,000 to $750,000.

In addition, the threshold separating Type A and Type B programs will increase from $300,000 to $750,000.

Furthermore, the percent of coverage will change from 25% to 20% for low risk auditees, and from 50% to 40% for auditees not considered low-risk.

The data collection form was also revised during 2013. The updated version is now available for submission. The data collection must include the following:

·      Financial Statement(s)

·      Schedule of Expenditures of Federal awards

·      Summary Schedule of Prior Audit Findings

·      Opinion on Financial Statements

·      Report on Internal Control - GAS

·      Report on Compliance - GAS

·      Report on Internal Control- A-133

·      Report on Compliance - A-133

·      Schedule of Findings and Questioned Costs

·      Corrective Action Plan (if findings)

·      Opinion or Disclaimer of Opinion on Schedule of Federal Awards

Firm Profile:  Hinkle + Landers, CPAs is one of Albuquerque New Mexico’s leading accounting firms.  Hinkle + Landers, CPAs has been operating for over 40 years in Albuquerque as well as all parts of New Mexico.  Hinkle + Landers, CPAs also provides audit, fraud and forensic accounting services as well as tax preparation, bookkeeping and elder care in Albuquerque New Mexico