Owning or operating a non-profit can be a rewarding experience. But, this experience can quickly turn sour if you are not financially savvy. Failing to be can result in costly fines, court proceedings and invasive audits. That’s why, all non-profits need to educate themselves on how to properly file taxes.
Despite the consequences, many non- profits remain unaware. Plus, there are many misconceptions surrounding taxes for non-profits. So, rather than remain unaware, this article will highlight all of the things that Florida non-profits need to know about tax planning for their organization.
May be Eligible for Benefits
One of the most important things that non-profits should know about taxes, is that they may be eligible for benefits. Benefits that the organizations may be eligible for could potentially come in the form of state sales, property taxes or income tax breaks.
However, it is important to note that these benefits are not automatically given to all non-profit organizations. This is especially true when it comes to federal income taxes. That’s because, in order for a non-profit to be exempt from taxes they will need to apply and receive recognition from the Internal Revenue Service.
Rather than risk the disappointment of mis-calculating the money your non-profit has to operate, you should be sure to confirm what benefits are available. To do this, try speaking to a financial advisor or lawyer to see about potential rebates which may give you more financial freedom to run the non-profit.
No Automatic Exemption from Federal Income Tax
As it was mentioned above, all non-profits are not automatically exempt from federal income taxes. This means, that all organizations will need to file, and go through the application process.
But, to go through the application process alone can be difficult. For this reason, it is best to contact a financial advisor or other professional who will be able to help you through the process and alleviate any worries you may have.
Otherwise, companies that misunderstand the steps of filing for exemption may be in for a costly surprise once they submit their taxes.
Filing for Exemption Rights is Lengthy
Another important factor that non-profits should educate themselves on is how long filing for tax exemption is. Overall, the process of filing, waiting and registering can last up to 27 months.
If a non-profit is not prepared to wait this time, it can have devastating results on the overall function of the company. That’s because, the organization will still be responsible for paying the full amount in federal income taxes while the application is being processed. So, if the organization isn’t financially prepared to cover these immediate costs, it can impact the function of the company.
Rather than risk the repercussions of being mis-informed, it is best to plan ahead and educate yourself on the process. Doing this, can help to make your non-profit financially savvy, and prepared during this long wait period.
Try Seeking Assistance
Another important detail that all non-profits should consider when educating themselves about taxes is that they should seek assistance. All organizations should try speaking to a professional. This professional can come in the form of a tax advisor, financial planner, lawyer or other.
Regardless of who it is you are speaking to, they will be able to help you through the process, and advice you of the documentation and forms you will need. Ultimately, resulting in a seamless process stress-free filing.
Maintain Your Records
The final thing that all non-profits should know when filing for taxes is to maintain detailed records of all of their financial documents. Doing this, will help to make filing much easier, and assist in situations where you may have to submit forms such as an audit. To do this, consider keeping hard copies, and digital files that have been backed up in an organized system.
Although filing for taxes as a non-profit can be an intimidating process, there are certain things that every organization can do. From seeking assistance, to maintaining records, and education; being informed is the first step for all. Rather than struggle to maintain your taxes this year, consider getting in touch with someone on our team who would be more than happy to help.
