6 Essential Financial Considerations for Nonprofit Startups

January 27, 2015
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Launching a new nonprofit organization? Many financial management and accounting issues differ from for-profit ventures.

MST blog 0115 02 image 1The unique controls and standards that apply to nonprofit organizations, from community and charitable organizations to trade associations, religious organizations, and more, are complex. Enlisting the early assistance of a professional accounting firm with extensive experience in nonprofit financial issues is the best safeguard against mistakes that can create insurmountable problems for any nonprofit organization.

While you’ll eventually be handling most of the regular workflow on your own, proper planning in the initial stages and continuing professional assistance are essential in these areas, among others:

  • Establishment of Best Financial Management Practices – By creating a business plan prior to the launch of a new nonprofit corporation, a professional accounting firm can help you get off to the right start. It is crucial that you create systems and procedures that meet legal requirements and provide accurate financial information.
  • Preparation of Exempt Status Applications – IRS Form 1023 is an essential step in creating a tax-exempt corporation. Proper preparation of this form involves many steps, and is tied to the establishment of policies and creation of supporting documentation. Experienced professional assistance can ensure accuracy and completeness.
  • Regular Oversight Reviews and Audits – Careful monitoring and auditing of financial and accounting processes are essential in many ways. Establishment of a regular schedule of reviews, reports, and audits helps to keep your board of directors and management informed about all aspects of its financial health and activities.
  • Preparation of Required Returns – From IRS forms 990 and 990-T to a broad range of other federal, state, and local filings, every nonprofit corporation is responsible for accurate and timely filing of these complex forms, annually and at other intervals. By assigning these tasks to a trusted accounting firm, your organization is assured of compliance and accuracy.
  • Establishing Internal Control Systems – Safeguarding your corporation against improper financial actions is essential. Each year, reported and unreported embezzlement and misuse of funds occur frequently in the nonprofit sector. Professional creation of control procedures helps prevent and detect such issues.
  • MST blog 0115 02 image 2Ongoing Consultation Services – A professional financial management firm with specific nonprofit experience can assist the board of directors and audit committee in many ways, both at start-up and throughout every year of operation. With expert advice and assistance for all financial issues, management can focus on achieving goals.

Confidence in Financial Management for Nonprofit Corporation Is Crucial

The founders and boards of directors of every newly-created nonprofit corporation begin with the expectation of achieving success in a specific area of service. Proper financial management is a major factor in that success, but its complexity often distracts from the attention required to meet the organization’s goals.

Moore Stevens Tiller offers time-tested experience in this complex sector, and can help put systems in place to ensure that financial issues are properly managed, giving you the freedom to concentrate on your primary priorities.

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