Category Archives: Non-Profit Accounting

FASB’s New Standard Aims to Improve Not-for-Profit Financial Reporting

In August, 2016, the Financial Accounting Standards Board (FASB) launched new reporting standards for Non-for-Profit Entities that will be effective for 2018 calendar year-ends or 2019 fiscal year ends. It is important to be familiar with the requirements ahead of time, but we are not recommending early-adoption, since you have to implement the entire standard.  Please call Schutte & Hilgendorf, CPAs with questions about the new standard and implementation.

Click on the link for a summary of the requirements:

 

New Non-for-Profit Reporting Standards

 

Schutte & Hilgendorf offers a broad range of professional accounting, tax, and audit services to individuals and businesses throughout Yavapai County and Northern Arizona.   With over 40 years combined certified public accounting experience, we specialize in providing services to numerous industry specific areas, including non-profit organizations, homeowner’s associations and construction contracting.  We also provide tax planning and preparation, sales tax and payroll tax return preparation, ongoing accounting/bookkeeping, live payroll, and QuickBooks setup and training (QuickBooks Proadvisors).  Given our small size, we can still provide a personal touch with professional expertise. Come in and see us anytime at 2086 Willow Creek Road, Prescott, Arizona or call us at 928-778-0079.


Volunteers for Charities – Tax Tips

If you volunteer for a charitable organization and you itemize your deductions, here are some tips to keep in mind:

  • Keep track of your mileage, date, and purpose of the trip.  The IRS allows you to deduct 14 cents per mile.
  • You can also deduct parking fees if applicable.
  • There are also deductions for other expenses incurred while volunteering such as the cost of stamps for a fund-raising mailing, or ingredients for making cookies for a bake sale fund raiser or for your religious organization.

 

If you have any questions about this or any other tax questions, please give us a call at 928-778-0079.

 

Schutte & Hilgendorf is a leading Prescott CPA firm, offering superior client service to individuals, small businesses, non-profit organizations, and homeowners associations.

Our services include accounting, bookkeeping, audit, review, tax return preparation, tax planning, payroll and QuickBooks consulting. We are located in Prescott and serve all of Yavapai County, and Northern Arizona.


Non-Profit Guidance for New DOL Overtime Rules

There has been an important update on the new DOL Overtime Rules that were set to go into effect on December 1st. Yesterday a U.S. District Judge issued an injunction against the new rules. This means that the new overtime rules will not go into effect on December 1st. The injunction stops implementation or enforcement of the new  rules until further action is taken by the Department of Labor, most likely through appealing the ruling. At this point it is uncertain when, if ever, the new rules will go into effect.

 

We will keep you apprised of any new developments. Please check our website as well for any updates. Contact us if you have any questions about how this will affect your business.

 

Many of our clients have asked for information pertaining to the new Department of Labor rules for overtime, especially as they pertain to the not-for-profits.  The link below takes you directly to Q&A excepts from the Department of Labor’s webinar for the not-for-profit sector.

 

https://www.dol.gov/whd/overtime/final2016/webinarfaq_np.htm

 

Even if a non-profit only engages in non-commercial, charitable operations, the Individual Coverage test may apply to specific employees because of their duties.

 

Examples:

Q1:  How does an employer handle an employee who works part time doing business enterprise and part time charitable enterprise? Is overtime only required when an employee passes 40 hours of enterprise work in a week?

 

A1:  There are two ways that an individual employee may be covered under the Fair Labor Standards Act (FLSA) and entitled to its protections: individual coverage and enterprise coverage.

 

A nonprofit organization is not considered a covered enterprise under the FLSA unless it engages in ordinary commercial activities that result in sales made or business done that meets the $500,000 threshold. If an nonprofit meets this threshold, its employees are covered by the FLSA and entitled to overtime for work performed over 40 hours a week regardless of how the employee spends their time.

 

Even if a nonprofit organization is not covered on an enterprise basis as described above, it may have individual employees who are covered individually and therefore are entitled to the FLSA’s protections. An employee who engages in interstate commerce or in the production of goods for interstate commerce or in the protection of goods for interstate commerce is covered by the FLSA and is entitled to overtime pay for time worked over 40 hours in a week.

 

Q2:  So we have a Special events position that makes donation requests to sell at our annual basket auction fundraiser. If any of those requests will be made or received from across state lines she would be individually covered even if we don’t earn $500,000 in sales revenue as an agency? She would be covered because of the Individual test?

 

A:  Generally, employees who make phone calls across state lines are individually covered under the Fair Labor Standard Act (FLSA). For further assistance with coverage principles under the FLSA, please refer to Fact Sheet #14 at:

 

https://www.dol.gov/whd/regs/compliance/whdfs14.pdf

 

or contact your nearest WHD district office at:

 

https://www.dol.gov/whd/america2.htm

 

 

We also found this article, provided by the National Council of Non-Profits to be informative:

 

https://www.councilofnonprofits.org/trends-policy-issues/overtime-regulations-and-the-impact-nonprofits

 

As always, please don’t hesitate to call us at 928-778-0079 with your specific questions about these rules and how they apply to your Organization.

 

Schutte & Hilgendorf is a leading Prescott CPA firm, offering superior client service to individuals, small businesses, non-profit organizations, and homeowners associations.

Our services include accounting, bookkeeping, audit, review, tax return preparation, tax planning, payroll and QuickBooks consulting. We are located in Prescott and serve all of Yavapai County, and Northern Arizona.


Overtime rules for Business Owners

There has been an important update on the new DOL Overtime Rules that were set to go into effect on December 1st. Yesterday a U.S. District Judge issued an injunction against the new rules. This means that the new overtime rules will not go into effect on December 1st. The injunction stops implementation or enforcement of the new  rules until further action is taken by the Department of Labor, most likely through appealing the ruling. At this point it is uncertain when, if ever, the new rules will go into effect.

We will keep you apprised of any new developments. Please check our website as well for any updates. Contact us if you have any questions about how this will affect your business.

Since the release of the new overtime regulations from the Department of Labor, we have received many questions from our business clients. One reoccurring question we would like to address is how/if the new overtime rules will affect the business owner’s salary. An employee who owns at least 20 percent equity interest in the enterprise in which they are employed and who is actively engaged in its management is not subject to the salary level requirements of the overtime regulations. This rule applies to LLCs, Partnerships, S Corporations, Corporations or any other entity type. Because of this, the final rules recently released should not have an effect on business owners who own 20 percent or more of their company. Any owners who own under 20 percent would have to apply the standard overtime tests and requirements. If you have any questions about your specific situation, please give us a call at 928-778-0079.

 

Schutte & Hilgendorf is a leading Prescott CPA firm, offering superior client service to individuals, small businesses, non-profit organizations, and homeowners associations.

Our services include accounting, bookkeeping, audit, review, tax return preparation, tax planning, payroll and QuickBooks consulting. We are located in Prescott and serve all of Yavapai County, and Northern Arizona.


Mandatory Rules for Overtime Pay Have Changed

There has been an important update on the new DOL Overtime Rules that were set to go into effect on December 1st. Yesterday a U.S. District Judge issued an injunction against the new rules. This means that the new overtime rules will not go into effect on December 1st. The injunction stops implementation or enforcement of the new  rules until further action is taken by the Department of Labor, most likely through appealing the ruling. At this point it is uncertain when, if ever, the new rules will go into effect.

We will keep you apprised of any new developments. Please check our website as well for any updates. Contact us if you have any questions about how this will affect your business.

On May 18, 2016, President Obama finalized the Department of Labor’s new rule updating regulations regarding overtime compensation for salaried employees. Starting December 1, 2016 any salaried employee paid under $47,476 must be paid overtime for working more than 40 hours in a week. Non-discretionary bonuses and incentive payments can be included, up to 10%, in the salary calculation. Please contact us if you have any questions or see the link below for more information from the Department of Labor.

 

https://www.dol.gov/whd/overtime/final2016/index.htm

 

If you have additional questions about this post or any other, please contact us directly at 928-778-0079.

Schutte & Hilgendorf is a leading Prescott CPA firm, offering superior client service to individuals, small businesses, non-profit organizations, and homeowners associations.

Our services include accounting, bookkeeping, audit, review, tax return preparation, tax planning, payroll and QuickBooks consulting. We are located in Prescott and serve all of Yavapai County, and Northern Arizona.


Tax-Exempt Church Schools – Frequently Asked Questions

As we enter tax season, important questions that have been in the back of our minds for the past year float to the surface.  Attached is an article from the American Institute of Certified Public Accountants (AICPA) addressing frequently asked questions regarding Tax-Exempt Church Schools that we would like to share with our clients.  As the season progresses, we will share these frequently asked about topics and other important accounting and tax issues as they arise, so stay tuned…..

Tax Exempt Church Schools FAQs

If you have additional questions about this post or any other, please contact us directly at 928-778-0079.

Schutte & Hilgendorf is a leading Prescott CPA firm, offering superior client service to individuals, small businesses, non-profit organizations, and homeowners associations.

Our services include accounting, bookkeeping, audit, review, tax return preparation, tax planning, payroll and QuickBooks consulting.  We are located in Prescott and serve all of Yavapai County, and Northern Arizona.


Charitable Solicitations – What is Required in Arizona and Other States

We have been asked by our clients where to locate information regarding laws for charitable solicitations in Arizona and other states.  Laws regulating the solicitation of funds can vary from state to state.  The IRS provides some basic information with links to other resources to answer these state by state questions. 

 

See the link below for specific information on these requirements.

 

IRS Information for Charitable Solicitations

 

If you have additional questions about this post or any other, please contact us directly at 928-778-0079.

Schutte & Hilgendorf is a leading Prescott CPA firm, offering superior client service to individuals, small businesses, non-profit organizations, and homeowners associations.

Our services include accounting, bookkeeping, audit, review, tax return preparation, tax planning, payroll and QuickBooks consulting.  We are located in Prescott and serve all of Yavapai County, and Northern Arizona.


Non-Cash Contributions – Have your Documentation

From Western CPE

eTax Alert™

 

Court Shows No Charity in Disallowing $37,315 of Non-cash Contributions (Kenneth Kunkel, TCM 2015-71)

Kenneth and Susan Kunkel claimed a $37,315 charitable deduction for non-cash contributions on their 2011 tax return. The Kunkels claimed to have donated property to four organizations: their church, Goodwill, Purple Heart, and Vietnam Veterans. They had no receipts, photos, or other documentation for the contributions, but claimed that they didn’t need receipts because each donation was less than $250.

What documentation is required?

$250 or more. For all contributions of $250 or more, the taxpayer generally must obtain a contemporaneous written acknowledgment from the donee (§170(f)(8)).

Less than $250. “Separate contributions of less than $250 are not subject to the requirements of Subscribe Share Past Issues Translate §170(f)(8), regardless of whether the sum of the contributions made by a taxpayer to a donee organization during a taxable year equals $250 or more” (§1.170A-13(f)(1)).

$500 or more. Additional substantiation requirements are imposed for contributions of property with a claimed value exceeding $500 (§170(f)(11)(B)).

More than $5,000. Still more rigorous substantiation requirements, including the need for a “qualified appraisal,” are imposed for contributions of property with a claimed value exceeding $5,000 (§170(f)(11)(C). “Similar items of property” must be aggregated in determining whether gifts exceed the $500 and $5,000 thresholds (§170(f)(11)(F)).

What are “similar items?” The term “similar items of property” is defined as “property of the same generic category or type,” such as clothing, jewelry, furniture, electronic equipment, household appliances, or kitchenware (§1.170A-13(c)(7)(iii)).

The court categorized similar items from Kunkel’s list of non-cash items.

Clothing – $21,920
Books – $8,000
Furniture – $3,090
Household items – $1,653
Toys – $1,072
Telescopes – $800
Jewelry – $780

No appraisals and no receipts equal no deduction.
Clearly the clothing and book donations exceeded the $5,000 value and required appraisals to properly substantiate the deduction. All other categories exceeded $250 and required receipts. The court agreed with the IRS’s disallowance of all non-cash contributions.

Tax practitioner idea. Claiming a $6,000 contribution of “household goods” would require an appraisal. Claiming a $3,000 donation of furniture and a $3,000 donation of clothing would not. Categorize the donations carefully.

 

© Vern Hoven and Sharon Kreider 

Western CPE

If you have additional questions about this post or any other, please contact us directly at 928-778-0079.

Schutte & Hilgendorf is a leading Prescott CPA firm, offering superior client service to individuals, small businesses, non-profit organizations, and homeowners associations.

Our services include accounting, bookkeeping, audit, review, tax return preparation, tax planning, payroll and QuickBooks consulting.  We are located in Prescott and serve all of Yavapai County, and Northern Arizona.


Misclassifying Workers as Independent Contractors Can Be A Costly Mistake

Using independent contractors in your business can save money.  Independent contractors do not receive typical company benefits such as vacation, sick pay or health insurance/retirement benefits.  Plus, employers don’t pay social security taxes (FICA), or provide unemployment benefits. However, it is easy to blur the line between a true independent contractor and employee and the IRS is cracking down.

In order to be considered an independent contractor, a worker should meet certain criteria.  Control is one of the primary determinators.  What is your level of control over the worker?  An independent contractor determines how and when work will be performed whereas an employee’s work parameters are established by the employer.  For example, if you require a worker to attend regular meetings, work set hours and use specific materials and equipment, then in most cases that worker is an employee because you are exercising significant control over his/her job performance.

Other factors include such things as:

  • Working relationship. Does the worker have other clients with whom he works or does he work exclusively for you?  An independent contractor is in business for himself so he should have other clients or at least be in the market to acquire other business opportunities.
  • Work hours. An independent contractor should, in most cases be able to set his own work schedule. As long as the contractor meets the deadline established by the client, he can decide his own work schedule.
  • Work location. Generally, an independent contractor provides for his own work location, materials and equipment.  In other words, his primary office is not located at your company’s facility.
  • Expenses. Employees typically submit their work-related expenses to their employer for reimbursement. An independent contractor, however, generally absorbs expenses as part of the cost of doing business.
  • Taxes. An independent contractor pays his own taxes by filing quarterly estimated tax returns.  Your company does not withhold taxes.

If the IRS determines you have misclassified a worker as an independent contractor rather than an employee, get out your checkbook.  You may be charged for back taxes, interest and penalties.  In fact, there is even the possibility of criminal charges.  And in some cases the misclassified worker has been able to sue the employer for lost benefits during the time in which he should have been considered an employee.

The IRS has a set of guidelines an employer can use to determine the proper status of a worker.  If you are still uncertain, give us a call us.

While in the short-term, using independent contractors in your business may save you money, it could cost you significantly more in the long-term.  Make sure you make the right choice.

 

If you have additional questions about this post or any other, please contact us directly at 928-778-0079.

Schutte & Hilgendorf is a leading Prescott CPA firm, offering superior client service to individuals, small businesses, non-profit organizations, and homeowners associations.

Our services include accounting, bookkeeping, audit, review, tax return preparation, tax planning, payroll and QuickBooks consulting.  We are located in Prescott and serve all of Yavapai County, and Northern Arizona.


Document Retention and Destruction Policy

Many clients ask about record retention.  Click on the link below for a suggested record retention policy for non-profits, proposed by the AICPA.  It can be used by just about anyone that has business or non-profit organization records.

Not-for-Profit Document Retention Policy

If you have additional questions about this post or any other, please contact us directly at 928-778-0079.

Schutte & Hilgendorf is a leading Prescott CPA firm, offering superior client service to individuals, small businesses, non-profit organizations, and homeowners associations.

Our services include accounting, bookkeeping, audit, review, tax return preparation, tax planning, payroll and QuickBooks consulting.  We are located in Prescott and serve all of Yavapai County, and Northern Arizona.