Nonprofits are an important segment of Nashville’s economy. According to a report, there are over 10,950 nonprofits in Metro Nashville, employing more than 130,000 people and earning over $19 billion in revenue each year.
If there’s a cause that you strongly support, such as those related to the arts and music industry or addressing homelessness, healthcare, the environment, and other local or global issues, setting up a nonprofit is a good way to create solutions and bring attention to your ideals.
In creating and running a nonprofit, you will need the assistance and services of a Nashville CPA. A nonprofit is unique from regular business types as its primary goal is not to earn income for its owners but to build, disburse, and use its funds to achieve its stated goals. As such, it is covered by complex regulations that are best addressed with the help of experienced and knowledgeable professionals like a CPA.
Here are some of the most essential things a CPA can do for your nonprofit organization.
An accountant helps develop a solid financial plan for a nonprofit. They assess the organization’s funding needs, create budgets, and forecast future income and expenses. This planning ensures that the nonprofit has a clear financial roadmap to achieve its mission and objectives.
Incorporation and Tax Exemption
Your CPA can assist with the incorporation process of your nonprofit, ensuring that all legal and regulatory requirements are met. They will help prepare the necessary documents and applications for tax-exempt status, such as filing for 501(c)(3) status—a step vital for nonprofits to receive tax benefits and solicit tax-deductible donations.
Financial Systems and Policies
Your accountant can help establish robust financial systems and policies, including accounting procedures, internal controls, and financial reporting structures. These systems ensure transparency, accuracy, and accountability in financial operations, which are crucial for maintaining public trust and complying with regulatory standards.
Bookkeeping and Record Keeping
Accountants are responsible for maintaining accurate and up-to-date financial records for the nonprofit. They record all financial transactions, including income, expenses, donations, and grants. By keeping meticulous records, your CPA can provide a clear financial trail and enable accurate reporting for donors and regulatory authorities.
Financial Reporting, Compliance, and Auditing
Your CPA will generate regular financial reports, including income statements, balance sheets, and cash flow statements, which provide insights into your nonprofit’s financial health and allow stakeholders to make informed decisions. The CPA will also ensure compliance with financial reporting requirements set by the IRS for nonprofits, and coordinate any needed external audit to review your organization’s financial statements and internal controls.
Grant and Funding Management
CPAs play a significant role in managing grants and other funding sources for the nonprofit. They track the utilization of funds, prepare financial reports for donors and grantors, and ensure compliance with specific grant requirements. This involvement helps maintain positive relationships with donors and supports future fundraising efforts.
Whatever cause you choose to support with a nonprofit, you can maximize your contribution with a well-run and professionally managed organization. Your CPA plays a vital role in ensuring the success of your endeavor.