by Donya Curry | Jan 18, 2016 | Non Profits
I have met various non profits that didn’t know they can lose their tax exempt status. They were great at getting the non profit set up. Non profit owners eager to help others sometimes forget to take care of their self. Tax exempt organizations are required to file an annual return with the IRS. If a non profit fails to file for three consecutive years. The tax exempt status is automatically revoked.
Your non profit will be added to the IRS automatically revoked non profit list. This could surely spell disaster for a non profit. Your company will no longer be able to receive tax deductible contributions. You might have to file an income tax return as a corporation or trust. Donors will not feel secure with giving to an organization that fails to manage itself. The IRS doesn’t have an appeal process for an automatic revocation if it was properly done. The company will have to apply for its tax exempt status again. Keep you tax exempt organization off of the revoked list by staying up to date on filings. Let IATC help you if you are having issues.
by Donya Curry | Dec 9, 2015 | Non Profits
As a small non profits with gross receipts less than $50,000 annually you may qualify to file a 990N or e-postcard. Form 990-N must be completed and filed electronically, since there is no paper form to send in. Form 990-N filers still have the option to file a complete Form 990 or Form 990-EZ if they choose to. Non profits need to remember gross receipts is defined as all sources of income before any of the expenses are deducted. There is a little flexibility in the %50,000 requirement for non profits. Your organization’s gross receipts are considered to be $50,000 or less if
- You have been in existence for 1 year or less and received, or donors have pledged to give, $75,000 or less during its first taxable year.
- Your non profit has only existed between 1 and 3 years and averaged $60,000 or less in gross receipts during each of its first two tax years.
- Your non profit is at least 3 years old and averaged $50,000 or less in gross receipts for the immediately preceding 3 tax years. The 3 years includes the current year for which calculations are being made.
The three requirements above however exclude any organization that are included in a group return. Churches, conventions or associations of churches, and any non profit organizations required to file a different return.
This is the simplest form for non profits to complete and many do this without any help. If you are a do it yourself new non profit just remember the 990-N still has a deadline. It is due on the 15th day of the 5th month after the close of your tax year.
by Donya Curry | Nov 16, 2015 | Business
Do you have an employee or contractor working for you? Workers can be either an employee or independent contractors. It would be a good idea to get this issue squared away at the beginning of a business relationship. Confusion on the part of the employee or employer can be a costly mistake. Employees are treated as taxable workers subject to payroll taxes. Independent contractors are self-employed individuals who are responsible for paying their own taxes. Contractors payments are reported on a form 1099. The reporting requirements are also different for both groups. A 1099 is required to be sent to the contractor if you made payments to them that totaled $600 or more in a tax year. Employees earnings are required to be reported on W-2.
The facts surrounding the relationship will provide evidence toward the degree of control and independence. The facts are broken down into three categories.
- Behavioral Facts: Surrounds the issue of if the company controls or have the right to control what the worker does and how the worker does the job?
- Financial Facts: This area focuses on the the business aspects of the worker’s job controlled by the payer. Does the payer pay all of the expenses, supplies all of the tools or supplies, how does the company actually pay the worker?
- Type of Relationship: Do you have any written contracts? Do you provide any employee type benefits for the worker like a pension plan, health insurance, etc.? Will the relationship continue and is the work performed as a key aspect of the business?
An independent contractor is a self-employed person. In this business relationship the entity paying you have the right to control or direct only the results of the work. The independent contractor should be controlling what will be done and how it will be done. The earnings of a self-employed person working as an independent contractor are subject to Self-Employment Tax. They are responsible for their own FICA and income tax withholdings as an employer and employee.
A person is not considered an independent contractor if the services they perform services that are controlled by an employer. When the entity paying you is controlling what will be done and how it will be done. This applies even if you are given freedom of action. What matters is that the employer has the legal right to control the details of how the services are performed. If have an employer employee relationship the person hired is not an independent contractor and their earnings should not be subject to Self-Employment Tax. The employer is responsible for withholding taxes.
If after reviewing all of the facts your employee or contractor relationship is still not clear it might be a good idea to file form SS-8 with the IRS. Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding. The form SS-8 can be filed by the business or the worker. The IRS will review all of the facts and circumstances and provide you with an official determination of your worker’s status. This determination is not quick it will take months before getting the response. This is a good idea if you plan or hiring workers for similar roles in the future.
by Donya Curry | May 15, 2015 | Business, Individuals, Non Profits
I get asked one difficult question frequently. How long do I have to keep my records? Depending on the size and type of your business you might have to pay storage fees or send them to a government agency. Important records aren’t only needed by the IRS. You have OSHA, SEC, EEOC, and others. Going out of business can even be an exhausting experience. I always tell clients to use caution before disposing of records.
I’m going to run down a list of some records and how long I recommend you keep them. This list is not definite as rules change and states can have different time requirements. This list might not work for everyone, but take a look. There are electronic storage options that reduce the clutter of having paper records. Going paperless is saving trees, but can help with your record keeping requirements.
Permanent
Any Legal Contracts – Keep permanently
Annual Financial Statements – Keep permanently
Asset Ledgers and Depreciation Schedules – Keep permanently
Audit Reports – Keep permanently
Documents for major asset purchases – Keep permanently
Employee Medical Records related to exposure of toxic substances – Keep permanently
Entity Structure/ Organizational Documents – Keep permanently
Insurance Policies workers comp, life- Keep permanently
Intangible Asset Records- Keep permanently
Tax Records Income tax returns, income documents like 1099’s, W-2’s, etc. – Keep permanently regardless of what the IRS says
Wills and Trust- Keep permanently
Long Term
Employee Accident Documents after a settlement – 11 years
Employee Procedures Manual – 11 years
Employee Job Descriptions – 11 years
Workers Compensation Documentations – 11 years
Bank Statements – 7 years
Check Ledger – 7 years
Customer & Vendor Invoices -7 years
Inventory Records -7 years
Payroll Checks- 7 years
Personnel Files after termination – 7 years
Sales Records- 7 years
Subsidiary Ledgers for A/R, A/P etc. – 7 years
Time Cards- 7 years
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