All organizations – and individuals, for that matter – have a need for some form of accounting services if they deal with finances. Even nonprofit organizations hosting fundraising events and individuals creating crowdfunding campaigns with online platforms like Kickstarter and GoFundMe have to handle accounting concerns when it comes to managing the money they receive and any expenses they incur. As an aspiring accountant, you may find that part of your work includes helping these clients not just with financial reporting, but also decision-making.
How Accountants Work with Nonprofits
There are plenty of opportunities for accountants working with nonprofit organizations, helping them to keep track of their assets and expenses. In fact, there is even a term for this growing niche – nonprofit accounting – and it’s changing rapidly.
Accountants working with nonprofit organizations must know the laws about accounting for tax-exempt organizations and partially tax-exempt organizations. They must know the standards they have to meet when reporting donations and other sources of income. When it comes to fundraising in particular, accountants have to accurately keep track of and report money brought in through donations as well as the expenses the organization incurred hosting and promoting the fundraiser. They need to know, specifically, where fundraising information goes in an organization’s Statement of Activities and how to correctly complete forms like the 990, according to Accounting Web.
How Accountants Work with Individuals on Fundraising Projects
Individuals who set up fundraising campaigns, even on a one-time basis, need accounting help and advice to comply with regulations. Although an individual might not think to hire an accountant purely to help with a Kickstarter crowdfunding campaign, it’s likely that someone who is already a client of yours might reach out to you for help handling their fundraising venture.
Individuals embarking on a crowdfunding campaign will need to understand the tax implications of their fundraising campaign as well as the basics of the accounting process, Entrepreneur magazine. That’s where their accountant comes in. An accounting professional may help their clients with handling decisions and questions like:
- Setting up a separate account for their fundraising venture
- Setting their fundraising goals
- Keeping accurate records of the donations they receive
- Recording their fundraising expenses
- Obtaining and using taxpayer identification information
- Reporting taxable income to the Internal Revenue Service (IRS) and state tax agencies
- Handling issues of sales tax (even though the money is a donation)
Increasingly, accountants are acting as consultants and advisors to their clients when it comes to meeting financial goals, from saving for a special occasion or purchase to helping businesses cut economic waste. Seeking an accountant’s help for traditional fundraising and Internet crowdfunding campaigns is no different.
Whether you work with nonprofit organizations on a regular basis or are merely asked for crowdfunding advice by a client, you will likely find yourself facing a question about fundraising at some point during your accounting career. This is a win-win situation: you’re providing a professional service, possibly helping your community, and strengthening your accountant-client relationship.