Non-profit or not-for-profit organizations in Australia are created to benefit society and serve a greater good. Individuals establish these entities to address social causes and serve communities. Some prominent examples include The Royal Botanical Garden Sydney, which focuses on environmental sustainability, and Invisible Illnesses, which operates in the health and well-being sector. These organizations work to solve problems faced by common people, helping them rise above their struggles.
Though non-profits operate like other businesses, generating profits, they cannot use this money for personal gain. Instead, the profits must be reinvested into the cause or saved to build financial stability for the organization. Non-profits, like businesses, need to maintain their finances properly and, in some cases, file income tax returns.
Below are some tips on how non-profits can manage their unique bookkeeping challenges, ensuring compliance and financial stability, particularly with the help of Bookkeeping in Dandenong Victoria and ProKeep Bookkeeping Services near me.
1. Managing Funds and Grants
Non-profits often receive grants and sponsorships from various sources, such as government agencies, private foundations, businesses, or other organizations. Before applying for grants, non-profits must check eligibility for government or business funding. Grants are typically short-term and may only be accessible to registered charities. Once received, the non-profit must comply with the terms and conditions set by the grant-maker.
Additionally, if the non-profit provides something of value in return to the grant-maker, they may need to pay GST. Engaging expert bookkeeping services in Dandenong can help non-profits manage and track the conditions set by grant-makers, ensuring compliance while properly utilizing funds. This includes using the funds as directed, returning any surplus, and reporting their use to the grant-maker.
2. Maintaining Financial Records
Non-profits must generate income to continue their operations and pursue their social missions. Keeping accurate records of income and expenses is essential for understanding the organization’s financial position and making informed decisions. ProKeep Bookkeeping Melbounre offers specialized expertise to track all transactions, ensuring that non-profits maintain accurate financial records.
Since non-profits’ income sources—such as grants and donations—differ from those of traditional businesses, specialized bookkeeping services are crucial for managing compliance with state regulations. Proper financial records are also vital for presenting information to stakeholders and for tax purposes, including tracking assets, liabilities, revenues, equity, and expenditures.
3. Growing Overhead Expenses
One of the challenges non-profits face is rising overhead costs, which are necessary to sustain operations. These costs include employee salaries, equipment purchases, utilities, property leases, and legal fees. Staff training and implementing new technology also contribute to increasing expenses.
Expert bookkeeping services in Dandenong can help non-profits manage these costs effectively. Professionals in the field can help identify new fundraising opportunities and donors, ensure the organization adheres to its budget, and improve cash flow by issuing invoices on time and avoiding late payments. Additionally, they can negotiate with vendors for discounted materials, further helping non-profits reduce overheads.
4. Recording In-Kind Donations
In-kind donations, such as goods and services, are common for non-profits and must be recorded according to Australian Accounting Standards Board (AASB) regulations. With the assistance of Bookkeeping in Dandenong Victoria, non-profits can record in-kind donations correctly in their charts of accounts. These donations are entered as both debits and credits, with fair market value assessed accurately.
In-kind donations are recorded as assets until they are utilized by the non-profit. They may include volunteer work, which is calculated at $20 per hour for general work and $45 per hour for specialized tasks. Maintaining detailed written records, such as receipts and donation letters, is essential.
5. Filing Tax Returns
Some non-profits in Australia are required to file income tax returns, while others may need to submit a non-lodgement advice to the ATO. It is crucial to determine whether an organization must lodge income tax returns, which can be clarified with the assistance of a knowledgeable bookkeeper who understands non-profit structures and tax compliance regulations.
While many non-profits are exempt from taxation, others—such as social clubs, hospitality services, and political organizations—are taxable. ProKeep Bookkeeping Services near me can assist in identifying whether the non-profit can apply the mutuality principle to calculate taxes. Non-charitable non-profits with an ABN must submit an annual NFP self-review return to the ATO, declaring their eligibility for income tax exemption.
6. Managing Payroll
Non-profits with employees must handle payroll, including PAYG withholding, single-touch payroll reporting, and superannuation management. Given the complexity, non-profits often benefit from professional bookkeeping services to streamline payroll processes.
Bookkeeping services in Dandenong can use advanced accounting software to ensure accurate salary payments and superannuation calculations. They also handle compliance, including withholding amounts from contractor payments and filing required reports to the relevant authorities.
Wrapping Up
While non-profits work towards the greater good, they must still keep a close eye on their finances. By addressing challenges such as managing funds, overhead expenses, in-kind donations, and payroll, non-profits can ensure financial stability and compliance. Professional support from Bookkeeping in Dandenong Victoria and ProKeep Bookkeeping Services near me can be invaluable in helping these entities thrive while maintaining their focus on social impact.
