By: Bill Murrill, CFO & COO
Tax season is here, and there is no better time to discuss your organization’s financials. As someone who has worked closely with businesses and associations for many years, I know the myriad of forms and numbered lines can be intimidating at first glance. However, properly filing your taxes and managing your finances is an important part of keeping your association running smoothly (and legally). Even though we handle the numbers for you here at Easter Associates, knowing what goes on behind the scenes gives you a greater involvement with your association. So, allow me to share the steps our staff takes to offer you financial services.
Some might argue that the foremost tax-related concern for associations is tax exemption. In general, associations are exempt from federal income taxation under Section 501(c)(6) and pay no taxes on dues, program income or investment income. Associations make annual reports to the IRS via Form 990 or Form 990 EZ in order to keep their federal income tax exempt status. An association is not required to file one of these forms if it normally receives less than $25,000 in annual gross receipts, but it is encouraged to do so if the forms are sent by the IRS.
At Easter Associates, we assist our clients in preparation of these tax returns. When a potential association client contacts us, the first thing we do is pull the organization’s IRS tax form 990. This “Return of Organizations Exempt from Income Tax” form gives us insight into the organization’s operations and financial health. It also helps us determine if your organization is current with tax filings. If you have no experience with this form, you are not alone. It is not uncommon when we bring up the Form 990 that the potential client asks, “What is that?” or says, “I have never seen that.” However, the basic information the form provides is essential to your association’s financial work.
Our next major focus for client financials is your organization’s tax-exempt status. On occasion, we find that an organization’s tax-exempt status has been revoked. By law, tax-exempt status is automatically revoked if an organization does not file the required Form 990-series returns or notices yearly for three consecutive years. This outcome is one you likely want to avoid. Your organization may have to pay taxes during the years revoked, and it can be costly to reinstate your tax-exempt status. Avoiding this problem is where we come in. Easter Associates works with outside accounting firms to make sure the proper tax forms are filed each year. We provide copies of the tax forms to all board members so that you can be assured filings are timely, preventing the tax-exempt status from being revoked. Easter Associates’ staff are also available to answer any questions your board may have about the taxes.
Alongside tax return preparation, Easter Associates provides clients with an assortment of financial and budgeting services. Our expert staff can assist your organization with annual budget forecasting, quarterly financial reports, interest-bearing account maintenance, disbursements, audits, political action committee contributions and distributions, and fidelity bond coverage. Whether you are an expert or novice of financials, Easter Associates can handle your numbers.
Did you learn something new about taxes or finances from this blog or have more questions? Send us an email and let us know: Bill.Murrill@easterassociates.com.