Nonprofit organizations are huge groups of enterprises that can be founded by both the state and private individuals. They have their characteristics of work, tax accounting, and accounting.
To properly manage the affairs of such an enterprise, it is necessary not only to be well versed in the legal side of the issue but also to have reliable automation tools at hand. In this article, you will learn more about the features of this type of enterprise and the automation of financial accounting in them.
Differences between nonprofit and commercial organizations
Nonprofit organizations have several differences from commercial ones. They are listed in full below:
- A commercial organization is created to make a profit and is a payer of the corresponding tax.
- A nonprofit organization does not pursue the goal of obtaining material benefits.
- Nonprofit organizations do not pay income tax and do not file a declaration for it, but at the same time, the status of a nonprofit does not exempt from reporting.
Nonprofit enterprises, institutions, and organizations must submit a report on the use of income (profit) of a nonprofit organization in the appropriate form within the time limits provided for submitting a tax return for corporate income tax. The report is intended to control the expenses of income (profit) because, in case of violation of the purposes of use, you will have to pay tax and become a payer of income tax on a general basis.
Automation of budgetary processes in nonprofit organizations
Accounting in nonprofit organizations (charitable foundations, trade union committees, and other public organizations) significantly differs from accounting in enterprises whose purpose is to profit.
Dedicated virtual data rooms are best suited for doing business in such companies.
Therefore, for accounting and reporting in nonprofit organizations, we have developed a special “nonprofit” version of VDR, the knowledge base of which contains the accounting features in such organizations.
- With its help, any attentive user who can read and enter information into the forms of documents opened on a computer screen can generate the necessary primary accounting documents, calculate salaries and print accurate financial and tax reporting documents automatically generated by the system with one click of a button.
- VDR allows you to keep track of income and expenses in the context of funding sources (membership fees, grants, and donations) and organization estimates.
- VDR automatically maintains analytical and synthetic accounting of fixed assets and other non-current tangible assets, intangible assets, non-cash and cash funds, material assets, and settlements with counterparties. In addition, VDR calculates all deductions from income accrued to employees, considers the intricacies of tax legislation, and prints payrolls.
- VDR correctly distinguishes between taxable and non-taxable income and accurately considers the costs associated with the organization’s statutory activities and those associated with profit.