Accounting Services guide for Nonprofit Organization
Nonprofit organizations in Singapore play a significant role in different sectors. In that regard, there is the need to meet the tax requirements as set out in the Inland Revenue Authority of Singapore. Just like the profit making organizations, the non-profits are mandated to display accountability, transparency and proper governance in the way they manage their funds and donations. One way of ensuring that the aforementioned conditions are met is by having the best accounting and bookkeeping practices.
The debate is not about the importance of accounting services for nonprofits, because any business entity knows that money is the life and blood of their operations and therefore they have to account for it. The thing is whether it is better to hire an in-house team for accounting or is it just better to outsource the entire accounting task to an off-site provider? Definitely, the latter is much better and more cost effective. That, in fact, is the route that most non-profit organizations in Singapore take. One reason for doing so is that the non-profit organization can better spend their time elsewhere.
Important accounting functions for Non-Profit Organizations
Basic operational accounting
It is important for every organization to set, synthesize and present their financial information in the proper manner. This is to ensure that the different departments get access to usable information, to drive different operations of the company. For instance, such information would be an asset for the top directors and executives of the nonprofit organization. The financial data will enable them to make practical decisions in a timely manner. It is a requirement in Singapore for you to present financial statements at the required times in the year. If you cannot manage all these, you can outsource these accounting services for nonprofits organization to a professional service provider firm like J Accounting Services.
Provide financial reports
Financial reports are important to the organization as well as to IRAS. Sometimes, if the organization has main donors, they may want to see the financial reports from time to time to know how their donations are being spent. Such reports will be important when the non-profit is required to conduct an independent audit. For the best results, the financial reports may be customized to suit different applications. This makes them easy to understand.
Bookkeeping
Even if the non-profit outsources its accounting function, they will still need an in-house bookkeeper who can keep records of every day expenditure. These records will in turn be forwarded to the outsourced accounting firm and to the internal and external auditor for further processing and preparation of more detailed accounts, and also checking of their work.
Bookkeeping is an integral part of accounting for non-profits, just as it is for the profit making organizations. The daily transactions of the organization must be recorded. This will eliminate the need for hunting for receipts when you are preparing the monthly or quarterly reports. Some of the tasks under bookkeeping include posting of invoices and bills, printing of checks meant for expenses and keeping electronic records of all receipts together with invoices. You should also assign funds to the various projects that you are undertaking.
In Singapore, accounting records must be kept for at least 5 years.
Advisory, strategy and planning
Sometimes, an organization needs to evaluate their financial records to establish where they are going as their objectives dictate. While this may not be a requirement from the government of Singapore or the IRAS, it is essential for the sustainability of the organization. The analysis helps in cutting costs, improving efficiency and ensuring that there are adequate resources when and where they are required. This requires an external party who will perform a thorough audit and budget development among other essential financial functions.
Claiming input tax
In some instances, input tax for non-business activities could be claimable or not. Non-business activities here could mean all activities that are religious, political, patriotic or philanthropic in nature. The input tax for such activities as mentioned above is not claimable.
In the running of the activities of the nonprofit organization, there could be a mixture of business and non-business activities. However, only an accountant and tax specialist would know whether the input tax for them is claimable or whether the monies raised from such activities are tax deductible.
Seeking experts help in the accounting and taxation for Non-Profit Organization and Charities is important. If you do it wrongly, this would lead to undesirable consequences. Outsource these functions to be safe. Contact J Accounting for assistance.
