3 Major Differences Between Nonprofit and For-Profit Accounting

When it comes to comparing major differences between nonprofit and for-profit accounting, it all comes down to the measurement of success.

3 Major Differences

1. Financial Goals
2. Accountability
3. Accounting Software

Check out the full infographic below detailing the major differences between nonprofit and for-profit accounting.

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Bottomline

As a nonprofit, you don’t just have a bottom line you have a double bottom line. The first bottom line is fulfilling your stated mission. The second one is having the necessary funding to support bottom line one now and in the future.

Nonprofit organizations are considered public benefit corporations that receive their revenue from a combination of:

• Donations or grant income
• Donated facilities and equipment
• Low paid or volunteer staffs

Federal Taxes

• Nonprofit files IRS Form 990
• For-Profits Pay taxes on net income

While all for-profit businesses must pay taxes on their net income, nonprofits are not required to pay income taxes. Nonprofits are only assessed for taxes such as real estate or sales taxes and are required to file IRS Form 990. Filing the Nonprofit Form 990 ensures that charitable organizations are accountable to funding sources.

Viewing a nonprofit’s 990 answers important questions such as revenue sources, sustainability, and how well the organization pays its employees. Potential board members can see who else is on the board and what the cash reserves look like.”

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Originally published at https://www.araize.com on June 10, 2019.