Nonprofit Organization Bookkeeping: Compliance and Reporting Requirements for Travis County Charities in 2024

Navigating the Complex World of Nonprofit Financial Compliance: Your Essential Guide to Travis County Charity Bookkeeping in 2024

Running a nonprofit organization in Travis County comes with unique financial responsibilities that extend far beyond simple bookkeeping. A charitable organization must maintain current and accurate financial records in accordance with GAAP. Based on these records, the board must prepare or approve a financial report that conforms to AICPA standards. Understanding these compliance requirements isn’t just about avoiding penalties—it’s about building trust with donors, grantmakers, and the community you serve.

Federal Filing Requirements: The Foundation of Nonprofit Compliance

The cornerstone of nonprofit financial compliance begins with understanding IRS requirements. Most charitable nonprofits have an obligation to file some version of the IRS Form 990. Most charitable nonprofits that are recognized by the IRS as tax-exempt have an obligation to file IRS Form 990, which is an annual information return to be filed with the IRS by the 15th day of the 5th month after the end of the organization’s accounting period.

The specific form your Travis County nonprofit must file depends on your organization’s annual revenue:

  • Small tax-exempt organizations generally are eligible to file Form 990-N to satisfy their annual reporting requirement if their annual gross receipts are normally $50,000 or less.
  • An organization that normally has $50,000 or more in gross receipts and that is required to file an exempt organization information return must file either Form 990, Return of Organization Exempt from Income Tax PDF, or Form 990-EZ, Short Form Return of Organization Exempt from Income Tax PDF.
  • Organizations exempt from taxation under section 501(a) to file their annual Form 990 and Form 990-PF returns electronically, unless covered by one of the exceptions listed in the form instructions. Form 990-EZ filers are required to file electronically for tax years ending July 31, 2021, and later.

The consequences of non-compliance are severe. If your nonprofit fails to file its Form 990 for 3 consecutive years, its tax-exempt status will be automatically revoked. A nonprofit that fails to file for three years in a row may owe income tax, and its tax-exempt status will be automatically revoked.

Texas-Specific Requirements for Travis County Nonprofits

While Texas doesn’t require most nonprofits to register with the state, there are still important compliance considerations. Under Texas law, most charities or nonprofit organizations are not required to register with the State. However, To register your nonprofit, the state of Texas requires you to submit a Certificate of Formation – Nonprofit Corporation (Form 202) with the Office of the Secretary of State.

Texas law does impose specific financial record-keeping standards. A charitable organization must maintain current and accurate financial records in accordance with GAAP. The financial report must be made available to the public. This transparency requirement means your bookkeeping practices directly impact your organization’s public accountability.

GAAP Compliance and Record-Keeping Standards

Generally Accepted Accounting Principles (GAAP) compliance is non-negotiable for nonprofit organizations. Both state and federal regulations require that the financial records of your nonprofit be complete, accurate, and consistent with Generally Accepted Accounting Principles, or GAAP. In fact, your board has a fiduciary responsibility to ensure your accounting records are accurate.

U.S. nonprofits manage their financial operations and report their finances based on the Generally Accepted Accounting Principles (GAAP) defined by the Financial Accounting Standards Board (FASB). The rules for nonprofits differ from the rules that apply to for-profit companies because nonprofits have specific accountability and transparency requirements.

Key GAAP requirements for nonprofits include:

  • Fund accounting to track restricted and unrestricted donations
  • Proper classification of revenue and expenses
  • Accurate financial statement preparation
  • Detailed documentation of all transactions

Audit Requirements and Professional Oversight

While not all Travis County nonprofits require audits, understanding when they’re necessary is crucial. The IRS does not require nonprofits to obtain audits, but federal and state government agencies do depending on your nonprofit’s size or spending. The Office of Management and Budget requires an audit when a nonprofit spends more than $750,000 in federal funds in a year through the end of 2024. Starting in 2025, the new threshold will increase to $1,000,000.

For organizations that don’t require full audits, there are alternatives:

  • The first is called a review, which is like a mini-audit. A review costs about half as much as an audit.
  • The cheapest alternative to an audit is a compilation. This is where an accountant assembles your financial statements from the information you provide.

The Importance of Professional Bookkeeping Support

Given the complexity of nonprofit compliance requirements, many Travis County organizations are turning to professional bookkeeping services. Working with a qualified bookkeeper travis county can ensure your organization maintains accurate records while staying compliant with all applicable regulations.

Bokap Systems understands the unique challenges facing Travis County nonprofits. Bokapsys delivers tailored bookkeeping services across Travis County, TX, with a focus on clarity, simplicity, and long-term financial health. Whether you’re a startup or established business, our local bookkeepers are here to support your success. Their approach emphasizes accuracy and dedication. Our commitment to your business’s success is reflected in our attention to detail and personalized service.

Record Retention and Documentation Best Practices

Proper record retention is essential for nonprofit compliance. The organization’s records should be kept for as long as they may be needed for the administration of any provision of the Internal Revenue Code. Usually, records that support an item of income, deduction, or credit must be kept for a minimum of 3 years from the date the return is due or filed, whichever is later.

Applicable law and an organization’s policies can require that the organization retain records longer than 3 years. Form 990, Part VI, line 14, asks whether the organization has a document retention and destruction policy.

Technology Solutions for Modern Nonprofit Bookkeeping

Modern nonprofit bookkeeping increasingly relies on technology solutions. Nonprofits can benefit from using accounting software that’s specifically designed for the nonprofit sector’s specialized “fund accounting” GAAP requirements. For example, nonprofit accounting software can automate production of GAAP-compliant nonprofit financial statements and handle management of grant revenues, expenses and compliance.

Bokap Systems leverages cutting-edge technology to support Travis County nonprofits. Utilizing cutting-edge technology, we provide accurate bookkeeping and financial oversight for seamless operations. With our online bookkeeping services, you can access your financial data anytime, anywhere, making informed decisions easier than ever.

Moving Forward with Confidence

Nonprofit bookkeeping compliance in Travis County requires attention to detail, understanding of complex regulations, and commitment to transparency. By maintaining accurate GAAP-compliant records, meeting filing deadlines, and working with experienced professionals, your organization can focus on its mission while ensuring full compliance with all applicable requirements.

The investment in proper bookkeeping and compliance isn’t just about avoiding penalties—it’s about building the foundation for sustainable growth and maintaining the trust that’s essential to your nonprofit’s success in the Travis County community.