There are numerous groups, societies, and clubs operating as a non-profit that come to us for accounting and taxation services. At GTA Accounting Professional Corporation, we have just the expertise and skill to deal with not for profit organizations (NPO). Just like any other business, NPOs have expenses like rent, utilities and payroll. They also collect money from clients and donations. Understanding how NPOs treat their profits and revenues is important to providing effective accounting and taxation solutions.
With non-profit companies, any revenue that is generated by the business must be put back into the organization. This is unlike other businesses that may decide to reinvest the money, pay stocks or award themselves bonuses. NPOs are run differently and an experienced accounting firm in Toronto will ensure that everything is done according to the applicable rules.
CRA Guidelines For NPOs
The CRA doesn’t require not for profit organizations to pay any income tax. At the same time, these organizations are not allowed to use the income they receive to benefit their members. Their purpose is to operate for the benefit of society. The revenues obtained from the organization can be put into paying employees, directors and some of the cash or assets may be held within the company for some years. A Chartered Professional Accountant who has experience working with NPOs can help put things into perspective.
At the end of the year, the CRA requires most non-profit organizations to file an information return and T2 form. Our Chartered Professional Accountant can help you streamline this process and give your NPO one less thing to worry about.
Get Help Setting up an NPO
If you are thinking of coming up with a non-profit organization, partner with our tax advisor to ensure you meet all the requirements. Remember that each province or territory has its own unique set of requirements that must be met when establishing a not for profit organization. For instance, you must fill out and submit important documents such as the Form 4001, Form 4002, first board of directors and articles of incorporation when incorporating an NPO.
The NPO will need to create bylaws which should also address important matters like record-keeping processes. We can help you create bylaws involving financial record keeping so you don’t have to lose any money due to poor structures and processes. We’ll help you navigate this process and ensure all tax regulations are met.
Help in Filing Taxes for your NPO
Although you may not be required to pay taxes as an NPO, you may need to submit form T1044 to the CRA. The process of filing an information return can be complex that’s why our Chartered Professional Accountant can provide all the guidance needed. We’ll ensure all the submissions are done in good time.
Get Help Maintaining Finances
The Canada Not for Profit Corporations Act has a set of guidelines on how financial records for NPOs must be kept. NPOs need financial statements to be prepared annually and submitted to members for review. All financial statements must be prepared according to the accounting principles accepted in Canada. GTA Accounting Professional Corporation has all the expertise needed to prepare financial statements as required by Canada Revenue Agency.
FTC (Foreign Tax Credits Or Deductions)
For all the taxes you paid in Canada, you can make a claim for foreign tax credit on your United States tax returns. If you are a green card holder or a U.S. citizen, you must file the 1040 form on yearly basis if you meet a certain income threshold. You may be subject to S.E. tax exemption if you reside in Canada and you are exempted by the Canadian U.S. social security agreement. You will have to file disclosure to this exemption with the 1040 Form.
Other than filing the 1040 Form every year, you may be subject to additional tax reporting. Additional tax reporting may apply if you are a beneficiary or if you own Canadian Mutual Funds. You are also subject to additional U.S. tax reporting if you own or are a beneficiary of Canadian RPPs, RESPs, RRSPs, and TFSAs.
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