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Don't Let Your Mission Be Hindered By Taxes With Our Accountants for Charities

There are growing legislative and regulatory constraints on the nonprofit and charitable sectors. Organisations in this industry must be vigilant in monitoring developments in the regulations that affect them.

Charitable organisations have greater demands than ever, including the need to acquire financing and employees, show accountability and responsibility, and care for beneficiaries.

This is why it’s crucial to work with an accountant who specialises in the unique financial issues faced by charities. 

When you come to Pearl Lemon Accountants, you can expect sound advice delivered in a way that is both clear and uncomplicated.

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We provide individualised guidance on tax, audit, and financial reporting and recording matters while adhering to industry standards. Every day, we help businesses like yours with bookkeeping, accounting, and financial statement preparation while ensuring you receive all available tax deductions and credits.

Interested? We invite you to contact us at your earliest convenience.

Is Accounting For Charities Different?

Accounting for charities focuses on the accountability part of the money. Donors for your charity have the right to put restrictions on the money they give you, and grant funders want to ensure their money goes to the programmes agreed upon. Because of these rules, you have to ensure that their money is spent in a way they agree with. Because of this, charities use something called “fund accounting” to keep track of their money.

Fund accounting lets charities divide their money into different groups, or “funds,” so they can keep track of it and only use it for what it was meant for.

Most of the time, charities will divide their money into groups like:

Restricted Funds

These are the funds that your organisation must spend on specific projects and activities.

Temporarily Restricted Funds 

Until a specific date, these funds should be used for particular projects and activities at your charity. After that, you can use them for anything.

Unrestricted Funds

It can be used on any part of your organisation that needs it the most.

The non-distribution constraint is another part of charity accounting that helps organisations stay on top of their finances. This is an integral part of accounting that helps people understand charities. In contrast to for-profit businesses, charities are not allowed to give their leaders a share of their net profits.

For example, if a charity found an extra 10,000 in their budget, they wouldn’t be able to give this money to the executives and board members. That extra money needs to be put back into the mission.

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Should You Outsource for Your Accounting?

Does your organisation have someone on staff who can undertake accounting duties and has the necessary expertise? It is difficult to locate qualified candidates for this position in many small and medium-sized organisations. In fact, insufficient personnel was cited by 18% of organisations as their top challenge for 2019. Therefore, finding a replacement for these roles (mainly as your business expands) may be tricky.

Charity organisations are fortunate to have choices to consider when hiring an accounting expert. Have in mind the following:

Combine all of the duties into one executive position

The executive director of many new organisations takes on all financial duties from the get-go. However, issues arise when it is time for the company to expand. As the organisation grows, so will the complexity of its accounting requirements, and your top executives will have more pressing matters to attend to.

Get an accountant on board full-time.

Many significant businesses have hired full-time staff members to work on specific projects. However, recruiting new employees is a significant financial commitment, particularly for smaller NGOs with more restricted resources. It’s not always the right moment to bring on new staff.

To get your accounting requirements met, choose a professional business

The vast majority of NGOs may gain by contracting out their accounting duties. These companies have specialists who have dealt with every conceivable nonprofit organisation’s accounting requirements. As a bonus, they are typically less expensive than adding a new staff person, making them a good option for charitable organisations.

Our experience tells us that most NGOs would do well to hire outside help for their bookkeeping and accounting requirements. It’s a cheap way to get access to professionals with years of experience in the unique accounting needs of charity organisations.

If your business considers outsourcing your accounting services, choosing a firm with experience working with similar organisations is vital. That way, you know they’ll have the knowledge to address any issues unique to your nonprofit organisation and will have experience with fund accounting.

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The Pearl Lemon Services

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Tax Planning

Our tax experts know how to get the most out of tax allowances, reliefs, and industry-specific tax benefits. Our skilled tax experts ensure that all business tax returns are HMRC-compliant and filed correctly to avoid fines.

Personal Tax Services

Our tax experts will advise you on every part of your tax situation to ensure you follow the law. We offer a one-of-a-kind service for filing both simple and complicated UK taxes. With these tax services, we want to help people get more money while lowering their tax bills.

VAT Accounting

VAT is one of the most complicated and frustrating parts of running a business regarding accounting. Since 1973, it has been up to business owners to figure out and pay VAT instead of the consumer.

Registration, choosing a VAT scheme to register for, calculating VAT, and balancing VAT accounts are all part-time jobs in and of themselves. Hiring a professional VAT accountant can relieve a lot of the stress that comes with this complicated tax system.

HRMC Tax Investigations

Random HMRC Tax investigations used to be rare, but now the tax authorities have a lot of sophisticated and effective tools at their disposal. Consultants who do risky things are most likely to be investigated and are more likely to be caught.

HMRC investigations aim to determine if correct information has been given and if correct tax amounts have been paid.

We can help you if you are having trouble paying HMRC or if HMRC threatens you about VAT, PAYE, self-assessment, or corporation tax issues. Better yet, we can help make sure you never have to deal with an HMRC tax investigation in the first place.

These are just a few of the things we can do for you. Want something that’s not on the list? Give us a call.

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Market Your Legal Practice

Pearl Lemon Accountants is a subsidiary of the broader Pearl Lemon Group, a digital growth and SEO firm in London.

As accountants, we operate in a dynamic and competitive field. To that end, we have a small firm mentality with big firm skills since we know how important marketing is to your company’s success. One thing that sets us apart from other London accounting businesses is our background in marketing.

Most lawyers and barristers rely on word-of-mouth and personal recommendations to grow their practice. To be successful in today’s digital world, you must shift your marketing efforts to the internet rather than only print. A potential new customer’s initial point of contact is likely to be your website, thanks to the rise in popularity of local searches.

An excellent first impression in business can’t be earned more than once, which is why your website works as a 24-hour, silent salesperson and a virtual storefront for your firm.

If you’re looking to build a high-quality, low-cost lead-generating website, we’ve helped hundreds of companies over the past several years. Your website’s design, development, and optimisation for Google and other search engines are all areas we can help you with. 

Video production and digital publication are some areas we may assist you in. Think about what would happen if your website didn’t include things like lead magnets or landing pages.

That being the case, we’ll work with you to develop them and introduce you to traffic-driving strategies like re-marketing and SEO.

We can help you design your company name, logo, and tagline, create your corporate brochure, even author blogs and newsletters, and harness the power of social media to obtain more referrals for your firm. Without these marketing techniques, your organisation will most likely fail to realise its full earning potential.

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FAQs

Although “not-for-profit” could imply that making a profit isn’t a priority, it’s really in the best interest of charities to do so since doing so increases the funds at their disposal to carry out their goals.

Charities should be renamed “for-benefit” organisations since “too many charities, it is more about the purpose, the welfare of recipients, and the consequence that it is giving.”

  • Does your annual gross income surpass one million dollars?
  • Do you have more than £3,260,000 in total assets and a gross income of over £250,000?
  • Are the trustees interested in commissioning an audit of the financial statements?
  • Do the organisation’s bylaws mandate an audit? 
  • Did the Charity Commission ask for an audit?
  • Do donors want audited accounts?

An audit is necessary if you answered “yes” to any of the questions above.

Not at all; they’re unique to each other.

In their most basic form, you probably already know that annual accounts consist of an income and expenditure account and a balance sheet for a particular year (with notes). The annual report of the charity’s trustees is typically included in the front of such documents. This report provides a synopsis of the organisation’s mission, activities, and future goals.

The annual accounts and the trustees’ annual reports are usually combined into a single document.

However, most charitable organisations are required by law to submit an annual return detailing any changes to the organisation’s trustees, purposes, etc.

Our agency understands and respects the demands and security of each of our clients. We preserve our clients’ anonymity at all times as professionals. When we sign a contract with you, we always include a confidentiality clause/agreement that will give you assurance about your financial documents handed over and made.

In our experience at Pearl Lemon Accountants, we’ve found that a company’s accounting needs vary considerably from month to month. Therefore, we don’t provide cookie-cutter packages. Because of this, whatever service you select for your company or account will be tailored just for you. Because we treat each client individually, your financial statements will seem different from those of our other customers out of respect for their uniqueness. Our rates can vary depending on the specific services you want. To find out more, don’t hesitate to get in touch with us.

When you allow us to keep track of your finances, you give yourself more time to do your work and please more clients. It's a win-win situation for everyone. Aside from that, you'll also gain financial stability because your assets and liabilities are managed well enough not to cause any trouble for you in the future.

So let our experts work for you, and you won't regret it even a bit.

Book a call today to get started.