Non profit organisation

Options
mc25
mc25 Registered Posts: 232 Dedicated contributor 🦉
Just had a potential client enquiring about preparation of non-profit organisation accounts (its not registered as a Charity) is there anything in particular i need to watch out for and has anyone got any pages I can read more about accounts preparation for these etc..? I look forward to hear your views.

Comments

  • T.C.
    T.C. Registered, Tutor Posts: 1,448 Beyond epic contributor 🧙‍♂️
    Options
    Simple income and expenditure accounts really then.
  • mc25
    mc25 Registered Posts: 232 Dedicated contributor 🦉
    Options
    Thanks

    TC thanks for your quick reply. If when i come to prepare the account and there are drawings does that go to Dir account (i hope there wont be any), the company is formed Ltd by guarantee, also if by the end of the year there is any profit is there any tax payable or how does this work.

    Thanks
  • JodieR
    JodieR Registered Posts: 1,002 Beyond epic contributor 🧙‍♂️
    Options
    so long as all the surplus of income over expenditure is retained in the organisation for 'non-profit' use in the future it is not taxable.
  • mc25
    mc25 Registered Posts: 232 Dedicated contributor 🦉
    Options
    Thanks

    Jodier, Thanks for your reply
  • deanshepherd
    deanshepherd Registered Posts: 1,809 Beyond epic contributor 🧙‍♂️
    Options
    JodieR wrote: »
    so long as all the surplus of income over expenditure is retained in the organisation for 'non-profit' use in the future it is not taxable.

    Not necessarily true.

    There are plenty of not-for-profit companies that have trading income and are subject to corporation tax just like any other company - they just don't distribute profits to shareholders.

    You need to check what the company does.
  • Monsoon
    Monsoon Registered Posts: 4,071 Beyond epic contributor 🧙‍♂️
    Options
    Last time I looked into not-for-profits, I was told there was 'officially' no such thing [this was in the case of an unincorporated organisation] and that it was only 'not for profit' if it indeed had no profits... and that it would be taxed as normal if it made profit as if it was a normal trading business.

    As Dean says, a Ltd by guarantee won't distribute profits to shareholders but I don't think it's automatically exempt from tax.

    I don't know much more about it than that, which is why I won't touch them!
  • JodieR
    JodieR Registered Posts: 1,002 Beyond epic contributor 🧙‍♂️
    Options
    Appologies if I've given incorrect advice here. I've only got one client who's a Ltd Co charity client. The first couple of years I did their accounts they made very small losses and then in the 3rd year they made a small profit so I phoned HMRC's charity helpline and asked whether they'd need to pay corp tax. It was a 30 second phone call, she just asked whether the profits would be retained in the company and I said yes and she replied that there was therefore no requirement to pay corporation tax, or indeed to even complete a corporation tax return. It seemed pretty straightforward but obviously not! sorry.

    Edited to say I'm assuming that the difference between my client & mc25's is that mine is registered as a charity?
  • Monsoon
    Monsoon Registered Posts: 4,071 Beyond epic contributor 🧙‍♂️
    Options
    Yes, the rules are different if they are officially a charity.
  • mc25
    mc25 Registered Posts: 232 Dedicated contributor 🦉
    Options
    Thanks

    Thanks all for your replies.The non profit organisation I was asking about are not registered as Charity. I will keep investigating to find out what they do then will take it from there. I did suspect they will be liable for ta but wasn't sure.

    Well done all and thanks once again.
  • MoneySavingBank
    MoneySavingBank Registered Posts: 143 Dedicated contributor 🦉
    Options
    Charity must be registered with CC by Law if the gross profit is more than 5K.

    Charity must be registered charity by Law if the gross profit is more than 5K.

    Some important points:

    1. If a Charity has gross profit more than 5K, it must be registered with Charity Commissions.
    2. If a charity is not making more than 5K, it is not legally required to be registered with Charity Commissions as a charity but it can continue the work as a charity.
    3. Even if you are not registered with charity commissions, you can still claim tax on the gifts from HMRC (but you need to register with them as a charity.)
    4. Charity Company Limited By Guarantee needs to pay the corporation tax if they are not registered as a charity and HMRC. (Again this depends on your communication with CC & HMRC mainly HMRC)

    LAST POINT> All these I said from the best of my knowledge but I might be wrong.

    But please read the following links:

    http://www.volresource.org.uk/briefing/fin_tax.htm

    http://www.hmrc.gov.uk/feedback/charity.htm
  • deanshepherd
    deanshepherd Registered Posts: 1,809 Beyond epic contributor 🧙‍♂️
    Options
    It's not a charity.
Privacy Policy