Organisations focused not on making profit but instead on providing a service to a group of people or community such as churches, sports and social clubs, education academies, and charities must report annually with an Independent Examination and conduct Governance reviews as well as preparing and filing annual accounts in order to be transparent to the public and people they benefit. Money made through donations, membership and fundraising is spent solely on the organisation’s aims and objectives – remember, you cannot set up a charity to support one specific person!
We have the relevant experience in the charity and not for profit sector to advise on complex and constantly evolving accounting issues which frequently crop up, as well as advising regarding the required meetings of members. Just like organisations in the private sector, understanding and mitigating risk is essential but risk in the charity sector must be looked at with a slightly different approach in order to understand donations handling and recording, financial control procedures, and Gift Aid amongst other things.
What makes an organisation 'not for profit'?
Not For Profit organisations have no commercial owner and nobody profiting from the money made. They instead rely on funds from donations, membership, event fundraising and investment contributions which goes solely back in to the running of the organisation and the local community or charity’s cause.
When does a charity have to register with the Charity Commission?
When a charity earns more than £5,000 in a year it must register with the Charity Commission and file annual accounts. Full records of donations and receipts must be kept, whatever the size and earnings of the organisation.
Does a charity have to register for VAT?
The same VAT rules apply to charity and not for profit organisations as apply to private companies and self-employed individuals – that is, mandatory registration if turnover in any 12-month period reaches the VAT registration threshold of £85,000. However, there are VAT exemptions and lower rates which apply to certain areas of charity donations and services provided. For example, premises rental, advertising and building utilities all attract a lower VAT rate. Contact us on 0345 314 8972 to find out more and ensure you comply with HMRC’s guidelines.
What is a trustee?
Charity trustees are individuals who share responsibility for the running of the organisation. At least three trustees are usually required and it is important that reliable and dedicated trustees are recruited in the correct way. Contact us on 0345 314 8972 to benefit from expert advice and ensure you comply with the complex charity requirements.