 I wanted to again welcome you to Don't Mess With Taxes. This is TechSoupConnect Florida chapter and we are delighted that you can be with us today. So again, my name is Danita Pimienta. I am the events coordinator for TechSoupConnect Florida. We have our wonderful co-host, Aretha Simons, who's there as well. And she is the events planner for TechSoupConnect Florida. So we are thrilled to have her on board as well. So just to give you a little bit of background, in reference to TechSoup, this is a worldwide network and having a worldwide network means that you've got people tuning in from everywhere, even though we say it's Florida. As you could see, TechSoup is all over and it is formulated in 236 different countries across the globe. So this is a vast network of individuals that are coming together and we talk about things that help others. So sharing information in reference to nonprofits is one of the great things about TechSoup, but we don't just deal with software, what have you, technology it is, that events like this that help us get our message across and kind of sort of hone in on information that can be most valuable to nonprofits as we go along on our way because being in a nonprofit has its own challenges, right? So talking about challenges, we certainly can use your help because this is a volunteer type of event and it has organizations that volunteer and we need people who are event producers or suburban marketing and speakers to come on board and share with us and those who can help us manage this tech room that we have going on. I would love for you to reach out to me directly. My email is listed there, denita at k-r-c-a-a-i-r-e dot org and you can connect directly with me and we can get you signed up to assist us on any future events. Speaking of future events, next month we'll be doing a wonderful presentation with regard to eye-catching graphics with Canva and because Canva is this thing that is just taking over and helping people become a lot more tech savvy when it comes to marketing, we want you to be aware of some of the things that you can do while you're on tech on Canva and that's something being brought to you again by our Florida chapter of TechSoup Connects. Though enough about all of that, you are here to hear from my Leica Morton who has 20 years in the accounting field. She is also an attorney and she specializes in the area of non-profit management so when you want to have a two-fold answer to any questions that you have it's wonderful to have someone who has this ability to do just that. So we welcome this level of experience. Hello, my Leica. I'm going to stop actually sharing my screen so therefore you would be able to go ahead and share yours while I just tell them that Ms. Myleica in her level of credentialing is phenomenal. I was looking at her bio and sharing that she's a graduate of Berry University, Magna Cum Laude in law. And when you think about that, something that non-profits need, they need the legal advice as well as the accounting advice. And so when you can couple that together, you've got one person who can do a number of great things for you and sort of keep everybody on the right track. So Ms. Myleica, I know that you should have the ability to share and I'm hoping that you're able to get your presentation up there so feel free. This is being recorded for all of the participants and so it will be available to you and as as we go along and Ms. Myleica is presenting you are more than welcome to put your questions in the chat or if you want to save them to the end, then we can go ahead and have a Q&A session as well once she's done. But I don't want to get in the way. I want to go ahead and again welcome Ms. Myleica Morton who's going to talk to us in reference to taxes. All right. Good morning. Can you all hear me okay? Yes. Okay. Awesome. All right. Thank you again, Danita. Thank you, Arepa. And thank you everyone who has logged in this morning. Really looking forward to speaking with you guys and hopefully I will be impactful. Hopefully we'll either reinforce what you already know about running your nonprofit or maybe I will educate you on some new information if you're either interested in the nonprofit realm or are new just getting your, dipping your toe into the world of nonprofit. So we will go ahead and get started. See, I am going to stop sharing for just one quick moment and get my PowerPoint synced up. Let's read some slides. And we know technology is always amazing until it isn't. Okay. Okay. There we go. So let's get started with talking about the types of exempt organizations because I know that some clients that I have worked with, they will think that just because they have set up a nonprofit operation with their applicable state, most of us are in Florida. So a lot of my reference will be to the state of Florida that they think that they have a 501c3. So the 501c3 designation is something completely separate and apart from simply setting up your business on SunBiz, which is Florida's Secretary of State application for setting up a business entity. So that's step one, you set up your entity with your applicable Secretary of State. Then you will get your actual tax exempt status through the IRS. The vast majority of us on the call, we are 501c3s. So we have that charitable purpose for which we operate our organization. There are other types of exempt organizations such as private foundations, political organizations, then there are other 501c3s. There are 501c3s for other types of organizations such as chambers of commerce or social clubs, sororities and fraternities are 501c7s. But for the purpose of this presentation, we will focus more so on those charitable entities, the 501c3. I did want to make a special note about churches. A lot of people will ask the question, I have a church, do I need to apply for the 501c3 designation? The reality is that churches are automatically granted that 501c3 status. So they get the benefits of the 501c3. So members that make those contributions, they get those tax deductible contributions by giving to the church. And churches do not have the same filing requirements. They do not have to file the annual 990. So they won't lose that 501c3 status for not filing. But I did just want to throw that out there because I know there's typically a lot of questions surrounding whether a church, the church entity in and of itself, needs to also have that 501c3 designation. And the reality is that it's automatically granted to them. So let's talk about what will keep your non-profit entity in compliance. Number one, maintain your annual report. Make sure you file that annual report here in the state of Florida. We have to file it on Sundays by May 1st of every year. Not filing that annual report can be a very costly error and mistake. So you want to make sure that you maintain your entity status, whether it's here in Florida or in Georgia. I saw Gail on from Atlanta. Just make sure that you're keeping up with your annual filing on the state level. Also here in Florida, there is a requirement. If you are going to solicit or contributions, you are supposed to have what's called a solicitation of contributions license. And that is issued through the Florida Department of Agriculture, their consumer services division. So whenever you register for that, for that license, they will let you know at what point in time you have to renew it. Not everyone's renewal date is necessarily going to be January the 1st. So just at whatever point you apply for that license is typically just going to be 12 months later, that you need to make sure that you log in, you give them some information regarding the amount of receipts that you've had for the prior year. And based on the size of your receipts, that's going to determine the amount of the cost to renew that license. And then number three, which I bold highlight underline, make sure you file your appropriate form 990 every year with the IRS by May 15th. And that's if your fiscal year is also a calendar year, meaning that your financial year ends on December 31st. If for some reason you are a another fiscal year filer, maybe you follow the school schedule, and your fiscal year either ends in August or June, some other date, it's due by the 15th day of the fifth month following the end of your fiscal year. This is the number one reason when I encounter clients that are asking me to help them reinstate their nonprofit status. This is the number one reason why when you do not file that 990 for three years in a row, the IRS will automatically revoke your 501c3 status. And after all the hard work that you went through to get that 501c3 status, you don't want that to be the reason that you end up losing the status is because you didn't file that 990 on time and for those years. And that's pretty gracious that they allow you three years to get it together and to get those filings caught up. So please remember, make sure you get those 990s filed. But now, why are we talking about taxes? We thought nonprofits were tax exempt. Why are we even having this conversation? And I think this is the reason why some people don't know about the 990 is they're thinking, hey, we're tax exempt, we don't have to do anything that deals with taxes. And that's not the case. Exempt organizations still have filing requirements. When you are exempt, it simply means that you are exempt from tax on the net profits or the net revenues of the operations of your organization, right? You have committed to providing a particular type of service that is going to be a benefit either for religious, charitable, scientific purposes. It's a more altruistic reason for you to exist and for you to make money. I like to use the term exempt organization sometimes versus nonprofit because nonprofit is simply a tax designation. It shouldn't necessarily describe your bottom line. So your organization, it's very possible for it to be profitable, right? For your receipts to be greater than your expenses is simply that you do not have to pay taxes on that net income. But nonprofits are still responsible for some taxes and for some filings. Number one, payroll tax. If you're not as employees or you're issuing a W-2 to that employee at your end, you are absolutely still responsible for payroll taxes. So you should be doing the appropriate submitted. You can choose to opt out of the unemployment tax, but general taxes, you still have to make sure that you're getting those submitted on a timely basis. Collecting and remitting sales and use tax. So if your nonprofit sells a product or service. So for example, if you have a nonprofit that's maybe a coffee shop or maybe you're a bookstore, you still should be registered with the Florida Department of Revenue to collect sales tax from when you sell to your customers. And then those taxes that you collect, you still remit it to the state on either that monthly or quarterly basis. Separate issue is being exempt from you having to pay sales taxes. So here in Florida, you can apply for a sales tax exemption certificate and it renews every five years so that you, as the nonprofit, when you are making purchases for your organization, you can be exempt from the sales tax on those purchases. That can be a great savings if you're making a major purchase such as maybe purchasing a vehicle for your organization and to be able to save on the sales tax on a $20, $25,000 purchase, that can be a substantial savings. And then of course, you want to make sure that you file all of the applicable information returns. And so the forms 1099, if you have independent contractors that are working with you, you still issue the 1099 to that contractor as well as the appropriate copy to the IRS, W-2s and the form 990, which is where we're going to spend the bulk of our time this morning speaking on. So the form 990, as I said, as a nonprofit, you don't pay taxes on your income. So the 990 is really referred to as more so of an information return. It's not generating any type of tax liability to the organization. It's for informational purposes. And just a note, 990s are public information. If someone decided that they wanted to go and search the IRS database to learn about your nonprofit, if they wanted to number one verify your charitable status, there is a way to go on the IRS website. You can check the status of a charity. And you can also see the filed 990s under that organization's profile on that database. So just informational purposes, you'll see on the photo here that's on the screen under that 2019, it says open to public inspection. So the form 990 series, there are different levels of the form 990. And you just need to make sure that you file the appropriate one every year because we don't want our status revoked for not filing. So the first level is going to be the 990 in the electronic postcard. So small tax exempt organizations, you get to file the 990 to satisfy your annual requirement. And this is when your annual gross receipts are no less than $50,000. So this is a very straightforward form. It's very basic information, tax ID number, name of your entity, your mailing address. And then basically just a, you literally just check a box that you attend that your gross receipts are not greater than $50,000. And that's it. Very straightforward. The it's only available, it's only accessible to be filed electronically. So there is a profile that you can set up on the IRS website to be able to file it yourself, or you can reach out to a tax preparer to have the tax preparer file it for you. One thing of note when you're looking at this form, because it only attests to the fact that your receipts are not greater than $50,000, there may be some funders and some grand tours that you're working with and you're applying for grant dollars. And you may submit this, some may accept this and some may not. Some of them may want to see your actual figures and your actual numbers. So the next 990 and the 990 series is the 990 EZ. So this is the short form of return of organizations except from income tax. Any organization that has gross receipts of less than $200,000 as well as total assets of less than $500,000 can use the 990 EZ. I do have a few clients that even when their receipts are less than $50,000, they still file the 990 EZ because they want to be able to detail out just a little bit more detailed information for their stakeholders. So they do choose to file the 990 EZ. The EZ is a little bit different in that you are going to report your actual revenues, your actual expenses, as well as the changes in your net assets and you will provide an abbreviated balance sheet. You do have to list your program service accomplishments. So if, for example, the purpose of your nonprofit is to tutor children after school, you will need to make note of the fact that, yes, over the course of the year, we provided tutoring services at such and such location and we served children. How much information you choose to put is subjective, but you do need to just indicate the fact that your entity is in fact generating income, but you're using that income for the purpose of your exemption. It's for your exempt purpose. You do have to list your officers and directors and trustees of your organization as well as any key employees. That definition has slightly changed. It used to be like persons making over $50,000. I think they increased that limit to persons making over $100,000. And then there is something called a schedule B. If you have any contributors that give greater than $5,000 in the course of the year, you will list some detailed information about those contributors, simply their name and their address. And again, this is once again all public information, so just something to be aware of. And then the form 990 in and of itself, the full schedule 990, return of organizations exempt from income tax, still reporting your income and expenses, but you're going way more in depth. So on the easy, you are reporting your revenues and expenses in the balance sheet, but it's more condensed, it's more summarized. Here on the full fledged form 990, everything is in a lot more detail. And so you are listing out all of your various categories of assets and all of your various categories of liabilities on your balance sheet. If you have fixed assets, we're getting into depreciation schedules. So it mirrors maybe like a corporate return. It's very similar to the full fledged corporate returns that I filed for some of my business clients, because again, a nonprofit organization, it's still a business. It's just that the proceeds are going for charitable purposes versus to go into the pockets of the shareholders and the owners. So it's a very in depth, very in depth filing. And then there will be additional schedules that will apply. And it simply depends on the type of exempt organization, and it depends upon the activities of the organization. So there are a number of checklists that have to be filled out a lot of yes, no questions that will just ask about certain activities that took place throughout the course of the year. And depending on how you answer those questions we'll determine how many additional schedules have to be filed for that 990. And then there is a schedule O with supplemental information. Some of that supplemental information that all filers would have to file would be things to attest to the fact that you complied with the conflict of interest policy of your organization. You may have to attest to I did the board of directors review the form 990 before it was submitted to the IRS, just as an example. And then you would also use that schedule. Oh, if there are any just out of the ordinary situations in some of those yes, no questions. If you answer yes, it may direct you okay, you need to give an explanation on schedule. Oh, a few additional schedules that are pretty commonplace on the 990. There is a schedule for related entities. So if this nonprofit is related to other entities, there are some nonprofits that may own LLCs that's common with maybe affordable housing entities and they own LLCs to own each individual asset. You just have to list what all those different related entities are. And again, this is all about disclosure because the IRS is allowing that tax exemption. They just want to make sure there's full transparency of what's happening with all of the funds of the organization. And last but not least on the 990 series, this is the 990T. So there are instances where a nonprofit may have to pay some tax on income. And that is when there is greater than $1,000 of gross income from unrelated business activity. That activity would have to be filed on the 990T. What qualifies as unrelated business activity is if it's a trade or business, it's regularly carried on, and it is not substantially related to furthering the exempt purpose of the organization. I personally have never encountered a scenario where I've had to file the 990T for an organization because generally, even if the organization is carrying on a business activity, it's for the purpose of this for the exempt purpose. And so there are a lot of exemptions and a lot of exceptions to this rule for the 990T, but just be aware that it is there, that it could potentially become an issue. So that's a high level overview of the 990 series and of the different requirements that you should take, different steps you should take to make sure that your nonprofit remains in compliance. And that actually ends at least my presentation portion. And now I would like to open it up, Danita, to see if we have any questions in the room. Yes, absolutely. Go ahead and unmute and please ask your questions. Thank you for that, Malika. I just want to say that was awesome. That was great information. I hope you guys would know, but that was amazing. Thank you for all the knowledge here. Oh, thank you so much. Thank you. Hi, Malika. This is Gail. I do have a question for you. It's my understanding that when filing the 990 in every year as a nonprofit that has less than 50,000 in grocery seats over a period of time at some juncture, I will have to file using the, I think it was the 990ED. And is that for, it's my understanding, I just want to make sure I'm clear, I would need to have 50,000 of grocery seats for three consecutive years. And then I would be required to, to more than, excuse me, more than 50,000 for three consecutive years. And then I would be required to file the 990ED. Is that correct? That's a really good question. So it's not necessarily that you have to exceed 50,000 for three years. What they take a look at is if in over a three-year period, as long as over those three years, your average is 50,000 or less, you're eligible to use the 990N. There are some organizations that are 10, 15 years old that every year they file a 990N because they never get over that $50,000. Ashland, okay. They never get over that average. But as soon as you get to a point where your average over a three-year period has exceeded 50,000, that's when you need to graduate to the easy. Okay, that's excellent. Thank you so much. Okay, my pleasure. Thank you. Any other questions? Because this is such great information I'm telling you. And just given that clarification was very helpful because the word average is in there and that's not always highlighted. So thank you for sharing that part as well. Yes, I have a question. Very simple question. I'm Doris Moore Bailey with the African-American Chamber of Commerce Co. County, Florida. My question is simply this. I understand that the 990N, can you still use a postcard or do you have to use a longer form? No, they have the e-postcard that you could fill out. Can you still do that? You can, yes. And yes, with you being a Chamber of Commerce, yes, you still have that filing requirement. Yes, as long as the Chamber's average receipts are under 50,000 a year, you can absolutely still use the 990N. But I guess they have the e-postcard, so you're saying you can do that because someone said to me, another CPA said, that's going to become obsolete. You need to file the 990N, but you need to file the complete form and not the e-postcard. So the 990N and the e-postcard, that's one of the same. That's right. It's the same form. I haven't heard anything about them phasing out the 990N because the purpose of that is just to have a, not to overburden the smaller nonprofits that don't have a lot of revenue. So yeah, so no, as far as I know, the 990N is here to stay. I haven't heard anything about that being phased out. Thanks. Oh, you're welcome. So by Leica, I have a question. When you said that churches are grandfathered and they don't have to necessarily apply for the Bible 1c3 status because they are a religious entity, then can you tell us how a church might obtain a letter of designation that they are tax-exempt? That's a really good question. It's not so much that they would receive the letter showing their tax designation. Literally what I would do is just go to the internal revenue code and would just copy the language just to highlight, and I actually had to do this for one of my church clients for a lender that they were working with, and I literally just copied and pasted that language from the internal revenue code to say, hey, churches, they're granted the 501c3 status even without the quote unquote designation letter. And this is of course, like you said, we're talking about the church in and of itself. A lot of churches will do a second separate entity for their community outreach work and community outreach efforts. That separate NCS, they would still want to go through that application process of receiving the 501c3 designation, but the church in and of itself just automatically receives all those benefits of a 501c3 charitable entity. Okay. And that's good to know. And I do hope that that was a question that came in from Ms. Melanie. So I do hope that response helped her gain clarification in that area. One other question that we had was how you would go through the process of assisting your clients in making the decision on the type of 990 to file. So is there like an abbreviated checklist that's done for your clients or what have you, I'm using your clients, but in general, or is there some way that it streamlines it so that people aren't, because that's a lot of information and I'm thinking maybe is there a way to help them? Navigate that? Sure. So the first checklist, so to speak, really is just looking at what were your verse receipts? That's step one. So once you let me know, hey, our verse receipts are less than 50,000. It's always less than 50,000. Then question number two becomes, okay, but would there be a reason why we would want to maybe do the longer form versus the postcard? So we spoke about the funders and some of the grant making entities that simply want to see a little bit more detail. Unless there is a reason why we want to do the 990 easy, then those smaller entities would still file the 990 in. And then of course, once their gross receipts are over 50,000, and then of course, over 200,000 will determine if they have to graduate up to the next 990 in the series. Got it. Thank you so much. Ms. Rose, I see your hand is up and we want to go ahead and get your question as well. Okay, thank you very much and thank you, Monica, for this valuable information. I just had you, it's been really good, but I had two points for clarification. The sunbiz finally has to be done by May 1st of every year. That is correct. There is a P associated with that. Second question has to do with the 990. That should be filed after the end of your fiscal year. Correct. That is correct. Correct. So for those clients where their fiscal year in the calendar year lines up, we're talking May 15th. So May 15th of 2022 for the 2021 reporting year. Okay. All right. Thank you very much. Okay. My pleasure. Thank you. And Ms. Gale, I see your hand is raised as well. You certainly can unmute and ask. Yeah, I have another question, Malika. As a non-profit preparing to do more extensive and detailed filing, you mentioned form the conflict of interest form just in your example. Are there other forms that non-profits should have on file to your knowledge that, and I don't know if it's an extensive and exhaustive list, but are there other files that we should be mindful of that we should have as we move into the realm of providing more detail and extensive filing, particularly for funders that they may be asking? That's an excellent question. So the key forms would be your incorporation form. So your articles of incorporation, but very important are your bylaws, the bylaws of the non-profit, because the bylaws is what's going to determine how are your board of directors determined, elected, the length of the term that they serve? Do they have to roll off after so many terms? All those are things that your grantor may want to know, but it's also just important for the organization to know, because this is simply how you transact business and how you conduct the business of the organization. And then there are other things that would be, I would say, a little bit more optional. You definitely should have a conflict of policy in your file and in your documents, but some other things may be, okay, within your board of directors, is there going to be a committee that does the hiring? How are salary packages determined? A lot of that may simply be determined by the vote of the board of directors. You just want to make sure that however you're making those decisions that is documented, either in the bylaws as well as in the minutes of your meetings. So if you decide, hey, we're going to hire our executive director full time, we're going to pay them a salary of X number of dollars. Just make sure that information is detailed, the vote, and just make sure that's documented and that you save those minutes, because that is basically how the nonprofit is going to be authorized to make those decisions. The key is just simple documentation, making sure those minutes are recorded and documented and saved. Excellent. Thank you. Thank you. That is superb. Okay. Do we have any other questions out there? And just for clarification, Ms. Gale, your hand was still up. Is that that you had another question or that you? Oh, okay. I just didn't want to leave you out there if not. Okay. So then we're great there. Mylika, you have been such an informative joy to have on today. We cannot thank you enough. I think that everybody is walking away with a nugget or two because of the explanations that you gave with regard to those 990s, which are the, they're the heart and soul of how a nonprofit is even able to communicate with the public as to what it is that we're doing. And so thank you all for joining us with these valuable questions. Again, this information is recorded. So in the next, within the next 48 hours, you will receive the recording on it. I want to again do a shameless plug for our event on April 4th. We want to have you join us. I did put the link to TechSoup's website there. So you can go in under the Florida chapter and register for us doing our Canva event. And if there are no other questions, again, want to thank you so much for joining us today. And I wish everyone a very happy Monday. Is this not a motivation Monday for sure? Get your taxes together, everybody, right? Stay connected to us. I'm Danita Pumyant. And I'm so grateful to have you. Thank you again, Milika. On behalf of Aretha Simons, my co-host here, this has been another TechSoupConnect Florida event. So thank you, everybody, for joining us. You have a blessed day. Thank you.