5 differences between bookkeeping for-profit and not-for-profit organizations

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5 differences between Bookkeeping

For-profit organization and

Not-for- profit organization

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For-profit

Earn and Maximize profit Support a Cause Society needs Convince people to donate by making them aware of the cause the organization is working for.

1- The Objectives of the organization

Not-for-profit

Income StatementsObjectives Balance Sheets Ratio

Convince people to buy through commercial strategythat the product will satisfy their needs, or create new needs.

In both cases they want to make a sustainable business

Nowadays, more organizations try to have a sustainable business approach these 3 levels : - Social- Environmental- Economical

Taxes




https://plus.google.com/107429300413225655449/posts



Income StatementsObjective Balance Sheets Ratio

For-profit Not-for-profit

2- The taxes

Taxes on Net Incomes

Corporates taxes is imposed in the United States at the federal level and in most states. Taxable income varies from 15% to 35 %. For Profit organizations have to pay these taxes each year

Some are Exempt from Taxes

The Not For Profit can be exempt from federal income taxes if the organization meet the requirements set by the Internal Revenue Service. One of this requirements : the organization must be organized and operated exclusively for exempt purpose.

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Taxes







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Income StatementsObjective The taxes Balance Sheets Ratio


3- Balance Sheet

Balance Sheet Detailed

The For-Profit company have to show the assets – liabilities on their balance sheet. The balance sheet has to show the company owner’s equity as well.

Statement of Financial Position

The organizations will provide a statement of financial position. The financial reports will provide information about revenues, support and expenses, but the emphasis will be not on profit or loss.

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Income statementsObjective The taxes Balance Sheets Ratio

4- Income Statements

Income statements

Incomes statements have to be completed each quarter: revenues, gains, expenses and losses have to be reported on it.


Actions done during the quarter A report providing all the actions completed has to be provided by the Not-For-Profit company. A financial report will show information about revenues, support and expenses, but the emphasis is not on profit or loss.

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5- Ratios Income StatementsObjective The taxes Balance Sheets Ratio

The Profitability Ratios is the ratio providing by the company in general: it measures the firm's use of its assets and control of its expenses to generate an acceptable rate of return.

Find the Best Profitably Ratio


Administrative = <10%

The organization must keep the fundraising expenses and administrative overheads to less than 10% of the budget. This information is usually made available in the organization's annual report.

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5 differences between bookkeeping for-profit and not-for-profit organizations

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