Understanding Categories
Bank Reconciliation Process
Tax Filing Requirements
TBC 990 Filing Service
Requirements by State
Closing a Fiscal Year
Your Briefcase

Understanding Categories

Why Do I Need Categories?

Organizations described in Internal Revenue Code Section 501(c)(3) must report total expenses by type and by function. The functions are broken into three categories: Fundraising, Program Services, and Administrative. Expense types can vary widely and are limited only by the amount of detail you wish to have in your category listing (supplies, postage, insurance, professional fees, rent are just a few examples). Requiring charitable organizations to report expenses this way provides the IRS and donors with information to use in determining if an appropriate amount of expenditures is being directed to activities that further an entity's exempt purpose. The IRS is interested in ensuring that the organization's financial resources are focused on performing its charitable programs. Also, since Form 990 (a 501(c)(3)’s tax return) is open to public review, this allows the general public to see how much of the organization's funds are spent on program services compared to fundraising and management and general expenses.

TBC understands many Treasurers are volunteers who have stepped forward to help their organizations, more often than not, with little if any accounting experience or understanding of the unique world of nonprofit accounting. We have therefore tried to make the task simple by providing a starting template for your organization. You can add to it based on your organization’s needs.

You will notice the template we have provided is always split into three categories that mirror those required by the IRS. Within each category are subcategories or “types”.


The Programs categories are the direct and indirect cash receipts and disbursements related to providing the organization's programs and social services (i.e., the activities forming its basis for exemption from tax). Most often you will be recording cash disbursements to these categories but there will be occasions in which you will also be recording cash receipts. For example if you are a youth baseball league and you run a tournament charging an entry fee this cash receipt would be recorded under the Program Service subcategory “Tournaments”. A PTA running a Father Daughter Dinner Dance charging a fee for entry to defray the cost of the event is another example. Both disbursements and receipts can be charged to the same account, meaning you do not need to establish a Father Daughter Dance Income and Father Daughter Dance Expenses categories. TBC automatically separates ins and outs (receipts and disbursements) and totals the activity for the time period so the net program results can be easily seen when generating reports.


Fundraising often referred to as Ways and Means in our category listing includes fundraising events as well as the sale of goods for fundraising purposes. Fundraising costs include those associated with soliciting others to contribute money or other property, time, or the use of facilities or other property as well as costs incurred to encourage contributions. Examples would be the costs of attending workshops to improve fundraising techniques. Most small nonprofits will use these categories for their special events and sales of goods for fundraising purposes. All receipts and disbursements will be posted to these accounts.

It is important to only use this category for fundraisers. As a volunteer Treasurer who may not be well versed in nonprofit reporting, the challenge is determining under which of the three categories (program, fundraising, or administrative) an activity belongs. As a rule of thumb first ask, “Is this receipt or expense the reason we exist?” If the answer is no, yet it generates cash receipts it is in all likelihood a fundraising item.

Contributions, Gifts and Grants

Direct contributions from the public, corporations, government entities or organization members should be recorded to a subcategory of this category.


Management and general expenses are not identifiable with a specific program or fundraising activity, but are normally indispensable to the organization's continued existence. Examples would be office supplies or telephone expense.

Now that you have a general understanding of the categories, below is is a list of examples to help you better understand the relationship between the fundraising, program services and administrative categories.

The Treasurer incurs postage charges sending out this month’s bill. This would be an administrative category item and would be charged to the subcategory Postage.

The PTA Treasurer pays for a new overhead projector for the fourth grade class. This would be a Program category item charged to the subcategory Classroom Enrichment.

The travel soccer team Treasurer pays for the candy the players will be selling. This would be a fundraising item charged to the subcategory Candy Fundraiser.

The Treasurer deposits money received from selling the candy. This would be a fundraising item charged to the subcategory Candy Fundraiser. Notice here we use the same category as above with the candy purchase as TBC splits the ins and outs automatically when generating reports.

The PTA Treasurer pays for the postage incurred sending out the solicitation campaign. This would be a fundraising item charged to the subcategory Postage. Note: It is possible to have a subcategory name under two different categories. In this case Postage under Admin and under Fundraising. This highlights the difficulty in allocating your checkbook activity. In fact in some cases, to be truly accurate, expenses may need to be allocated. The below final example illustrates this point.

The PTA does a mass mailing to all parents. In the mailing is a brochure discussing how to approach the subject of underage drinking with children as well as a donation solicitation. This should be allocated between a Program Subcategory and a Fundraising Subcategory as the mailing serves two purposes fundraising as well as educational awareness.

Recording your transactions to the proper categories is important for many reasons. In order to properly determine the success of a fund raiser for instance it is crucial to have all checks and receipts properly recorded. Developing an accurate budget for the future years is dependent to a large degree on the integrity of your category postings of the current year. Finally as we have highlighted throughout Treasurers Briefcase the general public including potential donors or grantors have the right to request and review your filed tax return. Proper category reporting could be the difference between receiving funding or not.

Bank Reconciliation Process

Reconciling Your Bank Accounts

Your organization's Checking Transactions screen contains a record of the transactions (checks written, receipts from donations, fundraisers or programs, etc.) that occur for a given period of time. The bank also creates a record of the organization’s checking account when it processes the organization’s checks, deposits, service charges, and other items. Soon after each month ends the bank usually mails a bank statement to the organization. The bank statement lists the activity in the bank account during the recent month as well as the balance in the bank account.

When the organization receives its bank statement, the organization should verify that the amounts on the bank statement are consistent or compatible with the amounts in the organization’s Checking Transactions and vice versa. This process of confirming the amounts is referred to as reconciling the bank statement, bank statement reconciliation, bank reconciliation, or doing a bank rec.

The benefit of reconciling the bank statement is knowing that the amount of cash reported by you as the Treasurer is consistent with the amount of cash shown in the bank's records. Because most organizations write many checks and make many deposits, reconciling the amounts on the company's books with the amounts on the bank statement can be time consuming. The process is complicated because some items appear in the company's Checking Transactions in one month, but appear on the bank statement in a different month.

For example, checks written near the end of August are deducted immediately on the organization’s books, but those checks will likely clear the bank account in early September. Additionally, sometimes the bank decreases the organization’s bank account without informing the organization of the amount. For example, a bank service charge might be deducted on the bank statement on August 31, but the organization will not learn of the amount until the company receives the bank statement in early September. From these two examples, you can understand why there will likely be a difference in the balance on the bank statement vs. the balance in the Cash account on the organization’s books at any given point in time.

After you adjust the balance per the bank to be the true balance and after you adjust the balance per the books to also be the same true balance, you have reconciled the bank statement. Most Treasurers would simply say that you have done the bank reconciliation or the bank rec.

At Treasurer’s Briefcase our goal is to make the job of Treasurer simple, fast and easy. We have therefore provided you with a checking account reconciliation feature. This feature allows you to reconcile your organization's checking account to the bank, and once reconciled produce a report for your President, Executive Board, Audit Committee or general membership to view at any time. When you produce the printed report it will be automatically saved in your Briefcase for future viewing by you or others and will in fact be available indefinitely for future Treasurers as proof that you fulfilled your duties during your term.

The Treasurer’s Briefcase reconciliation feature uses an Adjusting the Balance per Bank approach in which you will:

  • Begin with the ending balance from your bank statement...
  • Add any deposits in transit (amounts already received and recorded by the organization, but not yet recorded by the bank)...
  • Deduct outstanding checks (checks that have been written and recorded in the organization’s Checking Transactions, but have not yet cleared the bank account. Checks written during the last few days of the month plus a few older checks are likely to be among the outstanding checks).

The process of determining deposits in transit and outstanding checks is accomplished in the TBC reconciliation feature by checking those checks and deposits that did clear the bank (those transactions that appear on your end of month bank statement). The remaining unchecked deposits and checks represent your deposits in transit and outstanding checks.

As you are checking cleared deposits and checks from your bank statement you will notice items on the bank statement that are not on your Checking Transactions. Bank service fees, NSF check (not sufficient funds), check printing charges, and any interest earned are just a few examples of items you may find on your statement but you have not yet recorded in Checking Transactions. These items must be entered in your Checking Transactions in order to reconcile your account. The TBC reconciliation feature allows you to enter new transactions directly from the reconciliation screen.

Inevitably you will come across checks or deposits that clear for amounts different than that which was recorded in your Checking Transactions. This occurs for many reasons, bad math when recording your deposit, transposition errors when recording a check or deposit, or recording the wrong amount for a written check. TBC makes correcting these issues easy by allowing you to edit a transaction from within the reconciliation feature.

Important! Once an account is reconciled, and the reconciliation report has been generated and filed in your briefcase, amounts that have been cleared can no longer be edited. This is an important audit safeguard for your organization that prevents anyone from altering the true, reconciled amounts in your check register. The reconciliation function will prevent you from completing the process until the bank's balance and the Checking Transactions' balance agree.

Once you have properly cleared all transactions, entered any items from the bank statement you did not have in your Check Transactions, and corrected any deposits or checks which may have cleared for different amounts, you should be reconciled and can complete the process and print your report.

The function of reconciling a checking account is perhaps the most important function for reporting accurate results to your members and executive board. To help you better understand the reconciliation process we have provided you with a video example of a typical reconciliation. Click the video below for the tutorial of our reconciliation feature.

Tax Filing Requirements

Federal Filing Requirements

Annual IRS returns are known as the 990 series because there are several forms that use the number 990, including Form 990, Form 990-EZ, Form 990-N, Form 990-PF, for private foundations, and 990-T, used to report unrelated business income.

Filing an accurate and timely form 990 as well as providing a copy of it to anyone who asks is a requirement of law. On June 8, 2011, the Internal Revenue Service (IRS) released a list of more than 275,000 nonprofits that had their tax-exempt status automatically revoked due to failure to file annual returns. Since then the IRS regularly updates the list. Almost all nonprofits have an obligation to file an annual return with the IRS.

A properly prepared 990 is important because it enables regulators, funders, journalists, and the general public to measure your performance. The rules for determining which return your organization must file are listed below:

  • Form 990 must be filed by an organization exempt from income tax if it has either (1) gross receipts greater than or equal to $200,000 or (2) total assets greater than or equal to $500,000 at the end of the tax year.
  • If an organization has gross receipts less than $200,000 and total assets at the end of the year less than $500,000, it must file form 990-EZ.
  • If an organization normally has gross receipts of $50,000 or less, it must file form 990-N.

State filing requirements

Most states require nonprofit organizations to file one or more documents which generally fall in these four areas:

Annual Reports

Most states require nonprofit corporations that are incorporated in the state (and/or registered to conduct business in the state) to file an annual report (may be called something different) with the state agency that keeps track of corporations registered in that state. Filing the report may require a filing fee and usually requires that the nonprofit identify the registered agent and provide a physical office address. If your nonprofit fails to file this report when due, it could lose its good standing in the state where it is either incorporated or registered to do business as a nonprofit corporation.

State Annual Financial Returns

Just as the federal government requires nonprofits to file the annual information return, many states require nonprofits to file something similar with the state government. Some states allow nonprofits to complete the basic part of the required state form and then attach the signed version of the 990 form that the nonprofit filed with the IRS, but each state has its own requirements.

Tax Status

Additionally, some states require periodic renewal of the state’s recognition of your nonprofit's tax-exempt status. For example, many states issue their own tax-exempt certificate for sales and use tax purposes.

Charitable Solicitation Registration

If your nonprofit is engaged in fundraising activities in a state, it is likely that your nonprofit will need to file an annual charitable solicitation registration in each state in which you solicit donors. The state agency responsible for regulating fundraising activities varies from state to state. To find the general rules for your state just click on the map below:

TBC 990 Filing Service

We are tax exempt. Do we have to file tax returns?

Yes. Non-profits are exempt from paying tax under the provisions of Internal Revenue Code but generally must still file tax returns. There are very few exceptions for organizations other than churches and similar institutions.

What exactly is a form 990?

All federally tax-exempt organizations must file annually one of the Form 990 series returns (990, 990-EZ, 990-N). It provides information on the filing organization's mission, programs, and finances. In essence it is purely an informational return the IRS, and the public, use to determine if your organization is fulfilling its mission.

What is the difference between Form 990, 990-EZ and 990-N?

The 990-N, known as the e-postcard, is the return filed by organizations with gross revenues less than $50,000 per tax year. The 990-EZ is a more complicated return than the 990-N and must be filed by organizations with gross revenues between $50,000 and $199,999.

The 990 is the most complicate of the series and must be filed by organizations with gross revenues of $200,000 or more. There are many schedules that must be included and much more detail must be provided.

Should I use your 990 Wizard if I only have to file a 990-N or 990-EZ?

Yes. We can streamline and e-file the return for you. Whether you engage our CPAs or do your returns yourself, many of the wizard questions will be relevant to filing your state return as well. It's a good idea to use our wizard regardless of which return you need to file.

What is the deadline for filing a 990?

There is no one date on which all Forms 990 must be submitted to the IRS. Instead, a non-profit's filing date is determined by the end of its fiscal year (the 12-month period for which the organization plans the use of its funds); each filing organization is required to file "by the 15th day of the 5th month after" its fiscal year ends. Organizations can also receive up to two 90-day extensions of time to file. Thus, the Form 990 for a non-profit whose fiscal year ended on December 31, 2013, might not be filed until August 15, 2014.

Am I required to file a state return?

Visit our resource section and use the State Requirements tool to determine if your state requires returns to be filed. Most state filings are controlled by the Attorney General's Office as their mission is to safeguard the public from noncompliant charities.

When do I know I am ready to file my taxes?

You should not file your tax return until:

  • Your fiscal tax year is over
  • You have completed the bank reconciliation for the closing month of your tax year
  • The board has reviewed and approved the activity for your year (your final reports)
We suggest reviewing your detail category reports to make certain your postings are accurate and a true statement of your activity. Once you are comfortable with your category report and the tasks noted above have been completed, you are ready to begin the 990 Wizard process. What happens after I complete the 990 Wizard? Once you completed the wizard and returned the engagement letter to the offices of Lauer-Millen, CPAs, Dave and his staff will begin to prepare your return. If they have any questions they will contact the treasurer to seek clarification. When they are satisfied the return has been prepared correctly they will send you a copy of the return. You should then sign and fax or scan and mail the return to Lauer-Millen, CPAs. Detailed instructions will be included with your return.

How can I pay for the filing service?

Please include a check for the appropriate amount when you send the engagement letter to Dave's office.

Can you do our state return?

Yes! Because each state has different requirements, the exact cost and procedure will vary. Please contact us for more information about your state. Our prices for state returns will typically be less expensive than using your local CPA.

How much does your service cost?

The price for filing the 990-N is $35 and a 990-EZ is $249. We do not currently offer a set fee for the 990 as organizations who must file

Requirements by State

Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming Connecticut Delaware Maryland Massachusetts New Hampshire New Jersey Rhode Island Vermont West VirginiaMap of USA with state names
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Closing a Fiscal Year

The end of your organization’s fiscal year brings a few added responsibilities for the Treasurer. Treasurer’s Briefcase has made the accounting side of this process very easy. Once a year is accepted by your audit committee and you feel the work is complete and accurate you will file your reports for the year and Treasurer's Briefcase seamlessly moves to the next fiscal year.

Despite the ease of year end with Treasurer's Briefcase there are still a few steps we suggest you perform to finish the duties of your term.

Below is a list of the important steps we feel should be performed prior to giving control over to the new Treasurer.

Wrap Up Your Finances

Prepare the final month bank reconciliation.

Review the final month’s completed bank reconciliation for any old outstanding checks or deposits in transit and investigate the status of these potentially stale transactions. If these checks or deposits need to be voided, do so documenting the reasons,and reprint and file all year end reports.

Print out the Treasurer's Report and check to make certain the ending cash agrees to your bank reconciliations.

We suggest printing the category report for the year and that you review the coding of all of your entries to make certain the category assignments properly reflect the nature of the receipt or disbursement. Once satisfied print the final copy and file accordingly.

Reconcile Petty Cash account if the organization has one.

Do an Audit

All good nonprofits have a separate “Audit Committee” review the records at a minimum yearly. Establish a time to turn over the Treasurer's Briefcase to the audit committee for review.

Review your programs and your volunteers at year end. This will help in setting goals and objectives for next year.

File Required Documents

File your nonprofit’s 990 Form with the Internal Revenue Service when it’s due (four and a half months after the close of your fiscal year), and prepare any required reports for state and local authorities. (Remember Treasurer’s Briefcase offers a tax filing service for very reasonable fees!!)

Review the “calendar year” disbursements to determine if you need to prepare 1099s for any vendors or individuals who were paid more than $600 during the “calendar” year. ( Treasurer’s Briefcase also provides 1099 filing for a minimal fee.)

Transition to the New Treasurer

Arrange for the transfer of all records, reports, and files to the new treasurer. Remember Treasurer's Briefcase makes this a snap. Just pay your subscription for the new year, set the login and password for the new treasurer and deactivate your login and password.

Obtain and file new signature cards with the bank so that the new treasurer will be authorized to sign checks

Your Briefcase

What Should the Treasurer’s Briefcase Contain?

As CPA’s who have volunteered for several small charities and worked with many more, we know all too well the obstacles faced by most Treasurers. Many small charities like, PTA’s, travel youth teams, sports leagues and social clubs don’t always have a place of business where they can store the many years of documents required by federal, state and sometimes an organization's rules and regulations.

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New Treasurers are almost always handed a box full of random documents with little direction if any from the outgoing Treasurer.

Treasurer's Briefcase in fact, was motivated by this problem and we've devised the solution! Our cloud based document storage solution provides a safe, secure, permanent home for all your important documents. Not only are they accessible 24x7, encrypted and organized neatly into customized folders, they are searchable too. But what exactly should be stored in your Briefcase?

briefcaseBelow we have listed some examples of what you should store in your briefcase and guidelines for your document retention policies. Adhering to these policies should provide you the peace of mind of knowing that you, the board members of your organization and the next Treasurer can simply log in to Treasurer's Briefcase at any time and access these documents whenever they are required.

Permanent Documents that should never be deleted

  • Articles of Incorporation, State Certificate of Formation or Similar Document
  • Bylaws and standing rules including all amendments
  • IRS determination letter of tax-exempt status and copy of application for tax-exempt status
  • Letter assigning Federal Employer Identification Number (FEIN), also known as EIN (Employer Identification Number)
  • Group exemption number if applicable
  • Permanent state tax information, such as state sales tax licenses and correspondence, state identification numbers
  • Audit reports
  • General correspondence
  • Checks (canceled) for important payments, i.e., taxes, special contracts, etc. (checks should be filed with the papers pertaining to the transaction)
  • Contracts and leases still in effect
  • Corporation reports filed with the secretary of state
  • Insurance records, accident reports, claims, policies, certificates
  • Accounting Reports (You automaticall move reports to your briefcase!)
  • Minute books of directors and committees
  • Organization’s charter if applicable
  • Record retention policy
  • Form 990/990-EZ or 990-N and all Schedules, as filed with IRS
  • State tax information returns, as filed
  • Form 990-T, if applicable, for unrelated business income
  • Correspondence with IRS
  • Other information returns filed with the government
  • Charitable Solicitation Registration, if applicable
  • Trademark registrations

Documents that should be kept for a set period of time

The IRS statute of limitations (assuming no fraud exists) is three years from the date a tax return is filed. The 2012 tax return is filed May of 2013 therefore after May of 2016 the statute has run out. We therefore use as a minimum four years. Most states follow the federal guideline.

Document Retention Period
Accounts payable record 7 years
Bank reconciliation 4 years
Cash receipt record 7 years
Checks (canceled) 7 years
Contracts and leases (expired) 7 years
Correspondence with customers or vendor 4 years
Correspondence (general) 4 years
Duplicate deposit slips. 4 years
Employee records (post-termination) if applicable 4 years
Employment applications if applicabl 4 years
Financial statements (year-end) and budget 10 years
Grant award letters of agreemen 10 years
Inventories (products and materials) 7 years
Invoice 7 years
Petty cash voucher 7 years
Purchase order 7 years
Sales record 7 years
Vouchers for payments to vendors, officers, etc. (includes allowances and reimbursements to officers, members, etc., for travel and other expenses) 7 years