When it comes to comparing major differences between for profit vs nonprofit accounting, it all comes down to the nonprofit measurement of success.
Measurement of success between nonprofit and for-profit
- Financial Goals
- Accounting Software
Check out the full infographic below detailing the measurement of success between nonprofit and for-profit accounting. Nonprofit accounting methods differ in terms of accountability and compliance.
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Nonprofits have Two Bottom lines
As a nonprofit, you don’t just have a bottom line you have a double bottom line. The first bottom line is fulfilling your stated mission. The second one is having the necessary funding to support your mission now and in the future.
Nonprofit organizations are considered public benefit corporations that receive their revenue from a combination of:
- Donations or grant income
- Donated facilities and equipment
- Low paid or volunteer staffs
Difference in federal taxes between nonprofits and for-profits
- Nonprofit files IRS Form 990
- For-Profits Pay taxes on net income
While all for-profit businesses must pay taxes on their net income, nonprofits are not required to pay income taxes. Nonprofits are only assessed for taxes such as real estate or sales taxes and are required to file IRS Form 990. Filing the Nonprofit Form 990 ensures that charitable organizations are accountable to funding sources.
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