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Finance Notes

Our finance forms help our staff track what happened, our finance visualization help our Board make decisions and our finance visualizations help our accountants file vital forms.
  • Assets
  • Liabilities
  • Net Assets
  • Revenue
  • Expenses
  • A Ledger Account tracks a subset of financial transactions w/in one financial bucket
  • A Journal is the chronological log of every transaction
  • Ordered by date
  • The journal is the book of original entry that captures raw transactions in chronological order, and the ledger is a journal that organizes transactions by ledger account
  • A sub-ledger is a Journal for a Leger Account
  • The General Ledger is a Journal for all Ledger Accounts
  • An asset is true for all:
    1. We own it
    2. It has measurable value
    3. It will provide future benefit b/c its cash OR b/c it will last beyond one year
  • Examples:
    • Cash
    • Vehicles
    • Equipment
    • Property
    • Receivables (pledge, money owed to us)
  • A liability is true for all:
    1. It is an obligation to another party
    2. It arose from a past transaction (we already received something)
    3. It will require future payment or performance — either cash, services, or a deliverable
  • Examples:
    • Accounts payable — bills owed to vendors
    • Accrued payroll — wages earned by staff but not yet paid
    • Payroll taxes payable — federal (941/940) and California (EDD) taxes withheld but not yet remitted
    • Refundable advances / deferred Revenue — grant money received before conditions met
    • Loans payable — mortgages, equipment loans, lines of Credit
    • Foundation grant with strings attached A liability until the conditions are met (e.g., report by June or return it)
      • Conditional grant (must meet a milestone or return it) → Liability until conditions met
      • Unconditional but restricted grant (must use for wildfire work) → Revenue with donor restriction, not a liability
  • Payable means a sum of money that must be paid
  • Signifies that a debt or obligation is legally due
  • Accounts payable refers to liabilities a company owes to suppliers for goods or services received on credit but not yet paid
  • Example: We ordered $2,000 of lumber from a supplier. The lumber arrived. We have 30 days to pay the invoice.
  • What it is not:
    • A bill we haven't received yet (future Expense)
    • Wages owed to employees (accrued payroll)
    • Payroll taxes owed to the IRS (payroll taxes payable)
  • According to accrual accounting, transactions are recorded on the date they incur (occur) rather than the date money changes hands
  • Examples:
    • Wages earned by staff in December but paid in January
    • Internet services used during a month are incurred as we consume them, prior to receiving or paying the monthly bill
  • From a financial perspective, Remitted means to transmit or send funds or payment for a bill, service, or account (e.g., to remit the monthly invoice)
  • What we truly own
  • What we own after we pay our Liabilities
  • Example:
    • We buy a $500,000 house with a $400,000 mortgage and $100,000 of your own cash
    • Asset: = What we own = $500,000 house
    • Liability: What you owe: $400,000 mortgage
    • Net assets: = What we truly own = $100,000
  • Net assets without donor restrictions
    • Money the board can spend freely
    • Unrestricted funds (General Operating)
    • Board-designated funds (Operating Reserve, Capital & Equipment)
  • Net assets with donor restrictions — Money legally restricted by donors or grantors
    • All our Restricted funds (Wildfire Repair, Elderly Assistance, Opportunity Youth, etc.)
  • Value that comes in from outside our oganization (like a liability), with no obligation to give something back (unlike a liability)
  • Examples for Shasta Trades:
    • Donations
    • Grants
    • Service fees (trades invoices)
    • In-kind gifts
  • The cost of resources consumed to fulfill our mission
  • Examples:
    • Program Expenses — apprentice wages, mentor wages, program materials, tools consumed on jobs
    • Admin Expenses — rent, insurance, software, salary, board meetings
    • Fundraising Expenses — donor emails, grant writing, event costs, thank-you cards
  • Every Expense gets one functional class — mission
    • admin
    • fundraising
  • A Functional Class is a column on the transaction's table that answers "Was this spending for our mission, for admin, or for fundraising?"
  • Required by the IRS on Form 990 Part IX (Statement of Functional Expenses)
  • Every transaction gets exactly one functional class
  • Helps us tell the IRS (and our board) whether each dollar we spent was on the mission, on admin, or on fundraising
    ClassMeaningExamples
    missionDirectly advances the missionApprentice wages, mentor wages, tools & materials
    adminKeeps the lights onRent, insurance, accounting software, CTO salary, board meetings
    fundraisingRaises moneyDonor emails, grant writing, event costs, thank-you cards
  • Receivable tracks assets owed to us for goods or services we have already provided
  • Examples:
    • Sarah (the realtor) hired us for a $4,000 kitchen rehab. The work is done. $4,000 in accounts receivable
    • A grant funder approved $25,000 and the award letter is signed, but the check hasn't arrived. → $25,000 in grants receivable (a subtype of AR)
    • A donor pledged $10,000 and signed a written promise. No cash yet. → Pledges receivable (a subtype of AR)
  • What it is not:
    • Not a promise someone might make someday (prospect)
    • Not cash in the bank (cash)
  • Assets: 1000 – 1999
  • Liabilities: 2000 – 2999
  • Net Assets: 3000 – 3999
  • Revenue: 4000 – 4999
  • Expenses: 5000 – 5999+
  • The list of every Ledger Account that we use
  • Examples:
    • 1010 · Checking
    • 1020 · Savings
    • 1500 · Vehicles
    • 1510 · Vehicles Accumulated Depreciation
    • 2010 · Accounts Payable
    • 2020 · Credit Card Payable
    • 2030 · Accrued Payroll
    • 3010 · Net Assets, General Operating
    • 3020 · Net Assets, Operating Reserve
    • 3020 · Net Assets, Capital & Equipment
    • 3030 · Net Assets, Restricted
    • 4010 · Individual Donations
    • 4020 · Corporate Donations
    • 4030 · Foundation Grants
    • 5010 · Admin Wages
    • 5020 · Mentor Wages
    • 5030 · Apprentice Wages
    • 5210 · Tools & Consumables
    • 5700 · Depreciation Expense
  • A single economic event that changes two ledger accounts at the same time, b/c every Transaction answers 2 questions:
    1. Where did the value come from? (Credit)
    2. Where does the value sit now? (Debit)
  • From Latin creditum
  • No connection to "credit card"
  • In every transaction, total debits must equal total credits
  • Credit = Where did the value come from? AND Debit = Where is the value now? Examples:
    • Paid Wages:
      • $10,000 Credit @ 1010 · Checking AND $10,000 Debit @ 5010 · Admin Wages
    • Bought Tools w/ Credit Card:
      • $500 Credit @ 2020 · Credit Card Payable AND $500 Debit @ 5210 · Tools & Consumables
  • From Latin debitum
  • No connection to "debit card"
  • In every transaction, total debits must equal total credits
  • Credit = Where did the value come from? AND Debit = Where is the value now? Examples:
    • Received a Grant:
      • $50,000 Credit @ 4030 · Foundation Grants AND $50,000 Debit @ 1010 · Checking
    • Purchased a Vehicle w/ Cash:
      • $30,000 Credit @ 1010 · Checking AND $30,000 Debit @ 1500 · Vehicles
    • Monthly Vehicle Depreciation
      • $30,000 vehicle, 5 year useful life, $6,000/year = $500/month
      • Vehicle is $500 less valuable b/c we used $500 of its value this month
      • $500 Credit @ 1510 · Vehicles Accumulated Depreciation AND $500 Debit @ 5700 · Depreciation Expense
    • Monthly Office Depreciation
      • $500,000 office, $468,000 building, $32,000 land (land does not depreciate)
      • $468,000 building, 39 year useful life = $1,000/month
      • Office is $1,000 less valuable b/c we used $1,000 of its value this month
      • $1,000 Credit @ 1810 · Building Accumulated Depreciation AND $1,000 Debit @ 5700 · Depreciation Expense
  • Point in time
  • Never a range
  • Equation:
    • Net Assets = Assets - Liabilities
      • What we truly own = (What we own) - (What we owe)
      • Example: $100,000 down payment = $500,000 house - $400,000 mortgage
    • Assets = Net Assets + Liabilities
      • What we own = (What we truly own) + (What we owe)
      • Example: $500,000 house = $100,000 down payment + $400,000 mortgage
  • The layout matches the Balance Sheet equation
    • Left side: Assets
    • Right side: Net Assets + Liabilities
    • The two sides must be equal
      • That is why it is called a balance sheet
  • Statement of Activities
  • Tracks Revenue and Expenses over a period (e.g., month, quarter, year)
  • Equation:
    • Beginning Net Assets + Revenue − Expenses = Ending Net Assets
      • (What we truly owned at the start) + (What came in) − (What we used up) = What we truly own at the end
      • $50,000 (Beginning Net Assets) + $200,000 (Revenue) - $180,000 (Expenses) = $70,000 (Ending Net Assets)
  • Answers: "How richer or poorer did we become during this period?"
    • Surplus: Revenue > Expenses
    • Deficit: Revenue < Expenses
  • Balance Sheet:
    • Snapshot equation
    • Net Assets = Assets - Liabilities
    • Describes where we stand on a day
    • Start-of-period Balance Sheet: (e.g., January 1, 2026) provides beginning of period Net Assets
    • End-of-period Balance Sheet: (e.g., December 31, 2026) provides end of period Net Assets
  • Income Statement:
    • Period equation
    • Beginning Net Assets + Revenue - Expenses = Ending Net Assets
    • Describes how our wealth changed during a period
    • Uses the beginning net assets as its starting input and produces ending net assets as its output
  • The Income Statement is the bridge between the starting period and ending period Balance Sheets
  • Example:
    1. January 1, 2026
      • Start-of-period Balance Sheet
      • Assets - Liabilities = Net Assets
      • $500,000 (office) - $400,000 (mortgage) = $100,000
    2. January 6, 2026
      • A $50,000 grant arrives in cash
      • Income Statement:
        • $50,000 Credit @ 4030 · Foundation Grants — Balance Sheet:
        • $50,000 Debit @ 1010 · Checking
        • $550,000 (Assets) - $400,000 (Liabilities) = $150,000 (Net Assets)
    3. January 15, 2026 — We pay $10,000 in wages
      • Income Statement:
        • $10,000 Debit @ 5010 · Admin Wages — Balance Sheet:
        • $10,000 Credit @ 1010 · Checking
        • $540,000 (Assets) - $400,000 (Liabilities) = $140,000 (Net Assets)
    4. January 21, 2026 — We buy a $30,000 truck with cash — Balance Sheet: - $30,000 Credit @ 1010 · Checking - $30,000 Debit @ 1500 · Vehicles - $540,000 (Assets) - $400,000 (Liabilities) = $140,000 (Net Assets)
      • Income Statement: No Revenue or Expense alterations
    5. January 27, 2026 — We buy $500 of tools on Credit - $500 Credit @ 2020 · Credit Card Payable - $540,000 (Assets) - $400,500 (Liabilities) = $139,500 (Net Assets)
      • Income Statement:
        • $500 Debit @ 5210 · Tools & Consumables
    6. End-of-period Income Statement
      • $50,000 (Revenue) - $10,500 (Expenses) = $39,500 (Surplus)
    7. End-of-period Balance Sheet
      • $540,000 (Assets) - $400,500 (Liabilities) = $139,500 (Net Assets)
    8. Conclusion (Period Equation):
      • Beginning Net Assets ($100k) + Revenue ($50k) − Expenses ($10,500) = Ending Net Assets ($139,500)
  • A pool of money or resources set aside for a specific purpose, restriction, or accounting track
  • A way for a nonprofit to track and prove that money is being used according to:
    • Donor intent
    • Legal restrictions
    • Board designations
    • The organization's mission/programs
  • Fund money is available for general mission use
  • Donor or law limits how the fund's money can be used
  • It is almost never required or advisable to have a separate bank account for every fund
  • Our accounting system is where we achieve the strict fund separation required by us, donors and grants
  • Our bank accounts is for managing cash flow
  • Open additional bank accounts only when it serves a practical purpose, such as:
    • Safeguarding a Reserve: To prevent the Board from accidentally spending our 6-month operating cushion, it can be in a separate savings or investment account
    • Maximizing Earning: Long-term or endowed funds can be in investment accounts, not a checking account, to generate returns
    • Funder Mandate: A rare grant might explicitly require a dedicated account. If so, we must weigh the administrative burden against the value of the grant
FundTypeWhy does this fund exist?
General OperatingUnrestrictedGeneral Operating pays the bills that no grant will cover (e.g., rent, insurance, software) and the staff time that holds everything together
Operating ReserveBoard-DesignatedOperating Reserve holds 3 months of operating expenses so a lost grant or a slow quarter never forces us to lay off apprentices mid-cohort. It is the same cash as General Operating, but with a governance lock the board cannot casually undo.
Capital & EquipmentBoard-DesignatedCapital & Equipment buys and replaces the trucks, tools, laptops, and training-space buildout that outlive a single year. It turns a broken truck from a crisis into a scheduled line item the board already planned for.
Workforce DevelopmentRestrictedWorkforce Development lets us recruit, train, and pay skilled tradespeople. Foundations focused on optimal community employment love this fund.
Opportunity YouthRestrictedOpportunity Youth are young adults (age 16-24) who are not in school and not working. Foundations focused on opportunity youth love this fund.
Apprenticeship TrainingRestrictedApprenticeship Training lets us cover the structured training costs that sit outside or inside wages (e.g., study guide creation, safety certifications, exam prep). Foundations focused on apprenticeship programs love this fund.
Mentor DevelopmentRestrictedMentor Development lets us recruit, train, and compensate the experienced tradespeople who make apprenticeships work. Foundations focused on mentorship and teacher quality love this fund.
Low & Moderate IncomeRestrictedLow & Moderate Income lets us subsidize repair and renovation work for households that cannot afford market rates. Foundations focused on economic mobility and housing equity love this fund.
Elderly AssistanceRestrictedElderly Assistance lets us serve seniors on fixed incomes who need help before their home repairs become hazards. Foundations focused on aging gracefully and senior safety love this fund.
Community RepairRestrictedCommunity Repair lets us deliver affordable, high-quality trade services across Siskiyou County. Foundations focused on community revitalization love this fund.
Wildfire RepairRestrictedWildfire Repair lets us harden homes against wildfire (e.g., replacing dry wood roofs, bad siding, other hazards that put our neighborhoods at risk). Foundations focused on wildfire resilience love this fund.
  • The General Operating fund is for spending:
    • General Operating is the source. Reserve and Capital are destinations the Board funds when there is surplus
    • Answers "can we pay this month's bills"?
  • The Operating Reserve fund is for surviving:
    • Cash set aside by the Board (not a donor) to cover 3 months of operating expenses if revenue drops or a crisis hits
    • This fund is not a different pile of cash, it's the same cash with a governance label that the Board cannot casually undo.
    • Answers "can we survive a crisis"?
  • The Capital & Equipment fund is for replacing:
    • Money set aside to buy or replace things that last more than a year (e.g., trucks, tools, computers, a training facility)
    • This fund is not a different pile of cash, it's the same cash with a governance label that the Board cannot casually undo.
    • Answers "can we replace the truck before it dies"?
Only General Operating FundWith Board-Designated funds
One number hides everythingThree numbers tell the real story
Crisis forces layoffsReserve absorbs the shock
Truck breaks, work stopsCapital fund already has the cash
Board can't govern what it can't seeBoard votes on release, not vibes
Funders see a fragile orgFunders see a resilient org
Audit = stressAudit = routine
  • A single dollar carries all three stickers at once
    • They are not competing answers
    • They are three separate facts about the same dollar
    • That is why they never contradict each other
      ItemWhat it addsShasta Trades count
      Bank accountThe physical location of cash2
      Ledger accountThe category of value~50
      FundThe restriction label on value11
  • Depreciation is the way we spread the cost of a long-lasting asset across the years it actually helps us
  • The problem it solves:
    • We buy a $30,000 truck on January 21 and pay all $30,000 in cash that day. But the truck serves the mission for five years. If we recorded the whole $30,000 as an expense in January, that one month would look terrible and the next four years would look free. Neither is true
    • Depreciation fixes the timing: We record $6,000 of expense each year for five years, so each year carries its fair share of the truck's cost
  • The rule:
    • IF an asset will help us for more than one year AND costs at least our capitalization threshold ($2,500) THEN we capitalize it on the balance sheet and depreciate it over its useful life
  • Depreciation is an allocation of a past payment, not a new payment
  • Useful life is how many years we expect the asset to serve us before it needs replacing
  • Examples:
    AssetUseful life
    Laptops, software equipment3 years
    Power tools, hand tools capitalized3–5 years
    Vehicles (truck, van, trailer)5–7 years
    Furniture7 years
    Building39 years (IRS convention for nonresidential real property)
    LandNever depreciated
  • Accumulated Depreciation is the running total of all depreciation we have ever recorded on an asset, from the day we bought it until today
  • Depreciation expense is this period's slice
  • Accumulated depreciation is every slice ever taken, added up
  • "Contra" means "against"
  • A contra-asset is an account that reduces total assets
  • Examples:
    AccountTypeWhat it shows
    1500 · VehiclesDebitWhat we paid (original cost)
    1510 · Vehicles Accumulated DepreciationCreditHow much of that cost has been used up
    1600 · EquipmentDebitWhat we paid (original cost)
    1610 · Equipment Accumulated DepreciationCreditCredit
    1800 · BuildingDebitWhat we paid (original cost)
    1810 · Building Accumulated DepreciationCreditCredit
  • A donor is a person or organization that voluntarily gives money, property, goods, services, or other assets to a nonprofit without receiving equal value in return
  • A donor is the source of a charitable contribution
  • Donor types:
    TypeMeaning
    individualOne person giving personal funds, can be anonymous
    staffCurrent staff
    board-memberCurrent board director, must be disclosed on 990
    corporationBusiness giving from company funds
    nonprofitA 501(c)(3) giving funds
    foundationCharitable entity that uses its assets to fund charitable work
    governmentCity, county, state, federal agency
  • A donation is a gift of cash or cash-equivalent from a donor to Shasta Trades
  • A gift of goods, services, property, or use of facilities instead of cash
  • Still a donation for accounting, receipting, and 990/199 purposes
    • Value came in from somewhere → record in-kind revenue
    • Value now sits somewhere → record an asset or an expense
  • Has a fair market value (FMV) that must be documented, not guessed
  • Can be restricted (e.g., “this laptop must be used for apprentice training”) or unrestricted
  • Two big categories: goods/property (laptops, tools, trucks, materials) and services (pro bono legal, accounting, trades labor)
  • In-kind types:
    TypeExamplesWhat Makes It This TypeBooks As
    vehiclesTruck, van, car, trailer, heavy equipment with a title or registrationTitled or registered motor vehicle or towableFixed asset; Form 1098-C if claimed value > $500; Form 8283
    equipmentAndFurnitureLaptops, printers, monitors, desks, chairs, shelving, power tools, hand tools, large tool sets, generators, compressorsDurable property with useful life > 1 year, not a vehicle, not a buildingFixed asset if ≥ capitalization threshold; otherwise expense when placed in service
    consumableSuppliesPaint, lumber, fasteners, caulk, sandpaper, safety gear (gloves, masks, harnesses), PPE, cleaning suppliesUsed up or consumed within a single job or seasonExpense when used
    inventoryForResaleDonated building materials Shasta Trades intends to sell to fund programsDonated goods held primarily for sale, not for program useInventory asset; cost of goods sold when sold
    realPropertyDonated land, donated building, donated easementReal estate transferred outright (title changes hands)Fixed asset; appraisal required; Form 8283 Section B
    useOfFacilitiesFree office space, free warehouse, free training bay, free storageRight to use space without owning itIn-kind rent revenue + rent expense (equal amounts)
    professionalServicesPro bono legal, accounting, marketing, consulting, engineering, IT, grant writingSpecialized knowledge-based serviceRecognize only if specialized + skilled provider + would otherwise purchase; otherwise disclose only
    tradesServicesMentor donates 10 hours of electrical work; contractor donates a plumbing repairSkilled physical trade laborSame three-part test as professional services; usually disclose only
    securitiesStocks, bonds, mutual funds, ETFs, cryptoFinancial instrument with a market valueInvestment asset; Form 8283; appraisal not needed for publicly traded securities
    intangibleAssetsSoftware licenses, domain names, trademarks, patents, copyrights, royalty rightsNon-physical asset with legal or contractual valueAsset if ≥ threshold; otherwise expense or disclose
    foodAndEventGoodsDonated catering, beverages, auction items, event suppliesGoods donated for a specific eventExpense in the period of the event; watch quid pro quo disclosure
  • FMV stands for Fair Market Value
  • It is the price that a willing buyer would pay a willing seller for the same item, when neither is under pressure to buy or sell, and both know what they are trading
  • It is not what the donor originally paid, not what the item is worth to us emotionally, and not what we hope to sell it for
  • Why we need it: The IRS requires a dollar value for every in-kind donation so the donor can claim a deduction and so we can record revenue and expense correctly
  • Examples:
    ItemDonor paidFMV todayWhy
    A 3-year-old laptop$1,200 new$300Used laptops of that age and spec sell for ~$300 on eBay
    A used pickup truck$25,000 new$12,000Kelley Blue Book private-party value in current condition
    A hammer$30 new$30Brand new, still in packaging
    10 hours of an attorney’s timeBilled at $350/hr$3,500That is what she charges clients
    Free office space, 500 sq ft—$1,500/monthComparable office space rents for $3/sq ft in that area
  • Pro bono is short for pro bono publico—Latin for “for the public good”
  • It means professional services donated free of charge or at a substantially reduced rate to a nonprofit or to people who cannot afford them
  • Typical examples: an attorney drafting bylaws for free, a CPA preparing a Form 990 at no charge, a marketing firm designing a campaign for free, a structural engineer reviewing a repair plan
  • Pro bono vs volunteer work: Volunteer work is any unpaid help (painting a wall, handing out flyers). Pro bono is unpaid work that uses a person’s professional skill—the same service they normally charge for
  • A promise to give, so it's never cash
  • Institutional funding (e.g., Government, Foundations, Home Depot)
  • Separate lifecycle from Donation b/c grants have reporting and compliance
  • Grant statuses:
    StatusMeaningFunds received?Spendable?Reporting due?
    prospectIdentified, not yet applied.NoNoNo
    appliedApplication submitted.NoNoNo
    declinedApplication rejected.NoNoNo
    awardedApproved, award letter signed.NoNoSoon
    pending_fundsWaiting for disbursement.NoNoSoon
    activeFunds received and spendable per grant terms.YesYesYes
    reportingSpending underway or complete; reports due.YesYesYes
    closedAll reports accepted. Funds fully spent or returned.YesNoNo
    terminatedEnded early by grantor or grantee.PartialNoFinal report
  • Notes:
    • terminated is when the grant ended early, before it was supposed to (e.g., we missed a milestone, they ran out of money)
  • A receipt is the legal document that proves a donation happened
  • Without it, our donor cannot claim a tax deduction and we expose the organization to compliance risk
  • When a donation is for $250 or more
  • When a donor receives goods or services worth more than $75
  • Name of our organization
  • Date of the contribution
  • Amount of the contribution (cash) or description of property (noncash)
  • Whether any goods or services were provided in exchange
  • If goods/services were provided, a description and good-faith estimate of their value
FormJurisdictionDescriptionJanFebMarAprMayJunJulAugSepOctNovDec
Annual Return Form (990 Series)FederalIRS annual information return proving federal tax-exempt status and financial transparency. Due May 15 for calendar-year filers; Form 8868 extends to Nov 15.————Due—————Ext. due—
UBIT Annual Return (990-T)FederalIRS return for unrelated business taxable income (UBTI). Due May 15 for calendar-year filers; Form 8868 extends to Nov 15.————Due—————Ext. due—
UBIT Estimated Payments (990-W)FederalEstimated tax payments for UBTI. Calendar-year due dates are generally Apr 15, Jun 15, Sep 15, and Dec 15.———Q1 due—Q2 due——Q3 due——Q4 due
Payroll Tax Form (941)FederalQuarterly federal payroll return for Social Security, Medicare, and federal income tax withholding. Due last day of the month after each quarter. Used unless Form 944 applies.Q4 due——Q1 due——Q2 due——Q3 due——
Payroll Tax Form (944)FederalAnnual federal payroll return for small employers with annual employment tax liability of $1,000 or less. Due Jan 31 for calendar-year filers. Used instead of quarterly Form 941.Due———————————
FUTA Form (940)FederalAnnual federal unemployment tax return. Due Jan 31; if all FUTA tax was deposited timely, filing deadline is Feb 10.Due———————————
Nonpayroll Withholding Form (945)FederalAnnual return for federal income tax withheld on nonpayroll payments, such as backup withholding. Due Jan 31.Due———————————
W-2 / W-3 FormFederalAnnual employee wage and withholding statements plus transmittal to the Social Security Administration. Due Jan 31.Due———————————
1099-NEC / 1099-MISC FormFederalIRS information returns for nonemployee compensation and certain other payments. 1099-NEC due Jan 31; 1099-MISC due Feb 28 paper or Mar 31 electronic.NEC dueMISC paper dueMISC e-file due—————————
Form 8282 Disposition FormFederalIRS donee information return when donated property valued over $5,000 is sold, exchanged, or disposed of within 3 years of receipt. Due 125 days after disposition.As neededAs neededAs neededAs neededAs neededAs neededAs neededAs neededAs neededAs neededAs neededAs needed
Retirement Plan Form (5500)FederalAnnual ERISA/IRS return for employee benefit plans. Due Jul 31 for calendar-year plans; Form 5558 extends to Oct 15.——————Due——Ext. due——
Form 8868 ExtensionFederalIRS automatic extension request for exempt organization returns. File by May 15 to extend 990 / 990-T to Nov 15 for calendar-year filers.————Due———————
Form 5558 ExtensionFederalIRS extension request for employee plan returns. File by Jul 31 to extend Form 5500 to Oct 15 for calendar-year plans.——————Due—————
California Annual Return (FTB 199/199N)State (CA)Franchise Tax Board annual exempt-organization return. California's version of Form 990. Due May 15 for calendar-year filers; California provides an automatic extension to Nov 15.————Due—————Auto ext. due—
California UBIT Form (Form 109)State (CA)California exempt organization business income tax return for California UBTI. Due May 15 for calendar-year filers.————Due———————
CA Attorney General Registration (RRF-1 / CT-TR-1)State (CA)Annual Registry of Charitable Trusts filing with the California Attorney General. RRF-1 for charities with gross receipts ≥ $50,000; CT-TR-1 Treasurer's Report for small charities < $50,000. Due May 15 for calendar-year filers.————Due———————
CA Payroll Tax Returns (DE 9 / DE 9C)State (CA)California quarterly payroll returns for State Disability Insurance, Personal Income Tax withholding, and Unemployment Insurance. Due last day of the month after each quarter.Q4 due——Q1 due——Q2 due——Q3 due——
CA Exemption Application (FTB 3500/3500A)State (CA)Franchise Tax Board exemption application or streamlined submission based on IRS 501(c)(3) recognition. Filed as needed, not annually.As neededAs neededAs neededAs neededAs neededAs neededAs neededAs neededAs neededAs neededAs neededAs needed
Sales Tax (CDTFA) — ConditionalState (CA)California sales/use tax exemption or resale certificate only when a specific qualifying exemption applies. No blanket nonprofit sales tax exemption exists. Filed as needed, not annually.As neededAs neededAs neededAs neededAs neededAs neededAs neededAs neededAs neededAs neededAs neededAs needed
Local Business LicenseLocalCity or county business license required by the local jurisdiction. Renewal timing varies by locality; many local licenses renew in December, but confirm with the specific city or county.———————————Due
  • A jurisdiction is a government authority that has the legal power to require filings, collect taxes, or enforce compliance
  • Shasta Trades answers to several layers of government at the same time
  • Each jurisdiction has its own forms, deadlines, penalties, and rules
  • Gross receipts is the total cash or total amount received from all sources before any deductions for costs, expenses, or returns
  • For a fundraising event, gross receipts is simply the total cash generated—e.g., 100 attendees at $100 each = $10,000 in gross receipts
  • For a nonprofit organization overall, gross receipts includes contributions, gifts, grants, program service revenue, and other income—without subtracting the expenses of raising or collecting that money
  • Gross receipts is the threshold metric used to determine which IRS Form 990 series a nonprofit must file:
    • ≤ $50,000 → Form 990-N (e-Postcard)
    • < $200,000 → Form 990-EZ
    • ≥ $200,000 → Full Form 990
  • Gross receipts is the total cash in; gross income is the value of what was given back in exchange
  • Gross income is the fair market value (FMV) of the goods or services that a person or organization receives in exchange for a payment—not the total cash paid
  • In nonprofit accounting, gross income is most often relevant for fundraising events and quid pro quo contributions
  • Example: A charity dinner ticket costs $100. The attendee receives a meal with a retail value of $30. The gross income is $30 per attendee (the value of what they received), not the full $100 ticket price
  • Why it matters: The portion of the payment that exceeds gross income is the tax-deductible contribution. In the example, $70 per attendee is a contribution and $30 is gross income (the value of the benefit received)
  • Gross receipts is the total cash in; gross income is the value of what was given back in exchange
  • UBTI stands for Unrelated Business Taxable Income
  • In plain terms: IF Shasta Trades earns money that is not substantially related to our mission THEN that income is UBTI
  • UBTI is taxable at corporate rates and is reported on IRS Form 990-T (federal) and California Form 109 (state)
  • An Unemployment Tax Return is the filing that reports wages paid to employees and the unemployment insurance (UI) tax owed on those wages
  • Federal: Form 940 (Employer’s Annual Federal Unemployment Tax Return) reports FUTA tax. FUTA is 2.1% (after the 5.4% state credit) on the first $7,000 of wages per employee[reference:3]
  • California: Form DE 9 and Form DE 9C are the quarterly unemployment and wage reports filed with the Employment Development Department (EDD) . DE 9 reports contributions and DE 9C reports wages[reference:4]
  • IF we pay an independent contractor (e.g., a consultant, a guest speaker, or a tradesperson treated as a 1099 contractor) and do not have a valid W-9 with a correct TIN, THEN backup withholding may apply
  • Backup withholding is a 24% federal income tax withholding that a payer (Shasta Trades) must apply to certain payments when the payee (e.g., a consultant, a guest speaker, or a tradesperson treated as a 1099 contractor) fails to provide a correct Taxpayer Identification Number (TIN) or fails to certify that they are not subject to backup withholding
  • It is a compliance enforcement mechanism: if the IRS cannot match a payment to a correct TIN, the payer must withhold tax and send it to the IRS
  • Shasta Trades’ obligation: Collect a valid Form W-9 from every contractor before paying them to avoid backup withholding and to ensure proper 1099-NEC reporting
  • Nonemployee compensation is money paid to someone who is not on payroll as W-2 employees for services performed for the organization’s trade or business
  • The general reporting threshold is $600 or more paid to a single payee during the calendar year
  • If Shasta Trades controls what work is done, how it is done, and when it is done, the worker is generally an employee, and wages are reported on Form W-2, not 1099-NEC
  • ERISA stands for the Employee Retirement Income Security Act of 1974
  • It is the federal law that sets minimum standards for most voluntarily established pension and health plans in private industry, including nonprofit employers
  • ERISA requires plan administrators to provide participants with plan information, sets fiduciary responsibilities, and establishes funding and vesting rules
  • ERISA applies if the nonprofit sponsors a retirement plan (e.g., a 401(k), 403(b), pension, or welfare benefit plan)
  • If Shasta Trades only pays wages and does not sponsor a funded employee benefit plan then ERISA/Form 5500 does not apply
  • Employee plan returns are the annual information returns that an employer must file for certain employee benefit plans it sponsors
  • The main form is the Form 5500 series (Annual Return/Report of Employee Benefit Plan), which reports plan participants, funding, investments, and compliance
  • Who files: The employer maintaining the plan or the plan administrator of a pension or welfare benefit plan covered by ERISA
  • If we offer a 401(k), 403(b), or other funded retirement plan, Form 5500 is likely required
  • If we only offer a payroll deduction IRA or offer no plans then filing may not apply
  • FTB stands for the Franchise Tax Board — California’s state tax agency responsible for administering exempt organization filings
  • Key FTB Forms:
    • Form 199: California Exempt Organization Annual Information Return, the state equivalent of Form 990, required if gross receipts > $50,000
    • FTB 199N: California e-Postcard, for organizations with gross receipts normally ≤ $50,000
    • Form 109: California Exempt Organization Business Income Tax Return, for California UBTI > $1,000
    • FTB 3500 / 3500A: Applications for California tax-exempt status
  • CDTFA stands for the California Department of Tax and Fee Administration
  • Administers sales and use tax, excise taxes, and certain fee programs in California
  • There is no general sales tax exemption for nonprofit organizations in California. Nonprofits may need a seller’s permit and may owe sales/use tax on taxable sales or purchases
  • Common CDTFA Forms:
    • CDTFA-230: Resale Certificate, for buying goods intended for resale
    • CDTFA-101: Exemption Certificate, for qualified exempt purchases
    • CDTFA-230-C-2: For qualified nonprofit facility construction exemptions
  • For Shasta Trades: If the nonprofit sells donated goods, materials, or merchandise, or makes taxable purchases, CDTFA compliance may apply. Do not assume “nonprofit = no sales tax.”
  • EDD stands for the Employment Development Department
  • California’s state agency that administers payroll taxes, including Unemployment Insurance (UI), State Disability Insurance (SDI), Employment Training Tax (ETT), and Personal Income Tax (PIT) withholding
    • UI = Unemployment Insurance: An employer-paid tax that funds unemployment benefits for workers who lose their jobs. The wage limit is $7,000 per employee per year
    • ETT = Employment Training Tax: An employer-paid tax that funds worker training programs. The wage limit is $7,000 per employee per year
    • SDI = State Disability Insurance: An employee-paid tax (withheld from wages) that provides short-term disability and paid family leave benefits. There is no wage limit as of 2024
    • PIT = Personal Income Tax: California’s state income tax that employers withhold from employee wages and remit to the EDD. There is no wage limit
  • A resale certificate is a document a buyer gives a seller to purchase goods without paying sales tax because the buyer intends to resell those goods in the regular course of business
  • In California, the common form is CDTFA-230 (Resale Certificate)
  • Who can use it: Retailers and wholesalers that buy inventory for resale. It is not a general nonprofit exemption.
  • If we purchase building materials or goods that it will resell to clients as part of a program (e.g., selling materials at cost as part of a repair project), a resale certificate may apply to those specific purchases If we are a consumer of materials (using them in our repair work rather than reselling them), a resale certificate generally does not apply
  • Quid pro quo is Latin for “something for something”
  • In nonprofit fundraising, a quid pro quo contribution is a payment made by a donor partly as a charitable contribution and partly in exchange for goods or services provided by the organization
  • Example: A donor gives Shasta Trades $100 and receives a $40 benefit (e.g., a dinner, a gift, or event admission). The quid pro quo contribution is $100; the deductible portion is $60 ($100 minus the $40 value received)
  • Disclosure requirement: If the payment exceeds $75, Shasta Trades must provide a written disclosure statement that:
    1. States the amount of the payment that is deductible, and
    2. Provides a good-faith estimate of the value of goods or services provided
  • An excise tax is a tax imposed on the manufacture, sale, or use of specific goods, services, or activities, rather than on income or property
  • In California sales tax context: California imposes an excise tax on retailers for the privilege of selling tangible personal property at retail. This tax is computed as a percentage of gross receipts and is the legal basis for the sales tax that retailers collect from customers
  • Use tax is the companion tax to California sales tax. It applies when California sales tax was not paid on a taxable purchase, but the item is used, stored, or consumed in California
  • Common triggers for use tax:
    • Purchasing taxable items from an out-of-state vendor (e.g., online, mail order) that does not collect California sales tax
    • Removing items from inventory and using them in California without having paid tax at purchase
  • How it is paid: Use tax is reported on the organization’s sales and use tax return under “Purchases Subject to Use Tax.” The purchase price is added to the total amount subject to tax
  • There is no general exemption from use tax for nonprofit organizations. If Shasta Trades buys tools, equipment, or materials from an out-of-state seller that does not collect California tax, and those items are used in California, use tax is generally owed
  • Due the 15th day of the 5th month after our tax year ends (May 15 for calendar-year filers)
    FormGross receiptsTotal assets
    990-N≤ $50,000N/A
    990-EZ< $200,000< $500,000
    990 (full)≥ $200,000≥ $500,000
  • Failure to file for 3 consecutive years = automatic loss of tax-exempt status
  • If any threshold is passed then we must file that form
  • Due the 15th day of the 5th month after our tax year ends (May 15 for calendar-year filers)
    FormGross receipts
    FTB 199NNormally ≤ $50,000
    Form 199> $50,000, or private foundations / trusts regardless of size