While nonprofit organizations do not necessarily have to pay income tax due to their tax-exempt status, it is still mandatory to file annual income tax returns. Contact the Canada Revenue Agency to apply for a tax-exempt status.
Nonprofit organizations file their income tax returns using the T2 Corporation Income Tax Return. This form can be challenging, depending on the complexity of the nonprofit organization. Consider hiring a bookkeeper or an accountant for filing the T2 and for year-round financial assistance. It will alleviate the burden at tax time if the organization’s financial statements are in order and the books have been maintained throughout the fiscal year.
To stay organized throughout the year, use client management software or accounting software to schedule regular budget updates, create and monitor cash flow projects, and ensure that your charity is staying on track.