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Non-Profit Organizations: The Two Types Of Nonprofit Organizations

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NON-PROFIT ORGANIZATION An organization whose mission is to provide services needed by a society is a non-profit organization (NPO). Non-profit organizations are companies that do not declare a profit and utilizes all of its revenues, once operating expenses have been satisfied, toward servicing the public interest. There are two types of non-profit organizations: unincorporated and incorporated. An unincorporated cannot be given federal tax exemptions or the designation of 501 (c) (3) as defined by the IRS. Generally, NPOs are not intended to make profit (Kokemuller, N). The main goal and focus of a nonprofit is how can “they improve the lives of individuals, members, organizations, communities, and society as a whole” (Epstein, 2011).
Nonprofit organizations do not have owners, therefore, financial accountability and reporting is a vital need for demonstrating …show more content…
Included in the accounting and financial reports required by FSAB is a statement of financial position, a statement of activities, and a statement of cash flows (Ives, 2013). For-profits submit financial statements that are different from non-profits. For-profits are required to submit balance sheets, income statements/statement of operations, statement of cash flows, and statement of stockholders equity. This is also another difference between a non-profit and for-profit.
There are some significant differences between nonprofit and for-profit accounting. FASB Statement No. 117 requires NPOs to report net assets and the inflows and outflows of resources be reported as unrestricted, temporarily restricted, or permanently restricted (FASB). Whereas, for-profits report paid-in capital, retained earnings, and treasury

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