Chapter Finances: Leveraging TCA’s Resources Texas Counseling Association

Strategic Direction TCA has a secure organizational structure with sound fiscal management.

Agenda Financial Process Overview Fiduciary Duties Treasurer Duties Internal Controls Financial Services IRS Information Annual Budget Income Expenses Monthly Financials

Putting It All Together … Executive Director & Staff Have an idea … TCA Treasurer Presents idea to Finance Committee … TCA Board Determines if idea is aligned with TCA Strategic Plan then approves & submits motion to the Senate … Finance Committee Reviews & analyzes the idea & develops a motion …

TCA Senate Discusses the motion … Motion Adopted!!

Corporate Responsibility Under Texas Law, “A Division of a Corporation is not a separate legal entity but is the corporation itself.” Each of you may have different business setup. Corporate, Private or Public , LLC, Partnership, or S Corp. Non-profit fraternal 501(c)(10)

Fiduciary Duties Duty of Loyalty Duty of Care Duty of Obedience Requires the individual, when making a decision or acting on behalf of the association, to set aside personal or conflicting interests and act solely in the best interest of the association. Duty of Care Requires the individual to discharge duties in good faith, in a manner one reasonably believes to be in the best interests of the organization. The individual must devote the time, attention and resources necessary to understand and prudently oversee the affairs of the organization. Duty of Obedience Requires the individual to obey all laws pertaining to the association and act in furtherance of the association’s strategic purposes.

Treasurer Duties Receives and deposits all revenue and makes disbursements as directed by the Chapter Executive Committee or Board. Maintains accurate business records and provides regular financial reports to the Chapter leadership, Board and members. Is a signatory on Chapter bank accounts, along with the Chapter President, as designated in Chapter by-laws or governance manual. Coordinates the annual audit of the Chapter financial records with the individual (other than the treasurer) appointed by the Board or President to conduct the audit. Coordinates the preparation of an annual Chapter budget. More than one person is a signatory on bank accounts. Try for people with staggered terms so everyone not leaving at once.

Internal Controls Segregation of Duties Receipts Disbursements Keep more than one person involved Receipts Keep copy of receipts and invoices Disbursements Review appropriateness of payments Obtain required authorizations Reconcile bank statements monthly TCA Record Retention Guidelines are available Segregation – more than one person receives monthly reports Receipts – not necessary to have “originals”, copies and scanned documents will work Disbursements/Authorizations – do not sign your own checks, expenses over a certain amount should require two signatures, permission from board to exceed a budget line-item Reconciliations – credit cards should be reconciled just like a bank account Recommend keeping an electronic back-up of financial files & documents in a separate location Don’t send confidential info via email – passwords, acct numbers, etc

Internal Controls Manage Bank Accounts Statements should be reviewed by more than one person Look at beginning and ending register balance and compare to statement Look for unusual transactions Review all checks distributed Confirm authorized signatures only Have someone else opens and review bank and credit card statements. Review cleared checks – correct signatures, amounts, etc.

Internal Controls File timely tax return (engage CPA services suggested) File timely sales tax and Franchise reports (as applicable) Insurance General Liability Non-profits are not automatically exempt from sales tax and franchise tax. Need to apply for exemption separately.

A La Carte Services TCA provides “a la carte” services to Chapters upon request. Online membership dues management and database lists (chapter website required) Online event registration (required if using TCA’s CEU provider number) Financial & budget consultations

Financial Services 20% of any Chapter revenue collected by TCA is retained by TCA to help cover bank charges and administrative costs to provide the following services: Process online chapter memberships and/or conference registrations Monthly distribution of funds and membership reports to Chapter Treasurer Mailed memberships & registrations should go directly to the Chapter, not the TCA office. Communicate regularly with TCA office to give them current mailing address for checks and reports.

IRS Information TCA is a 501c3 Tax Exempt Organization Allowed to take tax deductible donations from individuals. Currently the EEF (Educational Endowment Fund) is the program setup for donations. 2017 Mileage rate Effective Jan 1, 2017, the standard mileage rate for the use of a vehicle is 53.5 cents per mile. IRS Rules on Stipends & Reimbursements Stipends are considered income, therefore, instead of stipends, TCA suggests providing reimbursements based on actual receipts.

Annual Budget TCA’s Fiscal Year runs from July 1 to June 30. Chapters are encouraged to do the same This is an excellent tool in translating your Chapter’s goals into $$ Set your membership rates according to your planned expenses Four months prior to fiscal year end, begin budget planning Prior Year End Financials Projected Current Year End Financials & Current Year Budget Prepare a worksheet for figuring upcoming year Budget Create & submit your final budget to your board for approval TCA Budget Planning takes place in late April/early May TCA Board & Senate approve TCA’s budgets at June meetings Identify shortfalls and overages in current year and keep in mind for new budget. Look at trends and upcoming initiatives when planning for new budget. President & Treasurer can come up with a starting point for the budget, then get others involved. Determine and note how you arrived at budget numbers. You will forget throughout the year!

Annual Budget Chapter Treasurer and Chapter President should lead the creation of the budget Estimate your activities for the upcoming year Tie your activities back to the strategic plan Keep your notes! List your budget assumptions Be conservative and realistic

Budget Template Define your income & expense categories. Not too broad or too detailed. Try to use the same accounts year-to-year for better comparison.

Income/Deposits Make and retain copies of checks before depositing to the bank Indicate what the checks are for and the line item in your budget where they will be recorded Confirm all deposit received on monthly bank statements Electronic copies are good. They don’t need to be hard copies. Consider using a deposit worksheet to code your deposits correctly. If you are using the TCA website to process membership, please deposit your deposits on a timely basis. Regardless of how small check may be.

Expenses Use an Expense Voucher All expenses should be coded to the correct line item in your budget Obtain approval from Chapter Treasurer or President Treasurer or President shouldn’t approve their own reimbursement voucher E-Signatures & email approval acceptable Include copies of receipts (originals not required) Submit within 10 days of the expenditure Keep copies for your records Review monthly bank statements to confirm the expense was paid as approved

Expense Voucher

Suggested Financial Reports 1. Budget vs Actual Shows income & expense compared to budget 2. Profit & Loss Statement Shows income & expense for the current month and YTD 3. Profit & Loss Detail Shows detail line by line item 4. Enrolled Member Roster Shows individuals who joined or renewed during the month. Welcome your new members via email 5. Expired Member Roster Shows individuals whose membership expired at month end and who have not renewed by the time the report was pulled. 6. Total Current Members Shows all current members Consider your members as customers. Define the benefits they derive from the membership. Maintain contact.

Budget vs Actual

Profit & Loss

Detail-Income

Detail - Expense

Resources Small Business Administration: https://www.sba.gov/starting-business/choose-your-business-structure Formation of Texas Entities: http://www.sos.state.tx.us/corp/formationfaqs.shtml Setting up a small business: http://www.austintexas.gov/blog/bare-bones-basics-texas-business-entities Texas RioGrande Legal Aid, Inc.: http://www.trla.org/www_texascbar/wp-content/uploads/2017/05/Business-Entities-in-Texas-Corp.pdf Texas Comptroller: https://comptroller.texas.gov/ Find a local CPA: Consult with tax preparer on recommended tracking mechanism – Software, spreadsheets, or a notebook to document your income and expenses

The End Resources- Small Business Administration: https://www.sba.gov/starting-business/choose-your-business-structure Formation of Texas Entities: http://www.sos.state.tx.us/corp/formationfaqs.shtml Setting up a small business: http://www.austintexas.gov/blog/bare-bones-basics-texas-business-entities Texas RioGrande Legal Aid, Inc.: http://www.trla.org/www_texascbar/wp-content/uploads/2017/05/Business-Entities-in-Texas-Corp.pdf Texas Comptroller: https://comptroller.texas.gov/ Find a CPA: contact your current tax preparer for assistance Consult with your tax preparer recommended tracking mechanism – Software, spreadsheets, or a notebook Documentation