What is a virtual CPA?

A virtual CPA provides the same services as a traditional CPA firm — tax preparation, bookkeeping, audits, financial planning — but delivers them remotely using secure cloud technology. You get expert-level service without visiting a physical office.

How much do virtual CPA services cost?

Pricing depends on the complexity of your financial situation and the services you need. We provide transparent fee estimates during your initial consultation. Virtual CPA firms typically have lower overhead than traditional firms, which translates to more competitive rates.

Do I need an audit for my nonprofit?

Many states require nonprofits to have an independent audit once they exceed certain revenue thresholds, often $500,000-$750,000. Grant-making organizations and government agencies frequently require audited financial statements. We can help determine your specific audit requirements.

What is the difference between an S-Corp and an LLC for tax purposes?

An LLC provides liability protection and pass-through taxation by default. An S-Corp election can provide additional tax savings by allowing owners to split income between salary (subject to payroll taxes) and distributions (not subject to payroll taxes). The right choice depends on your income level, business structure, and state tax laws.

What does a virtual CFO do?

A virtual CFO (fractional CFO) provides high-level financial strategy and oversight on a part-time basis — budgeting, forecasting, cash flow management, financial analysis, KPI reporting, and strategic financial planning. You get C-suite financial leadership without the full-time cost.

Can you help if I'm behind on bookkeeping or taxes?

Yes. We offer catch-up bookkeeping services to bring your books current and can help resolve back tax issues including IRS notices, unfiled returns, and payment plans.

What accounting software do you work with?

We work with QuickBooks Online, Xero, FreshBooks, Wave, and other major cloud accounting platforms. We can also help you select and set up the best software for your business.

How do I prepare for tax season?

Organize financial records throughout the year, keep receipts for business expenses, track mileage and home office usage, make quarterly estimated tax payments, and schedule a year-end tax planning session before December 31.

What is DCAA compliant accounting?

DCAA (Defense Contract Audit Agency) compliant accounting is a system that meets federal government requirements for contractors. It includes proper timekeeping, job cost accounting, indirect cost allocation, and specific internal controls required for government contract work.

Do I need a CPA or a bookkeeper?

Bookkeepers handle day-to-day recording of financial transactions. CPAs handle higher-level work — tax planning and preparation, audits, financial analysis, and strategic advice. Many businesses need both. Our firm provides both services so you have one team managing everything.

What's the difference between an audit, review, and compilation?

An audit provides the highest level of assurance through independent verification of financial statements. A review provides limited assurance through analytical procedures and inquiries. A compilation presents financial information in statement format without assurance. The right choice depends on your stakeholders' requirements.

Do you serve businesses outside the DMV area?

Yes. While our primary service area is Washington DC, Maryland, and Virginia, we serve clients nationwide through our 100% virtual model. Our cloud-based systems allow us to work with businesses anywhere in the United States.

What does "regularly carried on" mean for UBIT purposes?

An activity is regularly carried on if it is conducted with the frequency and continuity, and in a manner similar to, comparable activities of for-profit organizations. Intermittent activities (like an annual charity auction) are generally not subject to UBIT. Year-round activities (like a permanent gift shop) are regularly carried on.

Does our 501(c)(3) status protect us from paying UBIT?

No. Tax exemption does not exempt an organization from UBIT. All tax-exempt organizations — including 501(c)(3) public charities, churches, 501(c)(6) trade associations, and others — are subject to UBIT on unrelated business income.

What is the tax rate on UBIT?

UBIT is taxed at the corporate income tax rate — currently a flat 21% federal rate under the TCJA. State income taxes may also apply. DC taxes UBIT at the DC unincorporated franchise tax rate; Virginia and Maryland have their own corporate rates.

What deductions are available against UBIT?

Expenses directly connected to the unrelated business activity (cost of goods sold, wages for UBI-related staff, rent for UBI space) are deductible. Under the TCJA, losses from one UBI activity cannot offset income from another separate UBI activity.

How does the volunteer labor exception work for thrift stores?

If substantially all the work in carrying on the trade or business is performed by volunteers (without compensation), the activity is not subject to UBIT. "Substantially all" is generally interpreted as 85% or more volunteer labor. Thrift stores operated primarily by paid staff generally do not qualify.

What is a qualified sponsorship payment and is it UBIT?

A qualified sponsorship payment is a payment made in exchange for acknowledgment of the sponsor's name, logo, or product lines — where the sponsor receives no substantial return benefit. Qualified sponsorships are excluded from UBIT. Payments that include advertising (promoting the sponsor's products or services with comparative language) are generally subject to UBIT.

How much does UBIT analysis and 990-T preparation cost?

UBIT analysis and Form 990-T preparation typically ranges from $1,500 to $4,000 depending on the number of unrelated activities, complexity of the analysis, and whether retroactive filings are needed. We also offer an initial UBIT assessment at a flat fee to determine whether ongoing 990-T filing is required.

What does "regularly carried on" mean for UBIT purposes?

An activity is regularly carried on if it is conducted with the frequency and continuity, and in a manner similar to, comparable activities of for-profit organizations. Intermittent activities (like an annual charity auction) are generally not subject to UBIT. Year-round activities (like a permanent gift shop) are regularly carried on.

Does our 501(c)(3) status protect us from paying UBIT?

No. Tax exemption does not exempt an organization from UBIT. All tax-exempt organizations — including 501(c)(3) public charities, churches, 501(c)(6) trade associations, and others — are subject to UBIT on unrelated business income.

What is the tax rate on UBIT?

UBIT is taxed at the corporate income tax rate — currently a flat 21% federal rate under the TCJA. State income taxes may also apply. DC taxes UBIT at the DC unincorporated franchise tax rate; Virginia and Maryland have their own corporate rates.

What deductions are available against UBIT?

Expenses directly connected to the unrelated business activity (cost of goods sold, wages for UBI-related staff, rent for UBI space) are deductible. Under the TCJA, losses from one UBI activity cannot offset income from another separate UBI activity.

How does the volunteer labor exception work for thrift stores?

If substantially all the work in carrying on the trade or business is performed by volunteers (without compensation), the activity is not subject to UBIT. "Substantially all" is generally interpreted as 85% or more volunteer labor. Thrift stores operated primarily by paid staff generally do not qualify.

What is a qualified sponsorship payment and is it UBIT?

A qualified sponsorship payment is a payment made in exchange for acknowledgment of the sponsor's name, logo, or product lines — where the sponsor receives no substantial return benefit. Qualified sponsorships are excluded from UBIT. Payments that include advertising (promoting the sponsor's products or services with comparative language) are generally subject to UBIT.

How much does UBIT analysis and 990-T preparation cost?

UBIT analysis and Form 990-T preparation typically ranges from $1,500 to $4,000 depending on the number of unrelated activities, complexity of the analysis, and whether retroactive filings are needed. We also offer an initial UBIT assessment at a flat fee to determine whether ongoing 990-T filing is required.

Nonprofit UBIT Analysis & Form 990-T Filing — DC, Maryland & Virginia

What is unrelated business income tax (UBIT) and does my nonprofit owe it?

Unrelated business income tax (UBIT) applies to income a nonprofit earns from activities not substantially related to its exempt purpose that are regularly carried on. Common examples include rental income from debt-financed property, advertising revenue in publications, parking lot fees, and fees from services to non-members. Nonprofits with $1,000 or more in gross unrelated business income must file Form 990-T.

Common UBIT Surprises for DC/MD/VA Nonprofits

We have rental income but didn't know we might owe UBIT

Rental income from real property is generally excluded from UBIT — BUT if the property carries a mortgage (debt-financed property), a proportionate share of the rental income is subject to UBIT. This rule catches many nonprofits by surprise.

We didn't file Form 990-T and now the IRS is asking questions

Failure to file Form 990-T when required triggers failure-to-file penalties ($20/day up to $10,500/year for smaller organizations). The IRS cross-references 990 data with 990-T filing records, so undisclosed UBIT income gets flagged.

Our thrift store or bookstore generates revenue and we're not sure if it's UBIT

Retail operations (thrift stores, gift shops, bookstores) are generally subject to UBIT UNLESS substantially all the work is performed by volunteers. The volunteer labor exception is a significant planning opportunity.

The TCJA 2018 changes require us to track UBIT by activity separately

The Tax Cuts and Jobs Act (2017) requires nonprofits to calculate UBIT separately for each unrelated trade or business — losses from one activity can no longer offset income from another. This dramatically changed UBIT planning for multi-activity organizations.

We have investment income and aren't sure what's taxable

Investment income (dividends, interest, royalties, capital gains) is generally excluded from UBIT — but specific investment structures (debt-financed investments, real estate limited partnerships) can produce UBIT that surprises organizations.

Not Sure If Your Nonprofit Owes UBIT? Let's Find Out.

Key UBIT Concepts Explained

Unrelated Business Income (UBI): Income from a trade or business (1) regularly carried on, (2) not substantially related to the organization's exempt purposes, and (3) not specifically excluded under IRC Sections 512–514. All three elements must be present for income to be taxable UBI.

Debt-Financed Property: Real or personal property held to produce income (such as rental property) that was acquired or improved using debt. A proportionate share of income from debt-financed property is subject to UBIT, even if the property would otherwise be excluded from UBIT (like rental income from real property).

Common Nonprofit Revenue — UBIT Status

Feature	Generally UBIT?	Key Exception
Rental income (no mortgage)	No	Real property rental exclusion
Rental income (debt-financed)	Yes — partial	Proportion based on acquisition debt
Dividends and interest	No	Investment income exclusion
Capital gains	No	Investment income exclusion
Advertising in publications	Yes	Qualified sponsorship (logo, name) excluded
Parking lot / facility rentals	Yes	If operations managed by org, generally taxable
Thrift store / retail	Yes	Volunteer labor exception if substantially volunteer-run
Services to members	No	Member benefit exclusion
Royalties from IP	No	Royalty exclusion (if passive)
Corporate sponsorships	No if acknowledgment only	Substantial return benefit = UBI

UBIT Services We Provide

Initial UBIT exposure assessment (flat fee)

Revenue classification analysis across all income streams

Debt-financed property income calculation

Form 990-T preparation and electronic filing

TCJA activity-by-activity UBIT tracking

Volunteer labor documentation review

Sponsorship vs. advertising classification analysis

Retroactive 990-T filings and penalty abatement

Quarterly estimated UBIT payment planning

Our UBIT Analysis Process

Revenue Classification Analysis

We review all your revenue streams, classify each as related, excluded, or potentially unrelated business income, and identify activities that may have been misclassified.

UBIT Calculation

For each unrelated business activity, we calculate gross income, identify allowable deductions (expenses directly connected to the activity), and calculate net UBIT for the year. Post-TCJA, each activity is tracked separately.

Form 990-T Preparation

We prepare Form 990-T with all required schedules, calculate any estimated taxes owed (quarterly deposits may be required), and review for completeness.

Planning Recommendations

We identify UBIT planning opportunities — restructuring activities to qualify for exclusions, documenting volunteer labor, structuring sponsorships properly, and advising on activity mix to minimize ongoing UBIT exposure.

DC, Maryland & Virginia UBIT Considerations

Washington DC

DC nonprofits with real estate in the District — particularly those with HUD-funded properties or leases of surplus space — should analyze UBIT exposure annually. DC taxes UBIT at the DC unincorporated franchise tax rate in addition to federal UBIT.

Maryland

Maryland nonprofits with thrift stores (e.g., Goodwill affiliates, hospice shops) face UBIT on retail operations if not substantially volunteer-operated. Maryland imposes corporate income tax on UBIT at the state level in addition to federal obligations.

Virginia

Virginia nonprofits with significant parking facilities (common for churches and large nonprofits in NoVA) should assess parking revenue for UBIT exposure. Virginia imposes its corporate income tax rate on UBIT, which must be reported on Virginia Form 500.

Related Nonprofit Services

Nonprofit Audit Hub →Form 990 Preparation →Tax Preparation →Nonprofit Accounting →

UBIT Frequently Asked Questions

Get Expert UBIT Analysis from a Licensed CPA

Flat-fee UBIT assessments and Form 990-T preparation. Serving DC, Maryland, and Virginia nonprofits.