Your nonprofit’s biggest cheerleader and outsourced accounting department

Nonprofit organizations are entities organized and operated exclusively for educational, social, professional, charitable, health, or other nonprofit purposes. While business stakeholders are concerned with profits, nonprofit stakeholders and board members want to know if the resources are properly utilized and allocated. No one knows your nonprofit better than you do, which is why you should hire a professional bookkeeper to get your records in order and leave the decision-making up to your organization’s leaders. And, if you need further advice, an experienced bookkeeper can give you their perspective on your budget. Bookkeepers must process large volumes of transactional data within tight deadlines.

• They’ll have experience helping organizations like yours minimize their tax bill and make sure you aren’t breaking any tax code rules.
• Her meticulous nature of tracking every penny and footing every report ensures consistent accuracy.
• The promise of improved efficiency through technology often comes with its own hurdles in nonprofit accounting.
• Getting your financial statements correct involves more than just checking boxes—these documents use financial information to tell your organization’s mission story.
• Additionally, nonprofit organizations are tax-exempt (if approved for this tax status by the IRS) while for-profits are subject to income taxes.
• Periodic reports are created to provide updates on how the grant funds are being used.

Expense Categories

And it’s one of the essential roles of bookkeeping in a nonprofit organization. Because while nonprofit bookkeeping and accounting are related, they’re not the same thing. QuickBooks offers discounted products for nonprofits https://greatercollinwood.org/main-benefits-of-accounting-services-for-nonprofit-organizations/ through TechSoup, a nonprofit tech marketplace. We recommend that churches and other houses of worship use QuickBooks Online Plus or QuickBooks Advanced so they can get all the tools, tracking, and reporting features we offer.

See Financial Statements Through Your Accountant’s Eyes!

The statement of financial position represents the nonprofit version of the balance sheet. This statement provides insight into how much a nonprofit owes, what it owns, and how much money is left. Unlike for-profits, nonprofits don’t have equity because they don’t have owners, and that’s the biggest difference between a balance sheet and a 5 Main Benefits of Accounting Services for Nonprofit Organizations statement of financial position. Some are unrestricted net assets and some are considered restricted net assets. Depending on the size of your nonprofit organization and the number of transactions, it may be wise to do bank reconciliations once a month.

Financial Ratios Every Small Business Owner Should Know

• If you have to cut costs at your organization, see if you can reduce overhead spending before taking any funding away from your programs.
• While these expenses are important to your cause, they contrast with program costs, which are directly related to the initiatives that further your organization’s mission.
• Unfortunately, NetSuite’s site is pretty sparse, and it’s definitely on the pricier side of accounting software (third parties estimate it starts at around $499 a month).
• Generate the three core statements each month and share them with the executive director and finance committee.

Brandi is detail oriented and committed to helping organizations succeed while building unmatched relationships with the people there. She spends her free time gardening, reading fantasy novels, and playing games with her children. Jeremy holds a Masters in Financial Management and has 20 years of experience in leadership roles including corporate accounting, banking, data analysis, and compliance reporting.

Bookkeeping for Nonprofits – All You Should Know

They need an organized system that makes sure purchases are ordered, budgeted for, and fulfilled properly from the get go. Learn more about Bench, our mission, and the dedicated team behind your financial success. Get free guides, articles, tools and calculators to help you navigate the financial side of your business with ease. Learn all the best practices of CRMs to simplify customer relationship management and elevate your bond with loyal customers.

• While an accountant will interpret financial reports and make informed suggestions for the board, a bookkeeper is responsible for organizing the nonprofit’s data to create these reports.
• A skilled bookkeeper ensures financial transparency and accountability, vital to the organization’s fiscal health.
• As a result, you can identify any discrepancies between your projected and actual budget and make adjustments to your resource allocation accordingly.
• Many organizations are concerned about making the jump over to outsourcing, but with today’s advancements in technology, working with a remote expert team is almost seamless.
• The accrual accounting method gives a more accurate picture of the organization’s financial health and helps track grants and restricted funds more effectively.

Accountants often opt for certifications to improve their credibility, such as taking the CPA exams to become a certified public accountant. This statement details the cash inflows and outflows from operating, investing, and financing activities, providing insight into the organization’s liquidity. Accrual accounting offers a clearer financial picture and becomes mandatory once revenue tops $5 million or federal grant rules require it. Compare actuals to budget monthly and explain variances greater than 10 percent. As your nonprofit grows, you must protect yourself and the organization from fraud. This is especially true as you find board members and hire more staff.