Non-profit owners should be focused on their endeavors.

When you started your non-profit, you likely didn’t envision yourself sitting behind a computer all day. Nor did you picture yourself filing, scouring, and inputting numbers into spreadsheets all day.

But, you aren’t exempt from accounting principles. In fact, your financial status is a critical part of your organization. Without it, you won’t be able to survive or par-take in the critical community outreach you want to.

Therefore, every penny needs to be categorized, claimed, and analyzed. Even if it is a donation or a gift.

But, with so much to keep track of, it can be difficult to get ahead with this work. That’s why we suggest working with an accountant and came up with the reasons why below.

Bookkeeping and Taxes

Non-profits are not tax-exempt entities. Meaning, you still need to follow GAAP (the Generally Accepted Accounting Principles) and requirements set out by the IRS.

There are likely plenty of taxable transitions occurring in your company. Things like payroll for tax-exempt nonprofit employees are still subject to employment taxes, sales, real estate, and other state-specific regulations that could all be applied to your non-profit come tax season.

Even contributions coming in as ‘gifts’ or ‘donations’ might not qualify as a charitable deduction. But, we understand how difficult it can be to navigate these tricky laws. That’s why we suggest electing a treasurer or a financial officer to manage all the finances.

Although it can be a member of the internal team, for best results you should always turn to a professional, like an accountant. An accountant will already know the laws, regulations and ensure that all of your protocols meet guidelines.

They will also have (and be able to use) the most up to date accounting software. This can be used to produces accurate and reliable financial statements, create budgets, record, and organize receipts (any donations or in-kind contributions), disbursements (payouts from funds), and even keep track of petty cash transactions (accounts receivable, accounts payable, and payroll).

In turn, helping to keep you organized without the stress of doing it yourself.

Fund Accounting

Do you know what fund accounting is? If not, you should consider using this method when it comes to your nonprofit.

We recommend using fund accounting measures because it prevents you from using a single bank account to store all of your money.

It’s also suggested to use this method because of the strict rules that non-profits have around funding. Using fund accounts lets you better categorize these expenses based on specific endeavors. For example, things like ‘gifts and ‘donations’ can have their own account. So, you can easily track money coming in vs. coming out.

Bank Reconciliations

Another aspect that nonprofits need accountants for is bank reconciliations. A bank reconciliation is needed to make sure that the information in all of your accounts lines up.

This process is something that should be completed regularly as it helps to track cash, budgets, prevent fraud, and spot errors. Plus, this is something that’s best done by a professional accountant who also has the industry know-how to determine if you are on-track.

Implement New Systems

Using the help of a professional can also improve your current systems for tracking finances. Things like purchase orders, budgeting software, filing systems and more can all be analyzed to spot inefficiencies.

In turn, helping you to develop a larger-picture plan of your non-profit that you might not have thought was possible.

If you’d be interested in learning more, or knowing what services would benefit you, give us a call at 407-328-5001.

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