14 Nov Nonprofit Accounting & Bookkeeping Services
But there needs to be an equal focus on accurate accounting and bookkeeping. Instead of prioritizing sales, nonprofits must demonstrate an appropriate use of assets and resources for charitable purposes. Teaming up with a knowledgeable back-office team can be an investment that saves you both time and money. You simply cannot operate a nonprofit if your financial data is unreliable or outdated. In order to make the best leadership decisions on behalf of your organization, you need to have a transparent back office that provides you with reliable financial data in real-time.
The unique needs of nonprofits require a specialized set of tools from accounting software. The statement of functional expenses was once only required for health and welfare organizations, but the FASB now requires all nonprofits to report expenses by their function and nature. It is critical to hire someone with the proper training, education and experience in bookkeeping.
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The impact of accurate bookkeeping trickles down to every aspect of your nonprofit. Efficiency, transparency, and compliance are the hallmarks of an organization with effective bookkeeping. It’s important to note that bookkeepers are not certified public accountants (CPAs).
Accountants can then pursue further training to obtain various specialized certifications, such as certified public accountant (CPA), chartered financial analyst (CFA), or certified internal auditor (CIA). Getting started with nonprofit bookkeeping isn’t easy, but it is essential. Most organizations will also need to track payments they are owed (accounts receivable), bills that they haven’t paid (accounts payable). But expense allocation is even more complex in nonprofit bookkeeping, thanks to the need for functional expense reporting.
Bookkeeper vs. Accountant: What’s the Difference?
The selected program should be able to automate everyday tasks and minimize errors. FreshBooks accounting software accomplishes all of these tasks with ease and is an excellent choice depending on your needs. As mentioned, nonprofits have to follow strict rules to justify their financial position and fundraising expenses. You should also hire a financial officer or a treasurer who knows how to do bookkeeping for a nonprofit and is familiar with specialized accounting software. However, there are several actions all nonprofits need to take to ensure data quality and reliability.
These rules ensure that all businesses use the same methodology for financial reporting. Depending on the size of your nonprofit organization and the number of transactions, it may be wise to do bank reconciliations once a month. That way, you’ll identify professional bookkeeper potential bank errors, help track cash flow, and prevent fraud. Using the details you recorded about your nonprofit’s transactions, create a broad overview of your financial position and develop a plan to get your revenue where it’s supposed to be.