Bookkeeping for a nonprofit has different requirements than for a for-profit business. An experienced accountant can easily provide bookkeeping services to a nonprofit as well as a for-profit.
Bookkeeping Needed For Nonprofit Financial Transparency
As nonprofits enjoy IRS tax-exempt status, they are required to have a very high level of financial transparency. Accurate bookkeeping is necessary to achieve this transparency, which can be difficult for a nonprofit to provide as they may not have the skilled professionals on staff.
It is not uncommon for nonprofits to outsource their bookkeeping to efficient accounting services which provide nonprofits their bookkeeping and tax return assistance.
Tracking Expenses And Renevue For Nonprofits
Part of the bookkeeping necessary for nonprofits is the tracking of expenses and revenue. Expenses made by a nonprofit may be reported by several different departments, such as:
- Program
- Fundraising
- Management
- Operations
As the information is coming from various sections of the nonprofit, it can be difficult for an inexperienced bookkeeper to stay on top of all the financial information. This becomes especially difficult as a nonprofit bookkeeper attempts to track the revenue. Some sources or revenue that nonprofits receive are:
- Membership dues
- Investment income
- Fundraising events
- Donor contributions
- Grants
- Program fees
Required Nonprofit Financial Statements
Nonprofit bookkeepers need to not only perform the day-to-day tasks but they also will need to provide tax preparation support and financial statements.
Due to the transparency requirements nonprofits have, they need to have yearly financial statements available for all to view. The key required financial statements are:
- Statement of Functional Expenses
- Statement of Financial Position
- Statement of Cash Flow
- Statement of Activities
- Notes to Financial Statements
Outsource Your Nonprofit Bookkeeping
Above are just the basics of nonprofit organization bookkeeping. Nonprofits still labor under many of the bookkeeping needs of a for-profit business, such as:
- Payroll
- Bank reconciliations
- Bill pay
- Deposits
- Invoicing
Nonprofits organizations have a mission to accomplish and dedicating time and resources to track their bookkeeping is not always the most effective use of their valuable resources. Yet, by outsourcing their bookkeeping, nonprofits can fulfill their legal obligations for financial transparency, enjoy the professional handling of their bookkeeping, and allow the nonprofits to focus on their mission instead of financial matters.
AA Tax & Accounting Services LLC is able to provide top-quality bookkeeping services to nonprofit organizations. Depending on your nonprofit’s needs, our accountant can tailor what services are offered. Contact us for a consultation with our accounting firm and see what we can do for your nonprofit.
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