Nonprofit Bookkeeping Requirements You Need To Know

bookkeeping for nonprofit organizations

Non-profits often have a variety of general ledgers, or funds, as opposed to profit entities, which have a single self-balancing account. Otherwise, there are free accounting choices, but you should consult a professional before making final judgments about your non-profit’s financial software. A skilled bookkeeper will be able to advise you on the finest accounting software for your organization.

  • Encourage your donors to judge your organization based on your impact in the community rather than how much you spend on fundraising and administrative expenses.
  • While there are some nonprofit professionals who migrate to this world of charity from a for-profit organization, they are often faced with some major differences between the two industries right off the bat.
  • Explore three reasons why nonprofits are turning to outsourced bookkeeping services to meet their needs.
  • We specialize in providing reliable and cost effective bookkeeping, accounting, payroll and tax reporting services to nonprofit organizations.
  • You may not operate a university, but you still want to see where you can spend your money, and if restrictions apply to you based on how your funds were acquired.
  • This might sound obvious, but you’d be surprised how many organizations do not adhere to the latest accounting standards in the industry.
  • KPMG Spark also offers tax preparation, invoicing and payments, expense tracking and payroll services.

You will learn how to interpret the relevant accounting principles and how to apply them, all while minimizing unnecessary effort and eliminating potentially costly errors. It’s important to have your nonprofit organization’s duties documented. When positions turn over, having documented policies and procedures makes it much easier for people transitioning into a role.

Caring For The Books For Those Who Care

Explore three reasons why nonprofits are turning to outsourced bookkeeping services to meet their needs. Your nonprofit’s statement of activities is also known as your income statement.

Net assets are equivalent to the net worth of your nonprofit organization. GAAP calls for these net assets to be divvied and classified as unrestricted, temporarily restricted, and permanently restricted funds. The common statements and forms used for effective nonprofit bookkeeping are those that will thoroughly and effectively communicate the financial information for your nonprofit. Whether you’re communicating with other organizational departments, the public, or the government, using a proper statement or form with all the necessary components is key.

  • With project tracking you can create new projects, records notes and information about the project and manage multiple programs.
  • Some companies accept monthly payments and others require a yearly commitment.
  • Once you’ve got your bookkeeping system setup and have started generating financial statements, the final piece of the nonprofit accounting puzzle is getting your tax obligations straight.
  • Bookkeeping services for nonprofitare critical to the success of their organizations.
  • To ensure accuracy we work with each client to streamline the chart of accounts and accurately code transactions.

You can use Financial Edge to create budgets, track expenses, manage cash flow, and handle the general ledger. It has expanded budgeting capabilities, so you can forecast different scenarios and budget across fiscal years. Financial Edge is a product released by Blackbaud, a leading software company that caters to nonprofit organizations, educational institutions, and healthcare facilities.

How Much Does Nonprofit Bookkeeping Cost?

They also include tips on setting up files properly —— an excellent start for the harried novice who needs to set up an accounting system now. LessAccounting is a comprehensive online accounting software that is specifically designed for non-profit, charitable and church organizations. It is the easiest way for nonprofits to track donations and expenses. Access real-time financial performance data, gain budget insight, and stay compliant with automated workflows. It’s easy to learn and use so your volunteers and staff can focus on your mission, not bookkeeping.

bookkeeping for nonprofit organizations

The for-profit entity answers to its stockholders, while the nonprofit organization’s allegiance is to its mission and its board or members. After determining its fiscal year and accounting model, a nonprofit organization, because of its tax-exempt status and its reliance on the public trust, has a few distinctive bookkeeping requirements. Quickbooks online is a cloud based financial management software that bookkeeping for nonprofit organizations offers many plans and features for your nonprofit organization’s needs. It is designed to help you spend less time managing your organization’s finances and more time on your 501c3 organization’s activities. By keeping all the finances in one place, Quickbooks makes bookkeeping easy. Accounts is Windows-based software with a small set of features designed specifically for small nonprofit organizations.

Why I Always Use Turbotax To Do My Own Taxes

You have regulations and requirements that for-profit businesses don’t. All of this happens while ensuring a steady stream of donations in an increasingly competitive nonprofit environment. As a nonprofit leader, your focus — and your budget — is on your organization’s mission. How can you reduce administrative time so less of your budget goes toward overhead and also gain financial insight that will help you operate more effectively? Professional outsourced bookkeeping and controller services can be the solution for both of these goals. By using proven processes that streamline systems and enhance controls, Supporting Strategies helps nonprofit leaders channel their efforts toward fulfilling their mission. Even though your 501c3 nonprofit organization is income tax-exempt with the IRS, you must file a yearly tax return.

bookkeeping for nonprofit organizations

You will feel more confident knowing that your outsourced firm understands the special needs of nonprofits. Everyone involved with your nonprofit, from your customers to your employees and your board, wants to see you pursue large-scale opportunities that support the organization’s mission. By outsourcing your bookkeeping and controller work to Supporting Strategies, you will ensure that you’re able to focus on the mission of your organization.

Large-scale organizations with thousands of donors will need enterprise-scaled solutions, such as QuickBooks Enterprise Nonprofit or Blackbaud’s Financial Edge. Nonprofit accounting is vastly different from for-profit accounting. Nonprofits are backed by donations and grants, so they have strict financial accounting standards they have to meet. In terms of reporting requirements, nonprofits have to meet FAS 116 and FAS 117 (Financial Statements of Not-for-Profit Organizations) standards. The FastFund Accounting program is available for as little as $42 per month, and there is no setup fee. Also, you don’t have to commit to a contract; you can cancel at any time. For large nonprofit organizations that have significant accounting needs as well as employees and a large donor-base, Financial Edge can be an excellent fit and it’s our top choice for large organizations.

Best For Online Training : Araize Fastfund Accounting

Nonprofit Suite is 100% dedicated to providing accounting, bookkeeping and payroll and human resources services to nonprofits. Our goal is to remove the burden of handling these administrative activities so you can spend more time focusing on what’s important to you. Your basic needs as a nonprofit are not so different than a typical for-profit business. You need to have your receivables and payables processed, as well as budgets and forecasts and reports. Your accounts must be reconciled regularly, your taxes prepared and filed, and your payroll managed.

bookkeeping for nonprofit organizations

Financial planning and analysis from budgets to FASB-compliant reports. On-premise – If you prefer to pay upfront with annual maintenance rather than a monthly subscription and prefer to maintain control of product upgrades, you may prefer an on-premise solution. This comprehensive system of tools allows you to track every dollar from its donation to its use towards your mission.


Every business, including nonprofits, must protect themselves from fraud. While you’d obviously like to trust everyone that volunteers or works for your organization, you cannot assume that you’re immune from these types of problems. Most nonprofits know that they’re supposed to keep track of monetary donations. While I never assume anything, I’m hoping that you’re already doing this.

  • While this may seem like a no-brainer, it is surprising how often organizations do not stringently adhere to current accounting industry standards and operate seemingly at random.
  • However, they’ll likely outgrow it incredibly quickly and start looking for a new software investment.
  • If their standard hourly rate is $100/hr, you’d record the three donated hours as an in-kind donation of $300.
  • Don’t use your personal bank account to receive, hold or disburse money for your nonprofit.
  • For organizations that want total remote access, Araize FastFund Accounting is our pick for the best cloud-based solution.

In order to complete the standard bookkeeping package in a timely fashion we require read-only access to bank, credit card and other online accounts. To ensure accuracy we work with each client to streamline the chart of accounts and accurately code transactions. Not-for profit organizations have unique characteristics, so they must adhere to a specific set of generally accepted accounting principles . For many organizations it makes more sense for you to do your own bookkeeping and financial management, but the staff may not yet have the skills they need. Although I love ongoing clients, I’m happy when I can work myself out of job and help nonprofits to have all the capacity they need. The premium version offers accounts receivable, accounts payable, and cost allocations. The company also offers fundraising and payroll software for an additional cost.

Gusto, to automatically file taxes, manage employee withholding, and more. Time tracking—You and your team members can track your hours by launching our built-in time tracker. You shouldn’t have to master accountancy in order to help other people. ZipBooks is easy to navigate with its intuitive user-interface and straightforward layout—and it still packs the punch of big name software alternatives.

Statement Of Cash Flows

Your statement of functional expenses provides an in-depth look at your organization’s expenses and what those expenses were used for. The function of expenses refers to your organization’s programs, general and management expenses, and fundraising. Nature of an expense refers to the salaries, rent, supplies, depreciation, and similar types.

Check out one of the biggest changes impacting the gig economy beginning January 2022 – changes to the requirements for the 1099-K Form. Some or all of the services described herein may not be permissible for KPMG audit clients and their affiliates or related entities. It’s important to note that the IRS allows you to determine a value for “small” donations below $5,000. If above $5,000, you may need to get the donation formally appraised by an expert.

The nonprofit, like the for-profit, is interested in its bottom line. Its directors want to know, for example, how much equity the nonprofit has accumulated or how much its revenue exceeds its expenses. Net assets determine whether the nonprofit’s work is sustainable or if there is room for growth. The calculation used to determine net assets, which are called profits in for-profit businesses, answers that question.

These expenses are further separated into rows according to what, specifically, the money was spent on, like salaries or rent. He has published extensively in the field of nonprofit accounting and is coauthor of The Budget-Building Book for Nonprofits and The Cash Flow Management Book for Nonprofits, both from Jossey-Bass. He co-edits Nonprofit Report, a monthly newsletter on nonprofit accounting, taxation, and management. He is coauthor of the three-volume Guide to Audits of Nonprofit Organizations and frequently speaks at professional meetings and consults around the country.

If needed we can review and clean up your books periodically to ensure accuracy. Every minute you spend rifling through receipts and squinting at financial printouts is another minute your cape stays hanging in the closet. All grants and gifts are included in your total revenues if you run a non-profit. For example, tax reporting can be an extremely complex process that must be taken care of error-free. General purchases and deposits are handled by non-profit bookkeepers.

The primary function of ourbookkeeping services is to provide a monthly, quarterly and annual reporting package in full accrual accounting. Provides practical guidance on how to identify and apply the relevant standards. This guide is indispensable for professionals responsible for preparing and auditing not-for-profit accounts.

Bank And Credit Card Reconciliation

First, in today’s world you never know when you might need to work remotely, so having information available to you wherever you might be logging in is convenient. You can rest easy knowing your data is backed up online, and you won’t risk losing it if your computer’s hard drive dies. And most importantly, cloud-based accounting software is more secure because it requires each user to have their own credentials and offers two-factor authentication. Intuit Quickbooks is a great bookkeeping software for nonprofits who are just getting their start.


Back to top