Bookkeeping for Nonprofits: A Basic Guide & Best Practices

Even tiny nonprofits have BIG bookkeeping challenges, like cash flow forecasting, grant tracking, and finding the time to reconcile your accounts. Our accounting firm provides a wide range of financial services tailored to meet your specific nonprofit needs. From bookkeeping to financial consulting, we are dedicated to helping you achieve your business goals. Cost drivers, such as labor hours, headcount, or program revenue, are commonly used to allocate indirect expenses fairly.

Non-Profit Organizations

We know the philanthropic community in the Midwest is strong, and we value the opportunity to contribute through professional services, community service, and financial contributions. Outside of the office, Lutz employees are involved in 125+ community, civic, cultural arts, and professional organizations. In addition, our team has and continues to remain actively involved in several nonprofits as committee leaders and board members. Nonprofit accounting is complex and has many specialized requirements, but Fohrman & Fohrman, Inc., can be your foundation for making informed financial management decisions.

Managing Multiple Programs

• For example, grant management software can track progress on multi-year grants, ensuring reporting requirements are met and funds are used per agreements.
• We know the philanthropic community in the Midwest is strong, and we value the opportunity to contribute through professional services, community service, and financial contributions.
• For organizations tracking budgets and financials for grants, programs, departments, or multiple locations.
• While the basic bookkeeping principles may apply in both cases, certain seemingly small details make significant differences in how a nonprofit’s finances are done.
• Additionally, fund accounting is essential for completing Form 990, the IRS-required annual tax return for tax-exempt organizations.
• Depending on the size of your nonprofit organization and the number of transactions, it may be wise to do bank reconciliations once a month.

We apply our nonprofit accounting experience and expertise to implement the changes the organization needs to transform. Then, we work to continually evaluate and adjust, if necessary, to be sure your needs are met – even as they grow and change. Aplos is specifically built to serve the unique financial needs and dynamics of nonprofit groups and faith-based organizations. You can confidently manage your books, financial health, and bottom line the right way, bookkeeping for cleaning business the first time and every time. Specialized software streamlines tracking by providing real-time insights into funding sources and expenditures.

NONPROFIT ACCOUNTING SERVICES

Take a deep dive into challenging business topics with these free educational resources. For us, a great day at the office is one where we take care of the numbers, so you can focus on what you do best — making a positive impact on your mission. Nonprofits play a critical role in our society and we are passionate about supporting your important work.

• They can choose to hire in-house accountants or outsource their accounting to a specialized firm.
• This method aligns with IRS guidelines, which require nonprofits to demonstrate equitable and justifiable allocations.
• Budgeting and forecasting are vital for aligning financial resources with strategic objectives.
• Help writing and editing newsletters, websites, blog posts, annual reports, and social media content to effectively convey your message.

Why Nonprofit Accounting is Different

One of the first things we need to clarify before digging deeper into bookkeeping for a nonprofit is the difference between nonprofit and for-profit entities. For example, let’s say your nonprofit needs a car to run errands for the organization. A generous car dealership gives you a vehicle for free, but that doesn’t mean it wasn’t a transaction!

In other words, effective bookkeeping practices will accurately record and monitor your financial activity throughout the fiscal year. When the time comes to report your financial activity or make a budgetary decision, you’ll be equipped with precise and thorough information. That way, you can be sure that your nonprofit maintains both its 501(c)(3) status and the trust of its supporters. We’ll partner with you to automate key accounting processes and create forward-looking plans that make your future feel less uncertain. And we can offer you on-demand advice on grant utilization, fundraising strategy, tax compliance, and other topics that often trip up growing nonprofits.

Annual Tasks:

Whether you’re an established nonprofit organization, association, foundation, charity, or other service organization or are just getting started turning your idea into reality, we can help. Accurate grant and donation tracking what are retained earnings is critical for compliance with donor restrictions and financial transparency. Effective tracking systems monitor the receipt and use of funds, ensuring adherence to donor intentions and legal requirements. This involves maintaining detailed records of each grant or donation, including donor identity, fund purpose, and any specific restrictions. Forecasting predicts future financial conditions and performance based on trends and assumptions.

• Failure to file can result in penalty fees; tax-exempt revocation, and taxes may be due on the income you collected if your exemption is revoked.
• Cost drivers, such as labor hours, headcount, or program revenue, are commonly used to allocate indirect expenses fairly.
• Our expert team then devises a customized plan to address your specific needs and challenges.
• We will provide monthly financial reports, such as an Income Statement and Balance Sheet.
• To fulfill your mission and impact the communities you serve, you have to raise and allocate funds wisely—That’s why bookkeeping for nonprofits is an essential part of what you do.
• We offer a broad range of services for business owners, executives and independent professionals.
• Essentially, you should view bookkeeping as the financial oversight process that’s necessary for operating your nonprofit daily.

Our Team

Some are unrestricted net assets and some are considered restricted net assets. Nonprofit accounting and bookkeeping revolve around representing an organization’s financial records in compliance with generally accepted accounting principles (GAAP). Using the details you Bookkeeping Services in Lincoln 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. To do this, you’ll need to set reasonable expectations for your income, expenses, and financial goals. Then, plan out how you’ll spend your income in a way that achieves those goals.