Nonprofit organizations play a vital role in our communities. We thank them every single day. They tackle social issues and make a positive impact. Nevertheless, it’s not easy to manage the financial side of all this. Unlike for-profit businesses, nonprofits prioritize social good over generating a profit. This means responsible financial management and clear bookkeeping are two of the most important things.
5 Practices for Non-Profit Organizations
Here are some key bookkeeping best practices to keep your nonprofit organization on solid financial ground:
1. Establish a Chart of Accounts
A chart of accounts is the foundation of any effective bookkeeping system. It categorizes your organization’s income and expenses into clear and specific accounts. Similarly, it will allow you to track your finances in detail and generate meaningful reports.
For a nonprofit, your chart of accounts should include categories specific to your mission. Therefore, this includes “grant funding,” “program expenses,” “fundraising expenses,” and “administrative costs.”
2. Segregate Funds
It’s crucial to separate your organization’s funds. Similarly, maintain separate bank accounts for different purposes. For instance, keep separate accounts such restricted grants, general operating funds, and fundraising events. Therefore, this segregation ensures transparency. It will demonstrate responsible use of designated funds.
3. Track and Report on Grants
Grants are a bone for many nonprofits to survive. Create a detailed chart of funding shows. Therefore, it includes the purpose of a grant, how it’s being used, and any reporting requirements. Properly documenting the records showing compliance with the grant requirements is a necessity. Moreover, the possible problems with giving the future grant can ensure we continually meet the requirements.
4. Regularly Reconcile Accounts
Balancing all your ledgers and trial balance is one of the crucial steps of correctness. Make a habit of cross-checking your bank statement with your internal records regularly to identify any erroneous postings. Moreover, this enables real-time detection, rejection of fraud activities, and data consistency of all your financial information.
5. Seek Professional Nonprofit Bookkeeping Services
Balancing the financial needs of a charitable organization becomes a significant task, especially for smaller operations with a tiny budget. Another option is a professional bookkeeping services in Edmonton, AB, with experience in a nonprofit sector organization or having worked there.
This is where Faith Accounting & Tax Inc. comes in.
Reasons You Should Get Professional Help
- Expertise in Nonprofit Accounting
- Save Time and Resources
- Amazing Accuracy and Compliance
- Peace of Mind
Book Your Consultation with Faith Accounting & Tax Inc.
If you are a nonprofit organization that needs bookkeeping services, reach out to Faith Accounting and Tax Inc. With our expertise, we can help you navigate the unique financial requirements of nonprofit organizations.
