If your nonprofit is just getting started with bookkeeping, you may not have the resources or level of need to bring on a new team member to fill that position. Bookkeeping covers your nonprofit’s day-to-day financial needs, mostly concerning data entry and simple transactions (more on these duties to come!). Although bookkeepers need some on-the-job training and financial know-how to do their jobs well, they aren’t required to have specific degrees or certifications. Not only is nonprofit bookkeeping different from its for-profit counterpart, but a bookkeeper is just one of the professionals you should have working on your organization’s finances.
Donor Contributions and Grants
AccuFund is an excellent resource for nonprofits looking for a reliable financial management tool. As your nonprofit grows and steps out into more complicated financial projects, AccuFund lets you purchase tools that fit your organization’s needs. Once a year, you’ll send the required documents to an accountant to submit Form 990 to the IRS and provide tax documentation to staff. You will also need an accountant to audit your financial statements and help work with you on future financial plans.
Managing Grant Funds and Reporting Requirements
- If you don’t hear back from the IRS within 90 days, call Customer Account Services to check on its status.
- Once your vendor signs it, it’s a binding contract that tells you exactly how much you ordered from your supplier, how much you paid, and when the supplier agreed to deliver your order.
- We can serve as your organization’s bookkeeper, accountant, controller, or Chief Financial Officer (CFO), depending on which services you’re looking for.
- Proper record-keeping ensures that financial data is reliable and readily available for decision-making, reporting, and compliance purposes.
- 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.
The opinions expressed by the authors on this blog do not necessarily represent those of Your Blog/Company Name and should not be taken as expert advice. Schedule a call to talk to us about the unique accounting and reporting needs of your organization. All expenditures, charity, payments, and other financial information are recorded by bookkeepers in an orderly software platform or worksheet. Nonprofit bookkeepers oversee the day-to-day operations of the organization. Popular options include QuickBooks Online Nonprofit, Aplos, and Xero with a nonprofit chart of accounts template.
Financial statements for nonprofits
Of course, the central role of nonprofit bookkeeping is to keep the books of your organization current and accurate. The nonprofit bookkeeper is the front line in the battle for the accurate financial data you need to run your business, so let’s review the core responsibilities of a nonprofit bookkeeper. They can choose to hire in-house accountants or outsource their accounting to a specialized firm. As mentioned, nonprofit organizations have tax-exempt status, meaning they don’t have to pay federal taxes to the IRS under Section 501.
Step 10: Ensure Compliance with Nonprofit Accounting Standards
Although it’s possible to manually generate financial statements from your ledger or spreadsheet, it takes a ton of accounting knowledge and time to do it right. In most cases, it’s better to let your accounting software or a bookkeeper take care of this step for you. At Jitasa, our mission is to improve the effectiveness and efficiency of nonprofits.
Prepare data for the accountant
You’ll have secure, 24/7 access to your books and records, from anywhere you have a broadband connection. Write and print checks, sync with your bank account, generate reports…all in the same place. Perhaps of concentrating on sales, a non-profit’s financial records should reflect the organization’s commitment to its stated benevolent goal by properly allocating assets and resources. Choose software that supports fund accounting, generates Form 990 reports, and integrates with donor management tools. Cloud‑based options like QuickBooks Online Nonprofit or Aplos allow remote access and automatic backups.
- Bookkeepers with this expertise help nonprofits reduce risks and maintain financial integrity.
- Nonprofit cash flow statements will refer to “change in net assets” instead of “net income,” and will sometimes list cash flows that are restricted to certain uses.
- Timely and accurate record-keeping is one of the most important responsibilities every nonprofit organization faces.
- Accurate records let boards set realistic budgets and give program managers data to adjust spending on the fly.
- Invest in disciplined practices, embrace smart technology, and lean on expert partners when tasks exceed your bandwidth.
- There is some overlap between bookkeeping and HR departments when it comes to payroll, but most small to mid-sized organizations delegate this task to the non-profit bookkeeper.
- Nonprofit bookkeepers must create accurate invoices for vendor payments, retail sales if they have a store, membership subscriptions, tuition fees, and more.
- A lack of internal controls can expose an organization to financial risks and legal issues.
- Bookkeepers can be paid staff members or volunteers, but they should understand GAAP principles and fund accounting.
- Invoices help nonprofits track funds and give donors proof of their gifts.
- That way, you can be sure that your nonprofit maintains both its 501(c)(3) status and the trust of its supporters.
- Regular bank reconciliations help maintain financial integrity and prevent mismanagement of funds.
Let’s begin by clearing up these points of confusion and ensuring we’re all on the same page about what bookkeeping is. https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ Even tiny nonprofits have BIG bookkeeping challenges, like cash flow forecasting, grant tracking, and finding the time to reconcile your accounts. Bookkeeping captures day‑to‑day transactions, while accounting interprets those numbers into strategic insight.
These components help ensure the organization’s financial health and transparency. Since nonprofit organizations risk losing their tax-exempt status if they don’t comply with accounting principles, it’s vital to pay attention to proper bookkeeping. For that reason, it may be best to get high-quality accounting software that can automate everyday tasks, create reports, and minimize room for errors. Nonprofits must maintain detailed records of financial transactions, including donations, grants, expenses, payroll, and other revenue sources.