Nonprofit organizations often have complicated financials they need to manage in much the same way as a business, but in many cases do not have the time or resources to invest in their bookkeeping as they should.
Still, managing your books is crucial for a nonprofit organization to stay financially healthy and organized over a long period of time. Without proper bookkeeping, it becomes easy to lose your grasp on your organization’s finances.
Here are a few tips to help you keep your bookkeeping in good shape for your nonprofit organization.
Important reports
One important part of nonprofit bookkeeping is making sure you’re compiling all of the necessary financial reports for management and board members. These reports help the people guiding the organization make informed financial decisions. These reports include cash flow statements, balance sheets, profit and loss documents and more.
Prioritize the generation of these reports as part of your bookkeeping so you can arm your organization with the data you need to make responsible financial decisions. Given that most nonprofits run tight margins, you’ll need all the data you can get to assist you in your decision making.
Abide by IRS requirements
Familiarize yourself with the IRS requirements for nonprofit organizations and the tax filings you’ll need to make to maintain your exempt status. You must make compliance a priority throughout the year to keep that nonprofit status, and this becomes easier throughattentive and detail-oriented bookkeeping.
Stay on top of donations
As a nonprofit organization, you will likely have donations coming in from a wide range of sources. It’s important to make sure you stay on top of tracking those donations, regardless of where they come from. This can be particularly challenging with cash, as you might lose bills, or miscount the money.
Make sure every donor, regardless of how they pay, gets a receipt for their donation and that you log the amount in your records, along with the receipt number. Keep all cash donations in a safe until you can deposit it in your account, and make sure access to the safe is only given out on an absolute need-to-know basis.
Establish protocols
Small nonprofit organizations often have an all-hands-on-deck approach to organizational operations, which means you may have multiple people managing your books. Make sure anyone who has anything to do with your finances understands how to properly handle them, and have set protocols in place (and in writing) to ensure everyone follows the exact same standards.
It can be highly beneficial for your organization to work with a third-party bookkeeping agency to ensure the accuracy of your books, especially as your finances become more complicated with organizational growth. For more information about the services we provide, we encourage you to contact us today at MCG Solutions.