10 Things You Need To Do
Since Non-Profits differ considerably from for-profit businesses, mainly in the sense that they do not have commercial owners and therefore rely on charitable funds from contributors, public and private grants, membership dues, fundraising events, etc. There are many aspects to understanding the world of nonprofit business, and developing correct accounting structures are a key force in maintaining accurate records for your company.
Nonprofit organizations can apply to the Internal Revenue Service for exemption from federal income taxes. Depending upon the type of nonprofit, donors may also be considered tax exempt when contributing donations, such as for the Red Cross, Goodwill, and churches.
While for-profit companies must revolve around their quarterly income for accounting purposes, nonprofit organizations base their information from an activities statement. Insuring revenue is greater than the cost is the main objective for nonprofits. Instead of using a balance sheet, nonprofits will provide a “statement of financial position”, offering focused information strictly on assets and liabilities.
Things to Consider- Good Financial Reporting
- Creating an annual budget will assist your organization when it is met with the fiscal controls and regulations that dictate much of the pace of progress.
- Make sure that the information you can provide meets the reporting requirements of the IRS 990, 990N, and 990T. Accurate state reporting is just as essential.
- Be able to provide the necessary information in an efficient manner to your auditor. Allowing for auditors to access data easily could potentially reduce your audit bill.
- Track and report on cash and/or accrual accounting procedures
- Account for all petty cash transactions and tie them to the balance shown on the general ledger at all times.
- Accounts Receivable information must be conveyed for all services rendered that earn revenue
- Be wise with resource allocations and focus on connecting them with real data, instead of cost shifting.
- Keep track of reconciliation accounts
- Determine the value of your fixed assets, as opposed to it being an expense, in order to accurately track the capitalization threshold.
- Database and reporting system integration can be a key component in efficient information tracking. The more systems connect and are compatibly used, the less time you may spend on hunting down pertinent data.