Businesses collectively make our lives easier, offering us products and services we’d otherwise have no or little access to without them. In the United States alone, there are nearly 28 million businesses, ranging from supermarkets that sell food and clothing to cable television and Internet providers that both install hardware and provide streaming. Over 1.5 million of these 28 million American businesses are nonprofits, helping impoverished individuals, families who can’t afford a relative’s cancer treatment, and mentorship to young children that don’t have role models.
Whatever the purpose of a particular nonprofit organization here in the United States is, they’re unarguably beneficial for Americans at large, and the individual communities they serve. Unfortunately, despite their civic-minded nature, non profit accounting and bookkeeping is entirely too difficult. As if GAAP – generally accepted accounting principles, for the few familiar with them – isn’t difficult enough, owners of nonprofit businesses must adhere to FASB’s rules, as well – that’s the Financial Accounting Standards Board, for short – which are markedly more difficult than adhering to either set of rules on their own.
Fortunately for you, there are tips, tricks, strategies, and guides strewn across the Internet for seeking help with non profit accounting. Better yet, here’s a condensed guide of pointers every nonprofit owner, bookkeeper, and accountant should know about.
The AICPA has All the Official Rules You Need
Just like any other type of taxes, fudging up on a nonprofit organization’s taxes, screwing up a budget, and failing to include line items in statements of financial position can be costly. Rather than guessing how to classify transactions, keep up with program expenses, track fund balances, or perform any other accounting function for a nonprofit, the AICPA maintains a current bank of guides for not-for-profit (NFP) financial reporting.
While the FASB maintains NFP accounting rules, they’re difficult to understand. As such, NFP owners and accountants should look to the AICPA’s guides for help making sense of tricky rules and guidelines.
Accounting Software Makes Life Easier
As with all types of recordkeeping, accounting software is recommended for all nonprofits. QuickBooks Nonprofit is unarguably one of the most popular software for nonprofit usage. Organizations that pay the one-time fee for QuickBooks Nonprofit are given help with fundraising and seeking out pledges, bequests, grants, and endowments. Users can call QuickBooks’ customer service line for help around the clock in storing information and analyzing transactions.
Even further, this leading NFP accounting software comes included with tutorials to answer virtually every question beginners might have, as well as acclimating even the slowest of computer operators.
While QuickBooks Nonprofit is a great software, nonprofit owners should seek out a program that works best for their particular needs.
Hire a Consultant
Few understand the intricacies of nonprofit accounting without having to refer to literature, likely including yourself and everyone else working for your nonprofit. Hiring an accounting consultant for sticky situations and tough problems – if not regular meetings – is well worth the price. Face it – not everybody’s an expert at not-for-profit accounting.
Don’t Forget Terms of Grants, Bequests, and Endowments
Money given to nonprofit organizations is either unrestricted or restricted, in its simplest form. Unrestricted funds, the least common, can be used for anything within reason that administrators deem fit.
Restricted funds are earmarked for certain uses that their donors specify. They typically have time limits on their usage and must be returned if not used for their designated purpose in time. Also, organizations that misuse restricted funds can find themselves in big trouble.
Rather than taking the risk of misappropriating funds, softwares should include blocks that don’t allow restricted funds to be used for inappropriate uses. Reminders of their terms should be distributed on at least a weekly basis to employees, if not through in-person, mandatory meetings. It’s better to allocate more time now to reviewing restricted funds’ terms than messing up and facing fines, loss of reputation, and breaking up relationships with donors.
Upload Pertinent Documents to Accounting Software
Nonprofits are required to be audited to maintain their integrity, as they deal with tons of donated money. It’s wise – and easier than shuffling pounds of paper – to upload financial documents to a backed-up accounting software, preferably the backup being a cloud storage system. Make sure to file documents with precisely-written, easy-to-read names and titles to more easily search for them later.