The first step to accounting for nonprofits is choosing whether your organization should use cash-basis or accrual-basis accounting. When deciding between the two, you should consider your nonprofit’s financial and reporting needs and what it’s better equipped for. Have your books done in Aplos, accounting software designed for nonprofits. Our Bookkeeping Specialists can help you budget by fund, accept online donations & more. In-kind donations require special handling in nonprofit accounting systems.
QuickBooks Support
The point of this statement is to accounting services for nonprofit organizations help determine whether or not the organization meets its goals or has enough funds to support its programs. You’ll be able to provide a snapshot of the organization’s financial health so that stakeholders can assess its performance and decide its future direction. The cash-basis method is usually simpler to maintain than the accrual-basis method and may be adequate for smaller nonprofits.
Annual Compliance and Reporting
External audits objectively evaluate financial statements, enhance credibility, and ensure compliance with accounting standards and regulatory requirements. It helps nonprofits analyze past financial performance, project future income, and expenses, and make informed decisions regarding program activities, fundraising efforts, and resource allocation. Next, make a list of the features your organization needs to properly track, report and manage its funds and taxes. Such features may include the ability to track and allocate restricted funds, process payroll and pull reports to aid you in filing your 990 form. Now, reference your list of considered providers and the plans you can afford. Find the provider and plan that most closely matches the list of features your organization needs.
Do all nonprofits have to file Form 990?
Xero’s highly customizable and in-depth reporting tools make Xero stand out. By tracking categories, you know if funds are being allocated to the right projects based on donor intent. Non profits should seek professional help for complex financial transactions, regulatory compliance, audit preparation, and as the organization grows and financial management becomes more complex. Professional bookkeepers and accountants provide expertise and ensure accuracy. Popular options include QuickBooks Nonprofit, Aplos, Sage Intacct, Wave, Xero, and Araize FastFund Accounting. These tools offer features tailored to non profit needs, such as fund accounting, donor management, and grant tracking.
- As mentioned, nonprofit organizations have tax-exempt status, meaning they don’t have to pay federal taxes to the IRS under Section 501.
- The right approach depends on your organization’s size, complexity, and budget.
- Smaller organizations with fewer transactions might outsource bookkeeping.
- Different funding sources come with different nonprofit accounting requirements.
Financial Transparency and Reporting for Stakeholders
However, if you want to add more users to your account or leverage more complex tools like batch invoices and fixed asset auto-tracking, it’s worth upgrading to the Advanced plan. Nonprofit accounting is the unique process that charitable organizations use to plan, record, and report their finances. The core of nonprofit accounting is accountability, meaning your goal in your accounting practices should be ensuring honesty and transparency with your donors, other stakeholders, and the government. However, Wave doesn’t offer fund accounting or any other nonprofit-specific features, so we hesitate to recommend it to nonprofit bookkeepers and treasurers.
In addition, as you build new global entities, you can seamlessly add them to the software. Aplos stands out for its customer relationship management (CRM) component. With this software, you can create donor profiles, communicate with donors and keep a record of the relationship, and personalize your engagement and retention strategies with targeted outreach tools. Donor management tools then help you increase retention, track donations and fundraise. Schedule a live demo of FastFund Accounting today and see firsthand how it can help you manage your finances more efficiently and effectively. Don’t miss the opportunity to enhance your financial management and focus more on your mission.