Professional Accountants for Non-Profits: Financial Compliance

Not a magician here, but whatever led you to start your non-profit organisation did not include managing paperwork, calculations and compliance regulations. What entranced you was your organisation’s mission.

For the most part, non-profits rely on funding from donations, grants or program revenue to function. And like any other business, non-profits are expected to document their finances for transparency and accountability. That’s where Accountants For Non Profits comes into action.

However, the paperwork and numbers can be hard to master without the help of professionals. Nonprofit accounting requires experts who not only know accountancy and finances but also have an understanding of the sector to get effective results.

Luckily, here at Pearl Lemon Accountants For Non Profits , nonprofit accounting is one of the things we do best. We have helped various organisations manage and maintain their finances. Our accounting services will help secure nonprofit financing while staying organised for other important tax collection and compliance aspects.

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Nonprofit Accounting Is Different

Nonprofit accountability primarily focuses on the accountability aspect of your finances. Since your donors and funders inject money into your nonprofit, they have the legal right to restrict their contributions to ensure their funds are spent on the agreed-upon programs.

This means you have to spend the money in the way they approve of.

As such, nonprofit funds are separated into categories such as:

Restricted Funds. These are the money that your entity must spend on specific programmes and initiatives.
Temporarily Restricted Funds. These funds are used for specific programs and tasks at your charity organisation till a certain date. They are unrestricted money after that period.
Unrestricted Funds. It can be expended with whatever parts of your entity are most critical.

Another aspect of nonprofit funding is that non-distribution constraints bind nonprofit funds. Any extra funds can not be distributed to the leaders of the organisation. They have to be re-invested back into the mission of the organisation.

Even though nonprofits are tax-exempt, they must prove how the organisation is spending its funds and furthering its cause. Transparency is crucial in preserving trust in what a specific nonprofit is doing in its time.

Donors want to feel safe that their funds are being used rightfully. So, good accounting not only shows that the non-profit has integrity, it further shows the nonprofit has ethical standards.

Our Accountants For Non Profits

In the meantime, nonprofit accounting is the practice of gathering files and evaluating crucial data to tell critical decisions. Among the tasks performed by accountants For Non Profits are:

Accounts are being reviewed;
Recognising the basis for decisions;
Report writing;
Getting ready for an evaluation;
submitting your Form 990;
Account reconciliation; and
Making sure that GAAP requirements are met

As you’ve seen, the roles of the charity bookkeeper and auditor vary markedly, which means that when employing accountants for non profits and bookkeepers, you must consider these varying obligations and their correlating abilities.

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The Accounting Documents You Will Need

Nonprofit accounting, like other attributes of your nonprofit’s strategic plan, necessitates compiling many key documents and reports to organise your accounting transactions. Our experts will start preparing, evaluating, and using numerous financial information to demonstrate your charity’s financial status.

Some of these documents include:

Nonprofit budget report
Statement of financial position
Statement of activities
Statement of functional expenses
Statement of cash flow
Charity ledgers and journals
Receipts & other proof of payments
Form 990

It may seem quite a lot at first, but as long as you’ve been diligent in keeping a record of every financial transaction you’ve encountered, you will be fine.

Right from this moment, try collecting your receipts, crucial documents on donations, previous tax declarations, property titles, mortgage documents, and any other file that you think is relevant to your finances.

Once that is ready, allow us to analyse them so we can start reporting your financial standing to the authorities who ask of it.

Take Your Chance On Our Accountants

You must ensure that your nonprofit accounting is as efficient and effective as possible. Whether you do it internally or outsource experts to do the work for you, nonprofit accounting ensures that your ‘ financial statements are consistent.

Take the hustle out of your mission by hiring our professional accountants for non profits to keep your financial documents in check.

Book a call today to learn more about how we can help you!

FAQs

What is the difference between for-profit and nonprofit accounting?

Even though both for-profit and nonprofit organisations need to produce regular reports about their financial activities, the different reports bring significant changes in how these reports are formulated. These are some of the differences:

A for-profit business generates a financial statement that shows its net capital for stakeholders and investors. On the other hand, a nonprofit doesn’t have any stockholders or owners. Instead, it generates a financial position outlining its assets and debts.

In for-profit accounting, shareholders’ equity equals a firm’s assets fewer obligations, also known as net assets. Because a nonprofit has no capital, this line item is always known as net assets. Net assets are classified as either constrained or unrestrained.

Since a company is attempting to earn a profit, it generates an income statement that details its earnings, expenditure, setbacks, and profits. A nonprofit does not have a bottom line because it is motivated by a goal instead of the desire to profit. It generates a statement of activities rather than an income statement, which details the incomes and expenditures affiliated with each initiative.

But does my non-profit need accounting?

Like any organisation that handles cash flow, nonprofits must invest in professional accounting. One of the nonprofit firms‘ most significant mistakes is assigning their accounting tasks to untrained staff or volunteers. This is risky as such poses a risk for fraudulent activities if the accounting is not adequately managed.

Hiring accounting professionals like us ensures that people with adequate training and experience constantly pay attention to the nonprofit’s accounts and may notice elements that other untrained employees would miss.

What are some of the best practices for Nonprofit Accounting?

Here are some of the best practices that would be best for any nonprofit:

Make use of nonprofit accounting tools. Since nonprofit financial reporting differentiates from for-profit accounting, you must ensure that your tool can handle the specific activities of your financial statements.
Your institution’s budget should be reviewed regularly. Establishing and reconsidering your nonprofit finances should not be one-time work. Instead, it’s a file you should regularly reassess, making changes as your real revenue and expenses diverge from your initial projections.
Variable costs should be carefully planned. The conventional approach suggests minimising operational costs as much as possible to maximise your fundraising campaign’s return on investment. However, expanding overhead can sometimes be vital to boosting expansion at your charity organisation.
Assist with your multi-year business plan. Every month, great nonprofits review their finances and draw information to ensure their funds are in order. Periodically check your objectives and any multi-year fundraising efforts or initiatives to ensure that your existing fiscal methods are aimed toward reaching those objectives.

Encouraging sustainable procedures and carrying yourself responsible for impactful nonprofit financial reporting can have a favourable influence on the outcome of your nonprofit, influencing your governance, soliciting donations, and organisation design.

When you allow us to keep track of your finances, you give yourself more time to do your work and please more clients. It's a win-win situation for everyone. Aside from that, you'll also gain financial stability because your assets and liabilities are managed well enough not to cause any trouble for you in the future.

So let our experts work for you, and you won't regret it even a bit.

Book a call today to get started.

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