Bookkeeping for Nonprofits: A Complete Guide

This position requires keeping track of financial transactions so that accurate reporting can be done in order for a nonprofit to continue to abide by regulations and stay in compliance. This includes maintaining records of donations, grants, fundraising events, and https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ expenses. Unlike for-profit entities, nonprofits must adhere to specific guidelines and standards to maintain their tax-exempt status and demonstrate their financial stewardship to donors and stakeholders. While for-profit businesses primarily focus on boosting profit, nonprofit organizations focus more on the accountability component of bookkeeping and accounting.

Key distinctions of nonprofit bookkeeping

Invoices are legal documents and should have your organization’s logo, name, address, email, phone number, invoice number, and date. They should also include the donors’ information and a list of goods and services. In this article, we’ll discuss key bookkeeping responsibilities and steps to efficient bookkeeping and provide 3 software options that can help. The program offers numerous integrations and an easy-to-use interface, even for those who aren’t tech-savvy. FreshBooks is available on both computers and mobile devices, so you can stay on top of your nonprofit organization at any time.

Professional Nonprofit Accounting & Bookkeeping Services

• Additionally, consider outsourcing your bookkeeping needs to give your team more time to focus on making a difference in the community.
• Non profit organizations often receive donations with specific restrictions on their use.
• Many small to mid-size organizations will delegate payroll processing to their bookkeeper.
• She has a wonderful husband, four children, two stepchildren, and three big dogs.
• If your nonprofit is just getting started with bookkeeping, you may not have the resources or level of need to bring on a new team member to fill that position.
• Every nonprofit, no matter its size or sector, requires dedicated bookkeeping processes to ensure financial health, legal compliance, and maintain trust with donors.

This reduces the possibility of errors and guarantees reliability and accuracy. Of course, you can always generate financial statements manually, but this takes a lot of time and skill. Using the details you recorded about your nonprofit’s transactions, create a broad overview of your financial position and develop a plan to get your revenue where it’s supposed to be. To do this, you’ll need to set reasonable expectations for your income, expenses, and financial goals. Then, plan out how you’ll spend your income in a way that achieves those goals. Don’t use your personal bank account to receive, hold or disburse money for your nonprofit.

Financial Ratios

• When making this decision, be sure to carefully consider your mission’s needs and resources.
• We can serve as your organization’s bookkeeper, accountant, controller, or Chief Financial Officer (CFO), depending on which services you’re looking for.
• Integrating accurate bookkeeping software for nonprofit organizations and implementing standard nonprofit bookkeeping principles streamlines financial management.
• However, your bookkeeper and accountant are both professionals below the executive level who work with financial data in distinct ways.
• It involves generally accepted accounting principles and other tasks all businesses employ when reporting finances, along with those specific to nonprofit organizations.

Without access to accurate financial reports and expert financial guidance, your organization will never be prepared for what’s coming next. A nonprofit accountant requires a minimum of a four-year college education with a degree in the field of accounting. Accountants often opt for certifications to improve their credibility, such as taking the CPA exams to become a certified public accountant. The Key Benefits of Accounting Services for Nonprofit Organizations Implementing internal controls is essential for safeguarding the organization’s assets and ensuring the accuracy and reliability of financial information. Outside of IRS requirements, payroll can be the most important role for a nonprofit bookkeeper. You can determine whether these are one-time or regular experiences and choose how to raise funds for different programs that don’t gain as much financial support.

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• Accountants must use your bookkeeping reports to analyze and present your organization’s financial status to the board, IRS, and other external characters.
• Write and print checks, sync with your bank account, generate reports…all in the same place.
• In this guide, we’ll cover the responsibilities and skills of nonprofit bookkeepers, and we’ve included a job description template to help you get started.
• Restricted net assets are donations that have certain terms and restrictions attached, have special accounting procedures, and must be kept separate from other net assets.
• For example, large organizations like universities often have dozens, if not hundreds, of bank accounts for different purposes like scholarships, tuition, projects, etc.
• Her free time is spent with her husband and four beautiful children playing games and going for walks.

A bookkeeper is a financial professional who manages the day-to-day finances of your nonprofit. Their role is to track daily transactions, record income, and monitor expenses to keep financial records accurate. Bookkeeping for nonprofits is recording and analyzing financial transactions to ensure compliance with state and federal accounting rules. Think of bookkeeping as studying for a test—it’s the necessary first step you must take to prepare yourself for the big exam. In the same way, bookkeeping can prepare your nonprofit’s financial records and budget for tax filings, annual reports, and every other deep dive into your assets. Once you’ve got your bookkeeping system setup and have started generating financial statements, the final piece of the nonprofit accounting puzzle is getting your tax obligations straight.