Mastering Not-For-Profit Bookkeeping: Expert Guide for Nonprofits

FreshBooks is one of the most popular accounting software options on the market. Nonprofits can use FreshBooks to help with bookkeeping, invoicing, time tracking, and more. With many fund accounting software options, you can also link your bank account to allow for automatic credit card and bank reconciliations.

Streamlined Tax Preparation

• Bookkeeping software for nonprofit organizations plays a crucial role in helping organizations effectively manage their finances.
• Each fund tracks money earmarked for a specific purpose—scholarships, building projects, or disaster relief—so you never mix it with unrestricted revenue.
• Also, make sure you’re considering fixed expenses (like rent or salaries, which stay the same) and variable expenses (like event costs, which can fluctuate).
• While nonprofit organizations use a Statement of Financial Position and Statement of Activities, for-profit organizations use a Balance Sheet and Income Statement.
• These policies include conflict of interest, whistleblower, and document retention policies to maintain compliance and trust with donors and stakeholders.
• Customizable software that’s either made for nonprofits or for small businesses in general could be exactly what you need to forecast effectively.

At the same time, larger organizations or those managing more detailed finances might benefit from Adminsoft Accounts or GnuCash. Adminsoft Accounts offers uncommon features in most free accounting software, such as payroll management and stock control, making it an excellent option for organizations with more advanced needs. The ability to support multiple users — and even various companies — also allows teams to collaborate more effectively, even in larger organizations. In addition, Wave offers receipt scanning, which can simplify expense tracking by digitizing receipts and linking them to transactions.

• If you’re using Donorbox for church fundraising, managing your finances would be a breeze with Donorbox’s powerful integration with QuickBooks.
• Accounting is the reconciliation, analysis, and understanding of the numbers.
• These include multi-year and budget reports that comply with FASB 116 and 117.
• Now that we’ve discussed the common challenges in nonprofit accounting let’s explore proven practices that help organizations overcome these obstacles.
• Nonprofit accounting software helps organizations manage their financial records, track donations and handle other critical tasks such as budget management and reporting.
• Accrual offers a fuller picture and is required once your nonprofit tops $5 million in annual revenue or accepts federal grants.

Training Your Nonprofit Team on QuickBooks: Building Internal Capacity

A well-organized COA ensures that all transactions are easy to follow, and it’s particularly crucial when managing restricted funds. Restricted donations — funds earmarked for specific purposes — must be tracked separately from unrestricted funds. Properly categorizing these transactions prevents mismanagement and ensures compliance with donor requirements. Now that you have chosen the right bookkeeping software, it’s time to organize your finances through a Chart of Accounts (COA). Your COA is like the blueprint that structures all your nonprofit’s financial activity. It serves as the foundation for accurate tracking and reporting, ensuring that every transaction — whether it’s a donation, grant, or program expense — is categorized correctly.

Our Services

• If you decide to hire and manage a bookkeeper, you’ll also have to decide whether the position is part-time or requires a full-time, full-charge bookkeeper.
• They are responsible for performing a variety of nonprofit bookkeeping duties, including financial record keeping and transactions, such as accounts payable, accounts receivable, and general ledger.
• Expenses should be categorized as salaries and wages, office supplies, rent or mortgage payments, utilities, and other operating expenses.
• Ensure compliance with accounting standards and regulations when generating financial statements.
• 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.

Get insights into your business’s performance with our handy graphs, charts, and smart dashboard—no number-crunching or accounting degree needed. Plus, view cash flow reports to keep an eye on income and expenses and make smart business decisions. You don’t need to be an Excel wiz to understand your organization’s financials. Export profit/loss, sales tax, cash flow, comparative, and more reports with visual graphs that makes the information easy to comprehend.

Bookkeeping Services

Your nonprofit CFO and financial team should understand the full benefits of implementing digital transformation with automation software by integrating third-party add-ons with Sage for nonprofits. They can provide clear-eyed insights into the organization’s financial health, helping steer it in the right direction. accounting services for nonprofit organizations This may include costs for staff salaries, supplies, equipment, and other program-related expenditures. Proper recording of program expenses enables evaluation of program efficiency and impact.

• Strategic financial planning poses a unique challenge in the nonprofit sector.
• For larger needs, we recommend the Advanced plan, accommodating more than five users.
• With over 70 built-in customizable reports, organizations can get granular insights into all aspects of their financial performance.
• There needs to be an account for the membership fee and other activities that bring money into the organization.
• Choose software that supports fund accounting, generates Form 990 reports, and integrates with donor management tools.

Robust feature set includes thorough record-keeping, comprehensive reporting, excellent invoicing and inventory management, plus a capable mobile app. He joined NerdWallet in 2019 as a student loans writer, serving as an authority on that topic after spending more than a decade at student loan guarantor American Student Assistance. In that role, Ryan co-authored the Student Loan Ranger blog in partnership with U.S. News & World Report, as well as wrote and edited content about education financing and financial literacy for multiple online properties, e-courses and more. Ryan also previously oversaw the production of life science journals as a managing editor for publisher Cell Press.

Why Nonprofits Shouldn’t Rely on the Executive Directors or Board of Directors for Accounting

Here, we’ll explain the best accounting software for nonprofits and discuss the top features and functionality, pricing plans, and the pros and cons of each software. Some options would be better suited for smaller nonprofits with basic needs and others for growing organizations with many moving parts. That’s where our review of the best accounting software for nonprofits comes in! Whatever the size of your organization and your specific needs, there’s an accounting software that can solve your accounting and bookkeeping headaches. Fund accounting is a system used by non profits to manage and report their financial resources. It ensures that funds are allocated and used according to donor restrictions and organizational purposes, enhancing transparency and compliance.

An outside CPA can perform agreed‑upon procedures annually to test controls. Form 990 is a public document that details your mission, governance, and finances. Complete every schedule that applies and double‑check that program expense ratios reflect reality. Compare actuals to budget monthly and explain variances greater than 10 percent. Shows assets, liabilities, and net assets—broken into restricted and unrestricted categories—on a specific date. Track pledges and grant installments so you can follow up before due dates slip by.

Prepare data for the accountant

Automation can streamline bookkeeping processes, reduce manual data entry, minimize errors, and save time. Tasks like bank reconciliation, invoice processing, expense tracking, and financial reporting can be automated to improve efficiency and accuracy. 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. Transparent financial reporting builds trust with donors, grantors, and other stakeholders.