Why Your Nonprofit Needs Accounting
Your nonprofit needs donations to exist whether it is in goods, services, or money. Being transparent about how your funds are used puts donors at ease as well as makes your life easier. Here are a few reasons you should have clear and concise accounting in your organization.
Keep Track Of Finances
Whether you opt for an accountant or choose to let your treasurer handle it, you need someone to keep a close eye on money coming in and spent. If you choose to keep it in house, you need software such as abila mip advance. If you choose to hire out, you should look for a reliable accountant who will be able to produce accurate results while working within the budget you allot for their services. Whoever does your finances should also produce and statement for donors for tax deduction purposes. Doing so will encourage people to give if they know they can use it for their income taxes.
When you start a nonprofit, you need to open a separate checking account from your personal one. While it may be convenient to go to only one account to manage the money, it makes accounting difficult to differentiate what payment is going to which expense. Also, if you happen to get audited, it can be difficult to be transparents with your nonprofit.
Set Up Different Funds
Designate your money into separate categories so that you know which section of your nonprofit the money is allocated to. The funds can sit in the same bank account. However, you should state in your accounting which area the donation is meant for. You also should keep distinct records of where and when your petty cash is used. This will keep donors and the public at ease when they can see where their donations are being used.