8 Best Practices for Nonprofit Bookkeeping

bookkeeper for non profit organization

The IRS receives more than 70,000 applications for tax-exempt status every year, so be patient when submitting your application. If you don’t hear back from the IRS within 90 days, call Customer Account Services to check on its status. Where exactly your income and expenses come from and how you group them in your budget will depend on the nature of your organization. An annual operating budget for a university will be very different than a budget for a small local art gallery.

  • Outsource-bookkeeper.com is the best bookkeeping service for non profit organizations because we have a dedicated team of bookkeepers who specialize in the unique needs of the non profit sector.
  • We recommend that churches and other houses of worship use QuickBooks Online Plus or QuickBooks Advanced so they can get all the tools, tracking, and reporting features we offer.
  • But there needs to be an equal focus on accurate accounting and bookkeeping.
  • We also looked for some common elements, such as value for the cost, ease of use, breadth of features and functionality and customer support.
  • Virtual desktop connections are protected via TLS with a minimum of 128 bit encryption and authentication.
  • ACCOUNTS through Software4Nonprofits is a program offered by Cooperstock Software, a small company based in Canada.

If you upgrade to the local network version—which costs $220 for the first year—up to five users can access the database at once. Just because your nonprofit qualifies as tax-exempt under Section 501 doesn’t mean that all of your donors’ contributions qualify as charitable deductions. And it doesn’t mean that all of the activities your nonprofit spends money on aren’t taxable. Tax-exempt nonprofit employees are still subject to employment taxes, and your nonprofit could still be subject to sales, real estate and other taxes depending on which state it’s based in. Bookkeeping services for nonprofit are critical to the success of their organizations. They’re both required for making effective and well-informed financial decisions.

Statement of Activities

It makes it easier for employees and volunteers who are not accountants to assist your nonprofit with some bookkeeping. The common statements and forms used for effective nonprofit bookkeeping are those that will thoroughly and effectively communicate the financial information https://www.bookstime.com/ for your nonprofit. Whether you’re communicating with other organizational departments, the public, or the government, using a proper statement or form with all the necessary components is key. In this article, we’ll dive into bookkeeping for nonprofit organizations.

  • If you’re the treasurer of an organization, you can use the program to manage budgets, handle bookkeeping duties, reconcile bank accounts, and generate detailed reports.
  • Both are reliable organizations where you can find the latest bookkeeping principles.
  • This much-needed resource provides those with little or no bookkeeping experience with practical advice in a highly accessible format.
  • It goes without saying that you should never use your personal bank account for your nonprofit organization.
  • But lots of nonprofits forget to track other types of contributions.

MoneyMinder is powered by Nonprofit Central and was specifically created for volunteer-led nonprofit organizations who are often overwhelmed by complex accounting programs. For organizations that want total remote access, Araize FastFund Accounting is our pick for the best cloud-based solution. It offers comprehensive accounting, fundraising, and payroll services and can be accessed from anywhere bookkeeping for nonprofits in the world. For large nonprofit organizations that have significant accounting needs as well as employees and a large donor-base, Financial Edge can be an excellent fit and it’s our top choice for large organizations. Don’t use your personal bank account to receive, hold or disburse money for your nonprofit. Make sure all of your nonprofit’s transactions go through a dedicated bank account.


Outsource-bookkeeper.com will help your non profit organization by providing accurate and timely bookkeeping services, allowing you to focus on your mission and goals. Outsource-bookkeeper.com is the best bookkeeping service for non profit organizations because we have a dedicated team of bookkeepers who specialize in the unique needs of the non profit sector. Financial Edge NXT by Blackbaud is a cloud-based fund accounting solution. Like all of Blackbaud’s products, it was designed specifically for nonprofits. We’re honored that over 120 nonprofits trust us with their bookkeeping and accounting.

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Otherwise, there are free accounting choices, but you should consult a professional before making final judgments about your non-profit’s financial software. That is why to perform all accounting activities smoothly and error-free a non-profit will require bookkeeping. All expenditures, charity, payments, and other financial information are recorded by bookkeepers in an orderly software platform or worksheet. When you let us handle your nonprofit’s bookkeeping needs, you will be paired with one of our staff bookkeepers whose expertise is best matched to your needs.

Start reconciling your bank accounts

These contributions assist NGOs to meet their operational costs and achieve their goals. Your expenditures will be influenced by how your accounting systems, processes, reporting requirements, and laws are established and handled, in addition to these core bookkeeping duties. Nonprofit bookkeepers oversee the day-to-day operations of the organization. Fortunately, nonprofit professionals don’t have to worry about your financial information if you choose FreshBooks.

bookkeeper for non profit organization

Murray Dropkin, C.P.A., M.B.A., is president of CMS Systems, Inc., a consulting firm that specializes in improving the operational and financial operations of nonprofit and for-profit organizations. He has published extensively in the field of nonprofit accounting and is coauthor of The Budget-Building Book for Nonprofits and The Cash Flow Management Book for Nonprofits, both from Jossey-Bass. He co-edits Nonprofit Report, a monthly newsletter on nonprofit accounting, taxation, and management. He is coauthor of the three-volume Guide to Audits of Nonprofit Organizations and frequently speaks at professional meetings and consults around the country.


Security features, functionality and access are subject to change without notice as deemed necessary by Right Networks. Availability can vary and are subject to occasional downtime and may change without notice. Track budgets by fund or program with donor and grant management, financial reporting, and bank reconciliations. Categorize revenue expenditures by fund or program, and create custom reports based on the data that matters most to your nonprofit organization.

Bookkeeping does require training and experience but not a specialized degree. Even if your nonprofit isn’t selling anything, you’ll still need to process invoices. Now that we’ve learned the ABCs of accounting, let’s dive a bit deeper into some other vocabulary you’ll likely run across.

Once you’ve got a bookkeeping system in place, you need to start creating financial statements. Looking at these documents can tell you how much money you have, where your money is, and how it got there. There are some specific functions that non-profit accounting includes, that must be handled properly with the help of accounting software. The idea of fund accounting, which emphasizes accountability rather than profits, is the primary difference between for-profit and non-profit standards. Non-profits often have a variety of general ledgers, or funds, as opposed to profit entities, which have a single self-balancing account.