The Accountant: Nonprofit Accounting For Volunteers, Treasurers, and Bookkeepers

Nonprofit organizations play a vital role in our society by addressing various social, cultural, and environmental issues. These organizations heavily rely on volunteers to fulfill their missions, and the responsibilities of managing finances often fall into the hands of volunteer treasurers and bookkeepers. In this article, we explore the fundamentals of nonprofit accounting and provide essential tips for volunteer treasurers and bookkeepers to effectively manage the financial aspect of their organizations.

The Importance of Nonprofit Accounting

Nonprofit accounting is a specialized field that involves tracking, recording, and reporting financial transactions specific to nonprofit organizations. While it might seem daunting for volunteers with limited accounting experience, understanding the basics of nonprofit accounting is crucial for maintaining financial transparency, ensuring compliance with regulations, and making informed decisions related to resource allocation.

Volunteer treasurers and bookkeepers must familiarize themselves with the different components of nonprofit accounting, including budgeting, financial statement preparation, tax reporting, and compliance with donor restrictions. By mastering these skills, treasurers and bookkeepers can contribute to the sustainability and growth of their organizations.

Nonprofit Accounting for Volunteers, Treasurers, and Bookkeepers (The Accountant Beside You)

by Lisa London (Kindle Edition)

4.4 out of 5

Language	:	English
File size	:	60359 KB
Text-to-Speech	:	Enabled
Screen Reader	:	Supported
Enhanced typesetting	:	Enabled
Word Wise	:	Enabled
Print length	:	253 pages

FREE

Financial Planning and Budgeting

A key responsibility of volunteer treasurers and bookkeepers is to assist in creating and managing the organization's budget. By working collaboratively with the board of directors and key stakeholders, treasurers and bookkeepers help outline the financial goals of the organization and allocate resources accordingly.

When creating a budget, it is important to consider both revenue and expenses. Revenue sources for nonprofits can include individual donations, grants, sponsorships, and fundraising events. On the expenses side, treasurers and bookkeepers need to categorize costs such as staff salaries, program expenses, rent, utilities, and administrative overhead.

Regularly reviewing and adjusting the budget based on the organization's needs and financial circumstances is crucial. Treasurers and bookkeepers can use accounting software and spreadsheets to track and analyze financial data, making it easier to identify potential challenges and opportunities.

Financial Statement Preparation

Financial statements are essential tools for monitoring the financial health and stability of nonprofit organizations. Volunteer treasurers and bookkeepers are responsible for preparing these statements accurately and presenting them to the board of directors and relevant stakeholders.

The three primary financial statements that treasurers and bookkeepers need to prepare are the balance sheet, income statement, and statement of cash flows. The balance sheet provides a snapshot of the organization's assets, liabilities, and net assets. The income statement, also known as the statement of activities, demonstrates the revenues, expenses, and net income or loss for a specific period. Lastly, the statement of cash flows provides details about the cash inflows and outflows from operating, investing, and financing activities.

Using accounting software can simplify financial statement preparation by automating calculations and generating reports accurately. It is crucial for treasurers and bookkeepers to ensure that these statements comply with accounting principles and reporting standards applicable to nonprofit organizations.

Tax Reporting and Compliance

Nonprofit organizations are subject to specific tax regulations, and volunteer treasurers and bookkeepers play a vital role in ensuring compliance. These individuals must understand the tax-exempt status of their organization and stay updated on any changes in tax laws or reporting requirements.

One critical aspect of tax reporting is filing the annual Form 990 with the IRS. This comprehensive tax return provides information about the organization's mission, programs, governing structure, and financial activities. Volunteer treasurers and bookkeepers need to accurately complete this form to maintain the organization's compliance and tax-exempt status.

Additionally, treasurers and bookkeepers need to stay aware of any potential taxes or restrictions related to specific grants or donations. Contributions may come with specific guidelines regarding how funds can be used and reported. Accurate record-keeping and adherence to these guidelines are essential to maintaining transparency and credibility with donors.

Enhancing Financial Controls

As volunteer treasurers and bookkeepers handle financial transactions and sensitive data, it is crucial to establish robust internal controls. These controls prevent fraud, errors, and mismanagement of funds.

One important practice is segregation of duties, which involves dividing financial responsibilities among multiple individuals. This ensures that no one person has complete control over financial transactions from start to finish, reducing the risk of unauthorized activities.

Regular financial reviews, both internal and external, can help identify potential discrepancies and ensure accuracy. Volunteers, treasurers, or bookkeepers can request independent audits or reviews to provide an objective assessment of the organization's financial practices.

Using accounting software with built-in features for financial controls, such as restricted access to sensitive data and transaction approval workflows, can also enhance the security and reliability of financial operations.

Continuous Learning and Professional Development

Nonprofit accounting is a dynamic field, and volunteer treasurers and bookkeepers should continuously seek opportunities for learning and professional development. Educating oneself about changes in accounting standards, tax regulations, and best practices can significantly contribute to the success and resilience of the organization.

Various online courses, webinars, and workshops are available to enhance accounting skills specific to nonprofit organizations. These resources can provide treasurers and bookkeepers with the necessary knowledge to navigate complex financial tasks and ensure compliance with ever-evolving regulations.

In

Volunteer treasurers and bookkeepers are the unsung heroes of nonprofit organizations, contributing their time and expertise to manage the financial aspects crucial for achieving the organization's mission. By understanding nonprofit accounting fundamentals, treasurers and bookkeepers can fulfill their roles with confidence, ensuring financial transparency, compliance, and strategic decision-making for the betterment of their organizations and the communities they serve.

Nonprofit Accounting for Volunteers, Treasurers, and Bookkeepers (The Accountant Beside You)

by Lisa London (Kindle Edition)

4.4 out of 5

Language	:	English
File size	:	60359 KB
Text-to-Speech	:	Enabled
Screen Reader	:	Supported
Enhanced typesetting	:	Enabled
Word Wise	:	Enabled
Print length	:	253 pages

FREE

Nonprofit Accounting Explained!

Have you been asked to be treasurer for an association or local club?

Are you the office manager who also has to handle the nonprofit accounting?

Let The Accountant Beside You, Lisa London CPA, translate accounting into understanding for you.

This book is written for the treasurer, volunteer, or bookkeeper of

• Civic clubs

• Parent/Teacher associations

• Homeowner associations

• Scouting troops

• Animal rescues

• Private schools

• And other small nonprofits.

Don’t worry if you don’t have an accounting degree or bookkeeping experience. Nonprofit Accounting for Volunteers, Treasurers, and Bookkeepers doesn’t treat you like you are doing nonprofit accounting for dummies.  Instead, Lisa translates complex concepts into easy to understand bites. The step-by-step instructions have loads of illustrations to help you create and operate a solid and reliable nonprofit bookkeeping system, with controls to keep the money safe and you above suspicion.

With this comprehensive, easy-to-understand guide, you’ll learn:

• Simple and effective internal accounting controls to safeguard your organization’s money.

• What is different about accounting in a nonprofit versus a business.

• The IRS requirements for acknowledging donors.

• How to prepare payroll and file the necessary tax forms.

• Line-by-line instructions on completing the IRS Form 990EZ.

• How to tell if you have Unrelated Business Income and to prepare the related tax form-990-T.

• And so much more.

The book also includes an example of a simplified UCOA (uniform chart of accounts for nonprofits) and a checklist of basic accounting requirements to close out your month.

1. Proper Procedures & Internal Accounting Controls 

2. What is Special About Nonprofit Accounting? 

3. How Do I Select an Accounting System? 

4. Administrative Issues 

5. Donations, Part I: Receiving and Recording 

6. Donations, Part II: Acknowledgement 

7. Donations, Part 3: Other Topics 

8. Rules For Helping Local Families And Individuals 

9. Paying the Bills 

10. Reimbursement Policies and Procedures 

11. Payroll, Part I: Basic Steps 

12. Payroll, Part II: Calculating & Filing 

13. Budgeting For Nonprofit Organizations 

14. Month-End Financial Requirements 

15. Year-End 

A. Forms W-2 (Wages) and W-3 (Taxes) 

B. Form 944 (Employer's Annual Federal Tax Return) 

C. Form 1099 (Independent Contractors) 

D. Form 1096 (Transmittal of U.S. Information Returns)

E. Year-End Donor Acknowledgements 

F. State Filings 

G. Other IRS Requirements 

H. Audit Needs 

16. Unrelated Business Income Taxes (UBIT) 

17. Form 990 (Annual Filings for Exempt Organizations) 

A. Types of 990s 188

B. IRS Summary of Forms to File 190

C. Completing Form 990-N (e-Postcard) 191

D. Completing Form 990-EZ (Short Form Return) 198

E. Schedule A (Public Charity Status & Public Support) 212

F. Schedule B (Schedule of Contributors) 219

18. Appendix