How to Start Bookkeeping for Nonprofits

Running a nonprofit organization is a lot of work. While it’s not the first thing that comes to mind, you’ll want to have your bookkeeping set up from day one so you’re doing things right and staying on track. 

Here’s how to set up a good bookkeeping system from the start. 

1. Find a bookkeeper

Nonprofit bookkeeping is a nonnegotiable task—it just has to be done. It’s best to outsource to a professional bookkeeper with these qualifications:

• Familiarity with bookkeeping software.

• Understanding of state and federal rules to help you stay compliant.

• Experience in nonprofit finances: Between tax deductibility, different donation categories, and the unique rules around raising revenue, nonprofit finances are different from other entities.

2. Record every transaction

Your tracking and recording must be as detailed as possible. This information will be used later to produce financial statements (and report your financial information to the IRS), so you should thoroughly and accurately detail and categorize each transaction your nonprofit makes.

3. Reconcile your bank statements

By making sure your transactions line up with your records, you can identify any discrepancies, correct budgeting errors, and catch fraudulent activity. Having a bookkeeper would be supporting you in step 1 and 2 as well.

4. Make a budget

Accurate and timely bookkeeping practices will make budgeting possible, with accurate data to work off. There are different budgeting methods that are helpful.

5. Create financial statements

Your bookkeeper will produce monthly financial statements based on your nonprofit’s activity. These financial statements can provide helpful insight into your nonprofit’s financial health so that you can correct where you need to and grow. 

If you need to outsource your bookkeeping, get a free estimate with HarQuin today.