Guide to Bookkeepers for Nonprofits: Everything You Need to Know

Unlike for-profits, nonprofits don’t have equity because they don’t have owners, and that’s the biggest difference between a balance sheet and a statement of financial position. Some are unrestricted net assets and some are considered restricted net assets. Nonprofit bookkeeping is one of https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ the most crucial needs in an organization to maintain good financial health and transparency with supporters. Bookkeepers can be paid staff members or volunteers, but they should understand GAAP principles and fund accounting. QuickBooks is the most well-known accounting software for nonprofits and for-profit organizations. It has a nonprofit software that allows organizations to invoice, track donations, develop reports, and more.

Amanda Stoliker, Account Manager

We also manage your payroll, store all your receipts, file 1099s, provide monthly reports, give feedback on processes and procedures, and answer all your questions. Bookkeeping covers your nonprofit’s day-to-day financial needs, mostly concerning data entry and simple transactions (more on these duties to come!). Although bookkeepers need some on-the-job training and financial know-how to do their jobs well, they aren’t required to have specific degrees or certifications.

Mona Tabor, Professional Bookkeeper

• Both require very different levels of effort and expertise and the cost for full-service accounting is much higher.
• Together, let’s build a secure financial foundation for the future of your cause.
• No one knows your nonprofit better than you do, which is why you should hire a professional bookkeeper to get your records in order and leave the decision-making up to your organization’s leaders.
• A good budget can act like a roadmap for a nonprofit, determining where and when the organization will deploy its resources, and whether it’s on the right track financially.
• Because nonprofit bookkeepers must manage restrictions, grants, and expenses in significantly more detailed ways than a for-profit bookkeeper.

Additionally, it can lead to missed opportunities in the form of “untranslated” financial information or unidentified financial insights. As a nonprofit leader, you naturally want as much of your resources to go toward furthering your mission as possible, but of course, keeping a nonprofit’s operations in motion doesn’t just happen for free. It’s great when organizations set up their bookkeeping systems correctly from the start.

• When the time comes to report your financial activity or make a budgetary decision, you’ll be equipped with precise and thorough information.
• Nonprofit bookkeepers must be familiar with specific regulations, such as IRS Form 990, which is required for tax-exempt status.
• For example, imagine your non-profit has a long-standing relationship with a local company.
• When managing payroll for a nonprofit, bookkeepers must administer federal and state taxes, deduct money for employee benefits, and determine how funds are affected.
• Nonprofit bookkeeping is the process of systematically recording, organizing, and tracking a nonprofit’s financial activities.
• Several factors will determine the expenses of bookkeeping for a small company or non-profit.

Looking for a Nonprofit Bookkeeping Solution?

• An outdoor enthusiast, Kathy spends her free time hiking, kayaking, running, practicing yoga, aerial arts, and photography.
• Bookkeepers are in charge of maintaining your books closely day in and day out.
• Fund accounting rules leave plenty of room for error – especially if you’re new to bookkeeping.
• As a nonprofit bookkeeper, you’re responsible for entering cash and in-kind donations, grants, membership payments, etc.

If you want to get paid faster, you need to understand accounts receivable. 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.

• You might anticipate donations from the business each year; you should include the estimate in your annual budget.
• As restricted funds enter your accounts, you may notice specific programs receive more donations.
• We’ll also cover non-profit reporting requirements and our best practice recommendations.
• Move your mission forward with a reliable bookkeeping partner to track funds & expenses accurately.
• At some point in their careers, high-level executives may transition from the realm of the for-profit corporation to a non-profit organization.
• Speak to us about financial operations and management services for your organization.
• We can serve as your organization’s bookkeeper, accountant, controller, or Chief Financial Officer (CFO), depending on which services you’re looking for.

For example, Quickbooks offers non-profit functionalities to help with fund accounting complexities. Non-profits can choose from several bookkeeping solutions, including purchasing accounting software, hiring a full-time bookkeeper, or outsourcing to professionals. By the way, 1-800Accountant can support your non-profit with professional bookkeeping and accounting services. Popular options include QuickBooks Nonprofit, Aplos, Sage Intacct, Wave, Xero, and Araize FastFund Accounting. These tools offer features tailored to non profit needs, such as fund accounting, donor management, and grant tracking. Maintaining accurate and up-to-date records is the cornerstone of effective non profit bookkeeping.

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Creating and maintaining a strong internal control system is one of the most important steps that nonprofit organizations (“NPO”) and charitable organizations can take to mitigate risk. Unlike a for-profit balance sheet, the non-profit statement of financial position doesn’t report retained earnings or equity in the organization. Since non-profits cannot distribute profits to owners, total assets less liabilities represents net assets. Some organizations also generate income from business activities such as selling merchandise. These resources provide valuable knowledge and skills to enhance bookkeeping practices. Internal controls are essential for safeguarding assets, ensuring accurate financial reporting, and preventing fraud.

Data Visualizations to Guide Your Decision-Making

You must earn sufficient money to cover costs such as employee compensation, unforeseen expenses, electricity bills, and rent, among other things. At some point in their careers, high-level executives may transition from the realm of the for-profit corporation to a non-profit organization. Your Bookkeeping Specialist will enter and reconcile the transactions in the appropriate register and include journal entries for payroll if you use Gusto.