Did you know that all Institution- profit or nonprofit, big or small has their own exasperating bookkeeping troubles? So, no need to feel uncertain in learning how to keep your records pitch-perfect! Dive into the recommendations listed below:
1. Double-check entries
Data entry errors cannot be avoided 100% even if you have a reliable accounting system. It can cause confusion to various accounts even if a small discrepancy gets past the system so always double-check entries and reconcile your bank accounts, together with accounts receivable and payable reconciliations, monthly to ensure that the transactions entered are complete and accurate.
2. Implement Appropriate Bookkeeping Procedures
All organizations have a system as to how they operate, but not everyone has it clear and effective. That being said, the procedures should be documented and customized to the needs of the organization and to manage financial and bookkeeping tasks. It should comprise all aspects of managing your organization’s resources – how to receive, record and deposit donations, pay bills, and handle every step in between. Put these procedures in writing and make sure you follow each step, every time.
3. Implement a Review Process
Aside from double-checking your data entries, you also need to have a fresh set of eyes to review your work to capture and correct error/s.
4. Accurate reporting of Unrelated Business Income (UBI)
The IRS tends to take special care in reviewing Unrelated Business Income due to inaccurate reporting of UBI resulting to understated or non-reporting of UBI. Unrelated business income is income that comes from trade or business, that the organization regularly engages in, which is not substantially related to furthering the exempt purpose of the organization. If you are unsure whether the income should be considered as unrelated business income, contact your tax preparer.
5. Strict Petty Cash Monitoring
Purchasing small necessary expenditures are easier done with petty cash fund but be mindful with the cash. Authorize only a few employees to make disbursements and keep receipts for all transactions.
6. Proper Categorization of Revenues and Expenses
The tricky part of the revenues is that some donations may be restricted for certain purposes that is why it is important to categorize them appropriately so it can provide you an accurate reporting of inflow and outflow by project or category.
7. Don’t Be Afraid to Seek Professional Help
To cut costs, organizations tend to appoint inexperienced volunteers to handle bookkeeping activities. Accurate financial reports help nonprofit organization secure funds from both potential and existing donors so it’s critical to select professional bookkeeper in handling your bookkeeping activities.
Avoiding these errors is cost-beneficial, helps the organization build trusts with the public and gives the management financial information needed to make relevant decisions.
If you need help with bookkeeping, tax preparation, or implementing these practical tips to avoid financial mistakes, contact us today at email@example.com or 832-437-0385.
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