4 Best Practices For Nonprofit Accounting

As an accountant for a nonprofit organization, your responsibilities differ from those of a for-profit business. Therefore, it is imperative that you are up to speed on all of the rules and regulations that apply to your business. Here are a few best practices to follow for nonprofit accounting. 

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Use the Correct Software

Since nonprofits handle record keeping and tax payments differently than other companies, it is essential that you use software that is developed specifically for nonprofits, such as Abila MIP Advance. Good software will help you to stay organized and run the most accurate reports.

Keep Up With Current GAAP Guidelines

GAAP, or generally accepted accounting principles, are the standard set of rules of corporate accounting. These tend to change occasionally, and it is your responsibility to ensure that you are well-versed and up to date with them.

Understand Tax Responsibilities

Since you are not a typical for-profit organization, you are not required to pay the same types of taxes. Nonprofits are exempt from paying federal income taxes, as well as paying sales and property tax. However, there are instances where you are required to pay taxes, such as when you make money from something that is not related to your basic purpose. Familiarize yourself with these responsibilities so you don’t make any costly mistakes.

Be Realistic About Expenses

Even if you have numerous fundraising events planned and have a good amount of money in the bank, it is important to be realistic about the expenses needed to operate daily so that you don’t ever find yourself scrambling for money. Aside from money for fundraising events, you’ll also need to account for payroll, office expenses, and anything else that could potentially pop up.

Understanding the complexities of nonprofit accounting can be a challenge, but as long as you keep up with regulations and use the tools available to you, you will be successful. 

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