Looking for a fully integrated (all-in-one) option will be the better long-term option to avoid integration issues and paying multiple software vendors a month. Custom software solutions save time for nonprofits by performing the exact tasks necessary to run your NPO. Automation tools from these solutions fill out tax forms, track donations, or simply check your bank account all from one source. You can track all activity within the system, whether it’s posting journal entries, deleting a transaction, or any other change. Also, configure workflows so specific individuals or departments can approve financial actions. This gives you an extra layer of security to prevent user errors or identify suspicious activity.

Nonprofit bookkeeping challenges

• It allows you to break down financial performance by region or operational unit, providing granular insights.
• Monitoring in-kind donations ensures comprehensive reporting of the nonprofit’s resources.
• When your records stay current, budgets stay on track and donors stay inspired.
• You can determine whether these are one-time or regular experiences and choose how to raise funds for different programs that don’t gain as much financial support.
• You can use the statement to assess the usage of funds, track performance, and make decisions about future operations.
• For this reason, some of their primary financial statements are different.

Accountants must use your bookkeeping reports to analyze and present your organization’s financial status to the board, IRS, and other external characters. When recording donations for a nonprofit, there must be a distinction between unrestricted and restricted funds. Accurate documentation distinguishes between these categories, guiding how each donation can be used to support your organization’s mission.

Step 4: Record Program Expenses

And, if you need further advice, an experienced bookkeeper can give you their perspective on your budget. The more transactions your nonprofit makes, the more often you should reconcile your bank statements. You might https://nerdbot.com/2025/06/10/the-key-benefits-of-accounting-services-for-nonprofit-organizations/ start by reconciling every time you receive a bank statement (usually once a month), then schedule additional time as the size and quantity of your transactions grow.

• With the right bookkeeping software on your side, you’ll be able to make the most of your donations and reach people who support your cause.
• A professional bookkeeper for nonprofit organizations documents these funds correctly so the restricted funds are used for the purpose they are given and the other account details remain accurate.
• Organizations must develop allocation methods that are fair, defensible, and consistently applied across all programs and funding sources.
• These tools offer features tailored to non profit needs, such as fund accounting, donor management, and grant tracking.
• An accounting software or service can help you avoid costly mistakes and get a clear picture of your overall finances.
• Nonprofit bookkeeping software is invaluable for efficiently and accurately tracking each payment and transfer.
• Beyond basic fraud prevention, nonprofits must consider how their financial decisions affect their reputation and donor relationships.

Time-saving software to optimize your team

Organizations must constantly weigh program expansion opportunities against financial constraints, all while managing irregular cash flow patterns typical of grant funding cycles. So, the program managers need accurate cost information to make decisions. For instance, government grants demand specific reporting formats and deadlines, while foundation grants might operate on different fiscal years. Likewise, individual donations come with their complexity and varying restrictions. State charitable registrations need regular updating, while donor restriction compliance demands ongoing documentation. Board members expect regular financial updates, and program managers need budget reports.

If you ever find yourself feeling bogged down by the bookkeeping and tax filing process, doola can provide the expertise and support to navigate these complexities with ease. Over 65,000 nonprofits and churches trust Aplos Accounting tools to help them succeed in their missions. Almost every software solution on this list offers a free trial or demo tour. Take advantage of free trials/demos to test the software before you commit to a subscription or make a purchase. If you’re planning to grow your business, you’ll need a platform that can grow with your business—so don’t forget to consider scalability. Zoho Books might not be a nonprofit-specific software, but it can easily be fine-tuned to meet the needs of your organization.

• Therefore, nonprofits must stay informed about these requirements and regularly review their policies and procedures to ensure compliance.
• Proper accounting and financial management are necessary for nonprofit organizations to stay viable and remain accountable to the public, donors, funders, and other stakeholders.
• Nonprofit accounting is a specialized method of tracking finances, emphasizing accountability and mission impact over profits.
• To keep your financial statements accurate and do the work quickly, certified and experienced bookkeepers in the US have a thorough understanding of the bookkeeping tools that are available in the market.
• A bookkeeper is a financial professional who manages the day-to-day finances of your nonprofit.

Working With a Nonprofit Accountant

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 each transaction your nonprofit makes. If you are outsourcing an experienced bookkeeper, they can guide you and help you with the best tips to effectively manage your finances. Make sure the reports are positively supporting the growth of the organization and stay in compliance with the taxes. Additionally, take a look at this list of small business accounting software that lists 15 of the best options on the market today. We help organizations succeed through nonprofit accounting, nonprofit HR, and fiscal sponsorship. These resources provide valuable knowledge and skills to enhance bookkeeping practices.

The delegation also helps alleviate leadership of day-to-day accounting tasks and allows them to focus on other organizational objectives. This type of accounting is similar to corporate accounting in many respects, but there are also rules, regulations, and reporting requirements specific to nonprofit organizations. It ensures that all resources go to supporting the organization’s mission.