For many people that run a nonprofit organization, they find so much reward and fulfillment in their lives through the service that they are providing. It can be a straight forward endeavor as far a managing the books and taking care of accounting. However, there are errors that can still happen. When they do, it can mean big problems for even nonprofit organizations. Mark Dicus & Company is here to talk about some of the accounting mistakes that nonprofit organizations make that you should try to avoid at all costs.
Accounting Errors Nonprofits Often Overlook
There are mistakes that all nonprofit organizations are capable of making when it comes to accounting and bookkeeping. Here are some of the most common mistakes made that nonprofits should work diligently to avoid:
– Keeping Program and Administrative Expenses Separated: Fundraising for nonprofit organizations is commonplace. It is essential that the program expenses are kept clearly separated from the administrating or fundraising costs. This can complicate taxes and accounting for the organization down the road.
– Internal Controls: It is important that there are controls put in place to keep everyone working in the internal parts of the company honest. This may look like dual signatures for payments, restricted bank account access, and even regular reconciliations.
– Reconcile Bank Accounts Monthly: A huge mistake for many nonprofits is that they don’t always reconcile their bank accounts often enough. This should be done on a monthly basis to ensure there are no small errors that need to be adjusted and accounted for. These small errors can grow into much bigger problems if you don’t catch them quickly.
– Preparing for Audits: It may not be required to have an annual audit, but nonprofit organizations should be prepared for it anyway. It will help everything stay more organized, uncover weaknesses, and keeps donors and grantors honest.
– Financial Reports for Stakeholders: The board, grantors, and donors should all be getting a report that shows where the money is going. They should be seeing where the funds are going and the impact they are having on the organization as well as the community. You are going to want reports that are more informative than a generic report. You need something that shows exactly what the mission’s impact has been.
– Stay Compliant: You want to make sure you are staying compliant with any of the tax and reporting laws and requirements. This can make or break your nonprofit. It helps you build trust which is vital to the mission of the organization.
Bookkeepers, Accountants & More in Summerlin, North LV, Henderson, Lone Mountain Village & Greater Las Vegas, Nevada
If you have a nonprofit that you are trying to run on your own, there is more room for error. When you’re working with the certified accountants at Mark Dicus & Company, you don’t have to worry about the accounting errors any longer. We will make sure you are crossing all your t’s and dotting all your i’s. Call us today!