Accounting & Bookkeeping FAQ
Q. Why is accounting important to my nonprofit organization?
A. Accounting allows you to quickly determine your organization’s financial state, and whether you have adequate funding to cover costs. Keeping your income and expenses in order will also help when filing tax documents at the end of the year. Additionally, many foundations want to view financial statements or a 990. A good bookkeeper will help you maintain good record-keeping and be prepared for any audit.
Q. Can I hire a CharityNet bookkeeper to do the accounting for me?
A. Yes! Hiring a good bookkeeper can help you organize your accounting quickly. They can enable you to make the changes in your nonprofit that will keep it on track toward success and sustainability.
Q. What is a balance sheet and how can it help me?
A. The balance sheet shows a snapshot of the organization’s financial position, including assets and liabilities. Assets are things that are owned by the business. Liabilities are things that are owed to others. Balance sheets show you and your potential donors that funding is being utilized effectively to sustain the organization’s mission fulfilling programs.
Q. Do I really need to create a balance sheet each month?
A. If your nonprofit is really small, you can manage it fine without creating a balance sheet each month. But any size nonprofit, including a part-time one, needs to create a good profit and loss statement each month. If inventories or accounts receivables are important in your nonprofit, balance sheets will clearly point out any significant fluctuations that you should be aware of.
Q. What is an income statement?
A. An income statement (often called profit and loss statement or P&L) is the scorecard for a nonprofit. It shows the revenue, expenses, and profit or loss. It shows these things for some period of time, usually a month or a year. An income statement is usually titled “Income Statement for X Organization for the period January 1 to December 31.”
Q. How can the profit & loss statement (income statement) help me?
A. The income statement tells you if you are remaining cost-effective and shows your costs and expenses. It shows where you are spending your money and what sources your income is coming from. If you are not covering expenses, the Profit & Loss Statement can show you where you may be able to cut costs.
Q. What is the process for monthly bookkeeping?
A. After you sign up for the service, we will email you an order confirmation and service agreement. After you acknowledge this, we will forward you another email providing you access to our client-only web tools & questionnaire. Once you complete this online questionnaire, we will call you within 48 hrs to set up a conference call with your service consultant. During this call, the consultant will confirm information, ask you questions, answer any of your questions, and begin to work on your project.
Q. What will I receive with monthly bookkeeping?
A. Our monthly bookkeeping package includes income and expenses for the month entered into QuickBooks, monthly bank reconciliations, monthly balance sheet, and monthly income statement (P&L).
Q. What do I need to provide CharityNet for monthly bookkeeping services?
A. We have created a document checklist that you will want to keep to inform you of what we will need each month. Keep in mind, not all items on the list may apply to your organization.