Managing the finances of a non-profit organization can be a complex task. Just because your organization has an operating purpose other than to make a profit, doesn’t mean that accounting isn’t needed to keep track of money. Contributions, membership dues, fundraising events, grants and investment income are all sources of revenue for non-profit organizations and should be accounted for according to the Financial Accounting Standards Board (FASB). This why abila mip fund accounting is important for non-profit entities.
Why You Need a Non-Profit Accountant
Accounting doesn’t just involve managing money. As a non-profit, you must project, forecast and make recommendations relating to important financial transactions. With non-profit organizations, there’s often a larger variety of revenue sources than there is with for-profit companies. This means that non-profit financial accounts can be a bit more complex. This is a major reason why you may need accounting services for your non-profit.
Non-profit organizations often need an accountant to keep track of things such as:
- Unexpected expenses
- Uneven flows of revenues
- Rising costs due to inflation
- An increase in staffing needs
Accounting for Non-Profits vs. For-Profits
While non-profit and for-profit accountants aim to make sound decisions with the assets of an entity, they differ in how they use such assets. For-profit companies want to grow their revenue by selling their goods and services. In contrast, non-profits put their funding towards mission-based programs and sustaining their organization. Non-profit and for-profit entities have different names for their main financial statements. A for-profit’s Balance Sheet provides details about assets, liabilities and retained earnings. On the other hand, a non-profit provides a Statement of Financial Position shows assets and liabilities, but focuses on net assets.
As you get your finances in order for your non-profit organization, be sure to consider professional accounting. And don’t just choose any accountant. An accountant who specializes in non-profit accounts will be better prepared to manage your unique finances.
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