As we round the calendar and prepare to begin 2014, a lot of nonprofits and churches are going through the process of closing their financials for the year. At Aplos, we want to make sure this transition is a smooth one for your organization, regardless of your accounting software. Below, we will go through some helpful tips and reminders for closing your year-end financials.
Year-End Reminders: Employees
Faith-based organizations need to designate the housing allowance for ministers for the upcoming year. Also, remind your employees to review their W-4s and confirm that the information is correct. Make sure to identify if any employee should be reclassified or if their withholding amounts changed for the new year.
Year-End Reminders: Donors And Friends
Remind your donors to wait to file taxes until they have received their contribution statement from your organization. If you have time, you can also send them an advance statement with their current donation balance and ask for a year-end donation. After all, people tend to feel more generous around the holidays.
Some gifts to ministers, employees, or volunteers may be considered taxable income, so handle these carefully, and note them as needed.
Year-End Transactions
Make sure all revenue and expenses are accounted for prior to closing the books. These transactions can include donations, other revenue, reimbursements, purchases, and payroll (including taxes, retirement, flex spending, and insurance).
Performing regular bank reconciliations will help to identify any missing or outstanding transactions. If this is not a part of your normal month-end checklist, we highly recommend adding it.
Tax Forms
As mentioned above, you’ll want to review and make any needed changes to your employees’ W-4 Forms. In addition to this, be sure to send contribution statements and a Form 1099 for vendors by January 31.
Review Accounts
Run annual reports to check for accuracy and make sure all accounts balance. Make sure to adjust entries as needed, and then re-run the reports and print them for your records. When closing out your year-end financials, you’ll also want to confirm that your fund balances are carried to the next year and your accounting matches your bank balances (again, easily accomplished using bank reconciliations).
Other pieces of your accounting you can review are your internal controls, budget values for the upcoming year, and your insurance policies to confirm they are adequate.
If you are not an Aplos customer, you will also want to back up your data! If you are an Aplos customer, don’t worry because we do this for you. Transitioning to a new year is also the perfect time to switch to new accounting software. If you are in need of true fund accounting software at a great price, you’ve come to the right place. Start a free trial today, and see what you have been missing.
Good luck, and remember this blog is just a helpful resource and is not meant to be a substitute for professional services. Always consult a CPA or trusted professional if you need tax or accounting advice.
Free eBook: The Essential Year-End Closing Checklist
Need a more in-depth checklist of tasks you may need to complete to close out the year? This free eBook will help you review your organization’s accounting at the end of the year to prepare you for the coming year. Identify the most common accounting tasks to be performed this January. Then accomplish them with confidence knowing it will keep your organization on strong financial footing. This free eBook:
- Includes a year-end checklist so you don’t miss a task
- Walks you through common year-end accounting questions
- Shows you how to pull and analyze your annual financial reports
- Discusses compliance rules for year-end tasks
- Reviews the required reporting that nonprofits and churches must complete each January
- Demonstrates what you need if you are considering changing software
