New to nonprofit accounting? No problem!
Our goal for this course is to provide you with the backbone techniques and principles to start tracking your nonprofit’s or church’s financials while keeping them as actionable and succinct as possible. Sign up here and we will send you the entire course through email.
We’re going to dive into some of the day-to-day tasks so you are up-to-date and accurate, as well as what you will need to do to close out your bookkeeping each month.
Much like a business, churches receive money, spend money, purchase inventory, pay bills, and transfer money between banks on a daily basis. Keeping up with these daily or weekly transactions will speed up your month-end close process. Here is a quick breakdown of some of the most common tasks you will need to accomplish when managing your church’s books.
– Enter Income and Expenses – You will need to track what Asset account it impacts, the Income or Expense account it is categorized by, and the Equity account
– Prepare your bank deposits – More on this tomorrow, but make sure you track your donations by fund and note which of your income is tax-deductible for giving statements
Pro Tip: Always have two people count the giving received each Sunday and prepare the bank deposit slip. This improves accountability and transparency that all donations received were deposited.
– Pay bills – Track the due date of new bills so you can more easily anticipate your cash flow
Pro Tip: For good internal controls, choose a separate person to sign checks that confirms the amount matches the invoice or estimate and is an approved expense.
– Journal Entries – This is less common, but happens when you have a transaction that is not a standard expense or deposit. For example, if you need to transfer dollars between funds or bank accounts, such as allocating a portion of your General Fund to your Missions fund, you would note this in a Journal Entry
– Complete a bank reconciliation – This is an important part of your monthly bookkeeping and internal controls
Pro Tip: Have someone other than the bookkeeper check the month-end financials and bank reconciliation report to help spot errors. It is much easier to fix if you catch them early.
Having a monthly checklist can help ensure that all financial transactions that affect your bottom line are accounted for. Setting a deadline for the month end close helps too (for example, close month and run reports by the 5th of the following month). Here is a checklist of all the tasks to get finished when closing out your bookkeeping each month.
Now that you understand what to maintain each month, if you want to see more, sign up here and we will send you the rest of the course through email. and we’ll delve deeper into the subject! We’ll talk on how to set up your chart of accounts, tracking your giving in your accounting, and so much more!