By Heather Kramer, CNAP, QuickBooks ProAdvisor, Financial Specialist at Impact AMC
For some board members, finances and accounting can be pretty intimidating. It makes sense when accuracy is so critical and numbers are such a key component. However, even if your role within an association is not directly related to financial management, it’s important to have some understanding of the dos and don’ts of nonprofit and association financials.
With over 15 years of experience in the bookkeeping and executive administration fields, Impact AMC Financial Specialist, Heather Kramer, shares her tips for what associations and nonprofits should and should not do to ensure healthy financial management practices.
Do: Create an organized chart of accounts.
Provide an organized structure for your income and expenses to be tracked.
Don’t: Overcomplicate your chart of accounts.
Track your items accurately but don’t overcomplicate by having a chart of accounts that is too long. For example:
✔ Office Expenses
X Office Expenses 🡪 Pens, Office Expenses 🡪 Paper, Office Expenses 🡪 Stamps
Do: Remember to file your year-end tax report.
Nonprofits are required to file a year-end 990.
Don’t: Work without an annual budget.
A budget will allow you to accurately plan for your income and expenses and ensure you have the money for things you need throughout the year.
Do: Review your financial statements monthly (e.g. Statement of Activity, Statement of Financial Position).
Review your cash flow and ensure you can identify any unusual transactions.
Don’t: Handle everything yourself
Look into having a yearly audit completed by an outside source, or create an audit committee that reviews the books annually. Auditors can and will make recommendations for strengthening and safeguarding your non-profit.
The good news is that you don’t have to handle your financial management alone. Learn how Impact’s team of association professionals can help your association or nonprofit establish, maintain, and streamline its financial practices and more. Reach out today.