What exactly does it mean to reconcile an account? It isn’t as complicated as it initially seems, referring only to a simple comparison. To reconcile your books, internal financial documents are positioned next to documents from external sources like bank or credit statements. Reconciliation is an excellent way to find errors, catch fraudulent activity, and identify discrepancies. While companies that are publicly held are required to reconcile on a regular basis, nonprofits can forget this essential part of bookkeeping when resources are thin–but they shouldn’t.
When your nonprofit crafts your annual budget, you separate your revenue sources into various categories including that from individual contributions, corporate sponsorships, fees for service, membership fees, event revenue, and grants. Most small to mid-sized organizations operate on a rather tight budget, meaning that every penny of revenue counts and can make a rippling impact on various projects at the nonprofit. Grants can make up a significant portion of a nonprofit’s budget, accounting for around 10% of all nonprofit funding.
On the heels of November and December when charity drives are in full force and we’re thinking a little more about giving back, you may see the term B Corps with increasing regularity. At first glance, it may look like just another certification in the list of many a company can achieve, but it represents something special. But what exactly does B Corps stand for and what does it mean?
When you first started working at your nonprofit, what entranced you? What was the driving force behind your starting work there? Chances are, it wasn’t tedious paperwork, challenging calculations, and compliance regulations. What likely drove you to join was (and continues to be), the nonprofit’s mission. However, that paperwork, number crunching, and other tedious tasks come with the territory of running an effective nonprofit organization. One such activity that many nonprofit professionals don’t want to deal with is nonprofit accounting.
The IRS doesn’t require nonprofits to file taxes. You probably remember the forms and papers that you filled out when you first opened your doors to ensure you didn’t have to endure the annual burden of paying taxes on the revenue you receive. But does that mean your organization is also exempt from nonprofit audits? The answer is simple: no. While you may have escaped the need to pay taxes, you may still find that your organization should conduct an independent nonprofit audit.