If you own or manage a non-profit, you understand that it’s vital to economize in any way you can. One of the best ways that you can maximize your funds is to implement proper accounting practices. If you don’t have the training, time, or inclination to do this by yourself, consider hiring a qualified bookkeeper or accountant. Doing so can be a solid investment in the future of your business.
Accounting Can Help Your Business to Achieve Its Mission
When most people start a business, they have a clear vision of what it is they hope to ultimately achieve. If your non-profit is a charity, your primary goals may be to raise money and public awareness for your cause. Proper accounting increases a company’s awareness of how much revenue is being raised versus what is being spent towards operations and charitable causes. This is vital to the health of any business, especially a non-profit, which requires a firm grasp on where they stand financially. Losing financial direction may make it difficult to continue running a successful non-profit.
Keeping an Expense Budget
One thing every business requires is an ongoing budget for projected expenses. Your business will may need to closely monitor the money spent on advertising, equipment, employees, or inventory. Maintaining careful records of your expenditures and comparing them to a planned budget will make it easier to address problems and plan for upcoming needs. An expense budget will enable you to afford major purchases, such as new computers or a cash register, or give you time to arrange for financing if necessary.
Being Accountable to the Internal Revenue Service
All businesses operating under the status of a non-profit must be able to provide proper records to the Internal Revenue Service (IRS) on demand. If you don’t keep these detailed records, and your submitted documents don’t match up with the information on your tax forms, your non-profit might be flagged for a compliance review or an audit. By implementing accounting practices, you can prevent the need for such and avoid the all-important loss of non-profit status with the IRS.
Establishing Profitability Is Critical to Success
According to New Century Financial at www.newcenturyfinancial.com, lthough a non-profit is determined as a not for profit business, it must still generate enough revenue in order to cover operation costs and to fulfill its intended purpose. A business should establish profitability via proper accounting methods. If a loan is needed to cover some of the expenses for the business, a lending institution will require some proof of profitability to ensure the loan can be repaid in a timely fashion. When records are maintained sufficiently, a business can produce this kind of information quickly and easily, on demand.
Running a non-profit business can be a rewarding endeavor. The first, vital step is to determine a solid business plan through proper accounting practices.
This article was contributed on behalf of New Century Financial, your number one choice when looking for help with the finances of your business. Click here and see how they can help you!