Tag: year end accounting

Accounting for Nonprofits: Close the Book on It!

Preparing Your Books for the End of Year Close

‘Tis the season – the season when nonprofits everywhere start thinking about year-end close. This year, vow that you’ll do all you can to smoothly and efficiently close the books with minimal stress to your accountant. Accountants everywhere thank you.

In all seriousness, there are many reasons why doing a good job preparing your books for the end of year close is important. Without closing your books for the year, you’ll have no idea if your nonprofit was profitable or not. Closing the books and reconciling them means that you’ve tallied up everything for the end of the year, put a period or end point on it, and start with a fresh slate in the new year.

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Closing the accounts for the year reset the revenue and expense lines to zero. These ‘temporary’ accounts are now ready for the new year, a clean slate, and a new eye to profitability. Without closing your books, you’ll have a muddle of data to assess, and you won’t get a clear picture on how well your organization achieves its financial goals during the year.

Accounting for Nonprofits: Tips for Success

There are certain steps you can take to successfully close your books for the end of the year. This includes:

  • Keep your accounts updated: Schedule time monthly to reconcile expenses and income. If you let it all pile up to the end of the year, it will feel overwhelming. There’s also more of a chance to make mistakes and forget items.
  • Create a checklist: A detailed and thorough checklist that details every step for your year-end close is a helpful resource. Such a process can guide you through the close out each year and save time.
  • Ask questions during the year: Hopefully, you have a great certified nonprofit accountants to work with, someone who knows your nonprofit and is open to questions. Don’t let questions delay your routine accounting practices. Ask questions throughout the year so that you don’t let mistakes proliferate.
  • Schedule plenty of time for your audit: Dovetail your end of year close with audit prep, but leave plenty of time for your audit. By doing both at the same time – audit prep and end of year close – you’ll be well-prepared for the new year.

Pay Bills, Lower Receivables

Another useful end of year task to tackle before reconciling and closing your books is to pay off any outstanding invoices so that you carry fewer into the new year. You should also review your accounts receivable file, and attempt to collect any past due invoices. You can certainly carry these over, but it is always a good idea to avoid open receivables. The fewer receivables you have, the more income your nonprofit has at the ready.

While closing out your books may not be top of mind as you celebrate the holidays, tackle the tasks early enough in the month so that you can get them done while people remain in the office. Note when your accounting team may be taking time off to travel or celebrate the holidays, and work around their schedules. You can complete your end of year close with plenty of time to enjoy the festivities of the season.

Beck & Company

Beck & Company provides nonprofit accounting and audit services in Washington, D.C and Virginia. Founded in 1987, we specialize in the world of nonprofit institutions, helping them to navigate the complex world of finance and accounting. Our services are always personalized, and cost-effective for your institution. We welcome your inquiry or call.  Contact us today or call 703-834-0776 x 8001.

Finish the Year Off Well with this EOY Checklist

2016 is quickly approaching which may have you feeling a little stressed about closing out the year. Understandably, the holiday season can interrupt workflow and make it difficult to fully focus on year end tasks. In order to simplify the process we have provided you with a year-end check list to ensure you begin 2016 on the right track.

  • Print yearly reports– From financial and general ledgers to payroll and accounts receivable/accounts payable, we recommend that you print these reports for financial reporting reasons. You will want to have a hard copy of your historical company information, especially if you get audited.
  • Print and finalize payroll forms- Tax returns should be filed and completed for the year that you are closing.
  • Back up all company data- You can save the backup on a CD or flash drive. Save the backup with a name you will recognize in the future. We recommend that you include the words “Year-end” and the year you are closing in the file name. Both the paper documents you printed and this electronic data backup are essential for future reference and future audits.
  • Plan strategically- The end of the year is a natural time to start re-evaluating your financial processes, procedures, and goals. Focus your efforts on maximizing your impact in the next year while minimizing your expenses.
  • Import your current budget, analyze it, and create a new one- Learn from this year’s mistakes and create an effective budget for the year to come.
  • Evaluate your financial records- While it is important to straighten out your financial records due to legalities, it is also important for properly managing your organization. Inaccurate financial records often results in poor decision making and missed opportunities, not to mention trouble from the government.
  • Update donor records- Make sure that your donor records are in order by the year-end because donors will be expecting their annual contribution statements at the beginning of the year.
  • Hold an end-of-year meeting- Have a year-end meeting to discuss the challenges of the past year and focus on the necessary improvements for the year to come. Prepare for your end-of-year meeting by creating the necessary financial reports.
  • Finalize payrolls- Make sure everything is in order to ensure your employees receive their W2s in a timely manner.

Here at Beck & Company we are here to help you in any way that we can. Contact us to see how we might be able to assist your nonprofit organization in finishing off the year well.