Accounting can be one of the more stressful aspects of running a non-profit business. In addition to dealing with the different regulations that come with this less-than-usual business model, your oversight means you’re wearing many hats. Of all aspects of your business, prioritizing accounting is crucial to keep everything running smoothly and in compliance.
For some non-profits, outsourcing this essential function to a hassle-free accounting partner is the best solution. Here are nine signs that this increasingly popular approach could work for you.”
1 . You’re Doing Business in Multiple States
If you’re operating your non-profit business in multiple locations, you need to keep track of the sales, taxes, and labor costs in each state. As you expand the operation of your corporate non-profit, this can be a challenge to manage. A third-party partner with experience working across multiple jurisdictions can help you keep up with the different requirements and file the right reports.
2. You’re Just Getting Started
The best way to form good habits is to stick to them from the start. Setting up robust accounting processes for proper budgeting, recording, and reporting from the beginning can help you avoid running into issues later on. An experienced accounting partner for your non-profit can help you establish a firm foundation and maintain good habits as you grow.
3. You’re Not Clear on the Non-Profit Business Rules
A corporate non-profit doesn’t exist to make money for shareholders. Instead, your aims and strategies prioritize serving the public interest. While there’s an abundance of information for entrepreneurs, standard non-profits, and corporations, managing the accounting aspects of a corporate non-profit requires a specialized skill set.
The rules aren’t always clear, so it’s helpful to have an experienced accounting partner to guide you.
4. You Need Help with Employee Classification
Employee classification refers to the designation of workers as either employees or independent contractors. As labor classification laws have become more complex, many non-profits struggle to classify their workers correctly. Since how you classify employees impacts payroll and accounting, and misclassifying can lead to IRS penalties, it’s vital you get this right.
A third-party partner can help you establish correct employee classifications and maintain your records meticulously to protect your reputation as well as your finances.
5. You’ve Added a New Financial Officer
A financial officer is a key, mandatory position in any structured non-profit. This person can take on multiple roles in your organization, even handling contracts or other aspects of the business. With the changing of the guard, it’s the perfect time to review and evaluate current practices and consider the value of introducing a new accounting partner to help implement best practices going forward.
6. You’re Experiencing Significant Growth
As your non-profit grows, so does the complexity of your accounting needs. Growth means more focus on strategies to manage cash flow effectively, more donor contributions that must be recorded in compliance with tax regulations, and growing concern about cybersecurity and payment protection processes. Altogether, it often means too much time spent on accounting and finance tasks when you could be focusing on the mission instead,
Outsourcing accounting services can help you manage the increased workload, provide access to advanced security measures and technology, and ensure your finances remain accurate and up-to-date, and ready for audit or reporting at any time.
7. Tax Time is a Nightmare
If you find that tax time is consistently stressful, that you’re not quite sure what records are where, or that your relationship with the IRS comes with a side-helping of panic and worry, it’s time to think about a different approach. An accounting partner can provide personalized solutions for tax time and manage your other accounting and finance needs.
Your accounting partner will work with you throughout the year to ensure you close the books, manage reconciliation, and hit financial reporting deadlines with ease. From there, you’re in an excellent position to provide clear and compliant communication for your donors. Working with an expert accounting firm demonstrates that you’re as focused on integrity as you are on your non-profit’s mission.
8. You Need Accounting Help, But Not a Full-Time Staff Accountant
Is your corporate non-profit at that stage where you’re no longer stuffing business receipts in drawers and you need someone dedicated to accounting, but not necessarily full-time? You need a vendor who can fill in the gaps.
A fractional or outsourced accounting partner allows you to pay for the services you need without having the costs associated with a full-time employee. You can quickly scale services up or down, so you get the expert support you need in a cost-effective way.
The success of your non-profit means growth in every area, including all aspects of finance, accounting, and tax. You need to ensure you record and report donations, grants, and expenses in accordance with strict legal and regulatory guidelines and be able to leverage your finances to help you grow and look toward the future.
At Scrubbed, we understand the unique needs of tax-exempt organizations. We have helped scores of non-profits set up and maintain seamless financial and accounting processes designed to meet regulatory compliance and guard your hard-earned reputation.
We can help you strengthen internal controls, efficiently manage your books, streamline processes, keep an eye on cash flow, get ready for audits, and prepare all the necessary financial statements and IRS Forms.
With Scrubbed by your side, you can be confident that your financial affairs are in order. And that frees up more time for you to focus on working with your donors and stakeholders and encouraging more people to join in your mission to make the world – or your corner of it – a much better place.
Let’s start the conversation.