The non-profit sector in the US has around 1.5 million organizations operating and registered with the IRS as of 2016. These organizations are responsible for employing over 11.4 million people. They also contribute over $1 trillion dollars to the US economy each year.
However, as a non-profit, it’s important to stay on top of your accounts. There is plenty of specialized knowledge required to ensure your organization is making the most of its tax-exempt status.
This is why it is so important to use accounting services to moderate and keep track of your finances. In this article, we will explain the 5 top reasons why using accounting services can really benefit your non-profit. Read on to find out more.
1. They Can Help You With Keeping Costs Low
The great thing about hiring an accounting service that specializes in non-profit accounting is they will be able to use their expert knowledge to help make recommendations based on your current expenditures.
It’s no secret that 2020 has caused a financial strain on many businesses worldwide, including the charitable sector. This is especially the case if you rely heavily on charitable donations. Reports have shown that charitable donations are down as much as 6% for the first quarter of 2020.
Unfortunately, due to COVID related job losses and redundancies, a lot of people are having to cut back on financial obligations. This includes giving to charity. It means that the charity sector will also need to respond to the decline in donations.
An accounting service can help to streamline your business. It helps to cut out any unnecessary financial implications or costs you don’t need.
2. Allows You to Focus on Your Mission
The aim of any charitable organization is the improvement or bettering of a community or group of people that need additional help. This should always be at the forefront of all non-profits’ goals and is the reason why they operate.
Financial issues and jargon can leave some non-profits feeling overwhelmed, especially when it comes to accounting or bookkeeping. It means that valuable time and energy is spent trying to sort out finances. This can detract from your original purpose and intentions.
With hiring an accounting service all of the stress is removed from the charity and placed in the hands of capable and expert accounting staff. It allows the charity to focus solely on their mission and leave the bookkeeping to accountants that are highly adept in the non-profit charity accounting sector.
3. Means You Don’t Need to Employ an In-House Accountant
One of the biggest expenses that charitable organizations incur is the paying of staff wages. Of course, you will want to ensure that you are well equipped in having a wide enough staff base, however, employing an in-house accountant isn’t always strictly necessary.
The average accountant salary for a year is around $51,388 in the US, which can be an unaffordable cost for some smaller charities. By outsourcing your accounting, either on a retainer package or a bespoke service, you are drastically saving money each year on your accounting.
And this doesn’t mean that the quality of your accounting is compromised in the slightest. You can work with qualified and experienced accounting professionals that can offer you recommendations and guidance in all areas of charity accounting requirements.
4. Can Help You Make Decisions More Effectively and Faster
As a board member or a CEO of a charity, you will have to respond to regular hurdles and bumps along the road in order for your non-profit to progress. These issues can often be time-sensitive and need to be dealt with quickly.
Non-profit accounting services can work with your financial data and provide you with up to date reports on all financial aspects of the company. This information can be critical and useful in helping to make informed decisions on specific situations.
It means that you can utilize the reports and share them with your board, allowing everyone to come to educated decisions based on error-free and factual data concerning the financials.
5. Provides You With Additional Protection from Fraud
It’s an unfortunate reality to have to face, but non-profits can be at risk of fraud from within their own companies or outside sources. An employee may try to exploit the use of internal controls and use that for their own financial gain.
Fraud can be implemented in ways such as billing fraud, check fraud, fictitious vendor schemes, or plain theft of cash or items. People can assume that stealing from charitable organizations has less stringent checks in place, meaning they are much more likely to get away with it.
Warning signs can include things such as vendor addresses that match employee addresses, poorly defined invoices, and discrepancies in payments billed and received.
Using an accounting service can put a stop to any potential fraud by streamlining and refining the internal controls. This means that there are fewer ways for anyone to abuse your internal systems and commit any illegal activity.
It can also mean that your audit processes are simpler to do, which can save a lot of time and the headaches involved with trying to sort it all!
Accounting Services: Where Can I Find Out More?
We hope this article on the 5 top reasons to use an accounting service has given you all the information you need.
By using outsourced accounting services, it means that all your financial data and accounting needs are handled by qualified experts in their field. It gives you the reassurance and peace of mind needed when it comes to strategizing your accounts and financials.
There are different levels of support catered for all sizes of charitable business and their income. It means that there is the perfect package for your company and that you are only paying for what you need.
If you would like to arrange a meeting with one of our advisors, click this link.