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Manual bill format for non-profit organizations

[Music] the first thing that needs to be done when setting up your accounting system is to Define your chart of accounts the chart of accounts is a road map for all of your financial transactions and the proper setup will help your organization generate more meaningful financial statements both internally and externally to outside funding sources in Accounting 101 you learn that when you set up your chart of accounts you should assign a logical numeric order to all of your accounts there are five categories for all of the accounts in your system first there are assets assets are things that you own such as cash fixed assets prepaid expenses accounts receivable and other things that your business owns liabilities are what you owe accounts payable payroll taxes sales tax payables notes payable and possibly deferred revenue then there are net assets the net assets are the net worth of your business or in nonprofit parlance your fund balance the assets liabilities and net assets appear on your statement of financial position or your balance sheet next you have Revenue which is money coming in such as donations fundraising event Revenue grants investment income and then finally you have your expenses which is money going out for salaries payroll taxes Professional Services utilities and other expenses for your nonprofit your revenue and expenses will show up on your statement of activities or your income statement and for your budgets we also learned in Accounting 101 when you're assigning numbers to all of your accounts to follow a logical order so your assets will start with the number one your liabilities with two your net assets with three revenue is typically four and then expenses five through nine using this logical numbering system it makes it a lot easier when you have to print your financial statements your trial balance and it makes it a lot easier when finding specific accounts so once you've Define the parameters for your chart of accounts you then assign your numbers so cash could be 1,000 salaries could be 5,000 and the numbers could be anywhere from three digits to five digits long but that's not it for nonprofits you need additional segments to help segregate your activity by funds and functional areas such as management in general fundraising and all of your programs some nonprofits actually need another layer to identify their grants and funding sources so a true nonprofit chart of accounts will have your natural account number for your assets liabilities net assets revenue and expenses there will be another segment to identify your funds and at least one more segment to identify your functional areas so a nonprofits chart of accounts with its segmented table- driven system is like file cabinets so let's say you have three funds unrestricted temporarily restricted and permanently restricted funds you'll have a separate file cabinet for each of those funds each draw in your file cabinet is like your program area inside the draw you have separate files for each of your accounts so when you think about setting up your chart of accounts make sure that your system will be able to handle a multi- segmented account structure so when you're looking at accounting systems you definitely need a system that will allow you to separate all your financial activity by the three four or five segments that you need that Define your organizational structure