Nonprofit Accounting Year-End Checklist
As this year draws to a close, most people are dreaming about festive holidays and new year celebrations. However, the term “year-end” may harbor some anxiety for those in the nonprofit industry. There are seemingly tons of tasks to address before the current year ends and a new one begins. But take it from us — getting everything done doesn’t have to be daunting. The key to success is organization. To help your nonprofit get a headstart on year-end tasks, here’s a helpful checklist of the top accounting, payroll, and tax tasks to complete:
Year-end accounting tasks for nonprofits
- Reconciliation – Be sure to reconcile all of your bank statements. Also, follow up on any uncleared checks. Write off any receivables that are not collectible. Record voided checks and, if necessary, reissue payments. Examine your chart of accounts for any changes or additions that are required. Of course, you want to complete your regular month-end checklist and bank reconciliation for the final month of the year.
- Fixed assets – Update your fixed asset records. Add any fixed asset purchases and remove any items no longer utilized. Include any adjustments and record the yearly depreciation.
- Balance sheet – Analyze your balance sheet accounts (like deferred revenue, accrued payroll, prepaids, etc.) to ensure they’re correct. Make adjustments if needed.
- Income statement – Look closely at your expense and revenue accounts and compare them to your budget. Enter journal entries for anything that needs correction.
- Vendor summary – For any vendor that you paid $600 or more, you may need to send them a Form 1099-MISC. Review your vendor information to ensure you have current addresses and tax information on file. If you’re missing vendor information, ask them to fill out a Form W-9 for your records. After processing the last checks of the year, prepare the 1099s.
- Board documehnts – Review and complete the year-end financial statements, grant reporting, and any other important documents required by your board of directors.
- Budget – Review your budget for the past year and compare it to your actual numbers. Look at where performance differed from expectations and use that information to adjust your budget for the new year.
Year-end payroll tasks for nonprofits
- Employee updates – Before running the last payroll of the year, remind employees to ensure their withholding information and addresses are correct.
- Process W-2s – Once all employee information is deemed accurate and the last payroll for the year has run, process your employee’s W-2s.
- Payroll tax filings – File all of the quarterly and annual payroll tax filings.
- Update payroll records – Update payroll records to reflect any pay changes that go into effect in the new year.
Year-end tax tasks for nonprofits
- Donations – Get your nonprofit’s donations processed by the last day of the year (December 31).
- Donor documentation – Nonprofits must send a written donor acknowledgment for contributions of at least $250. Once all donations are processed, send out contribution statements and donation summaries to your donors, as they will need these when filing their tax returns.
- Give thanks – Thank your donors in an annual letter of gratitude and kindly ask for their continued support.
- IRS Form 990 – Form 990 is required by the IRS and is due 5 1/2 months after closing your organization’s fiscal year. So, if your fiscal year is on the calendar year (with a year-end of December 31), the IRS Form 990 will be due on May 15. However, the form is lengthy and takes time to prepare. Even though it may not apply to your organization right now, it’s something to keep in mind for the future.
Keeping up with your nonprofit’s finances takes time, especially if your processes are manual. Automating your accounting processes simplifies those tasks, especially at year-end. Automation also saves time and provides a better understanding of your overall finances. If you need a hand with your year-end tasks or would like advice on streamlining, automating, or simply facilitating your accounting processes, our expert team of nonprofit accountants can help. Don’t wait – schedule a free call today.
In the meantime, cheers to yesterday’s achievements and tomorrow’s brighter future. Happy new year!
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