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Home  /  Specialized / Industry-Specific  /  Nonprofit and 501(c)(3) accounting

Books your board and your funders can follow.

Fund accounting done properly, restricted money tracked separately, and reports a volunteer board can actually read.

Nonprofit and 501(c)(3) accounting in Cedar Park, TX

Nonprofit accounting asks a different question from business accounting. A business wants to know whether it made money. A nonprofit needs to show where each dollar came from, what it was restricted for, and that it was spent on that.

That means fund accounting rather than a single pooled set of books, a chart of accounts organized around programs and funding sources, and reporting built for people who did not train as accountants and sit on your board once a quarter.

  • Restricted and unrestricted funds separated

    Grant money with conditions attached tracked against those conditions, so releasing it into general operations cannot happen by accident.

  • Program, administrative, and fundraising split

    Expenses allocated across functions with a documented, consistent basis. Funders scrutinize this ratio, and an allocation you cannot explain becomes a problem.

  • Grant tracking against the award

    Each grant with its budget, its spend to date, and its remaining balance and reporting deadlines, so grant reports are assembled rather than reconstructed.

  • Board-ready reporting

    Statement of activities and statement of financial position, plus a plain-language summary of where the organization stands, written for trustees rather than for accountants.

Organizations that need this structure

The threshold is usually restricted funding or an outside reporting obligation rather than size.

You have received your first restricted grant

The moment a funder attaches conditions, pooled bookkeeping stops being adequate and fund tracking becomes necessary.

Your board cannot read the current reports

A standard profit and loss does not answer the questions trustees are responsible for. Reformatting alone often solves this.

The annual return is getting painful

When the annual information return means weeks of reconstruction, the underlying bookkeeping is not organized the way the return needs it.

Setting a nonprofit file up correctly

  • 1

    Structure the chart of accounts around programs

    Funds, programs, and functional categories built in from the start, because retrofitting this later means reclassifying every transaction.

  • 2

    Establish the allocation basis

    How shared costs are split across program, administration, and fundraising, documented so the method is consistent and defensible.

  • 3

    Bring the funds current

    Existing restricted balances traced and proved, which is frequently where the first real discoveries are made.

  • 4

    Report on the board rhythm

    Monthly close, reporting aligned to board meetings, and grant reports prepared to funder deadlines rather than in the week before.

Small nonprofits across the Austin area

Small nonprofits in Cedar Park, TX, Round Rock, TX, and Austin, TX usually run their finances on volunteer time until a grant makes that untenable. We keep the books, run the fund accounting, and prepare the reporting. The annual federal information return is a filing, and that goes to your outside tax partner, who receives a clean set of books from us so the return costs less to prepare. We work the same way with nonprofit clients in San Diego County.

Questions from nonprofit boards

  • Do you prepare our annual information return?

    No. Filings go to an outside partner. We keep the books, run the fund accounting, and hand over a clean, reconciled set of records that makes their work faster and cheaper.

  • Can QuickBooks Online handle fund accounting?

    For most small nonprofits, yes, using classes and locations to represent funds and programs. It has to be configured deliberately, and this is exactly the setup most organizations get wrong at the start.

  • How should we allocate shared costs?

    On a basis that reflects reality and can be explained, typically staff time, square footage, or headcount depending on the cost. The key is documenting the method and applying it consistently.

  • Our books were kept by a volunteer who has left. Where do we start?

    With a cleanup. That is common and entirely fixable, and it usually improves the fund structure at the same time.

Related work for nonprofits

Catch-up and cleanup bookkeeping

Where most nonprofit engagements begin.

Read about it →

Budget versus actual reporting

The reporting boards and funders ask for most.

Read about it →

Financial statement preparation

Formal statements for funders and grant applications.

Read about it →

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Need books your funders will accept?

Book a consultation and tell us about your funding mix. We will explain what the fund structure should look like.

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