As the year comes to an end, businesses and nonprofit organizations alike need to start planning for their year-end close. Regardless of when your nonprofit organization’s fiscal year ends, many payroll, tax and human resource tasks must be completed at the end of the calendar year because the IRS requires tax filings based on the calendar period. Prepping your nonprofit fund accounting system ahead of time will help ensure a smooth year-end and less stress during tax season.
Preparation is key to an organized year-end. We’ve created the following list of tips to help guide you through the year-end process:
Payroll and Human Resources
- Software updates. Federal tax rates are usually imbedded in the payroll software. You will need to have the most current version of your product updated by your first payroll in January 2013. Remember to schedule IT resources to implement the updates.
- Order supplies for producing tax forms. Check with your software provider to find out if standard forms from the office supply store will work or if your software requires special forms. Some applications print the form as well as the data so plain, perforated forms are all that is needed. You can get Sage checks and forms here.
- Notify employees to update their address information. Oftentimes, employees move during the year. While they remember to forward their mail and update their magazine subscriptions, sometimes they forget to update their employment records. Remind employees that correct addresses are required so that they will receive the proper forms in a timely fashion.
- Print preliminary reports and verify all employee information. Look for missing data such as missing social security numbers or missing zip codes. Enter corrections.
- Verify terminated employees have been correctly marked and their addresses are correct.
- Reconcile total payroll accounting entries with 941 totals and W-3 totals. Watch for checks voided in a period after 941s have been filed. They could be a cause of any difference between totals.
- Notify employees about benefit changes.
- Post current required employment posters. Visit the U.S. Department of Labor website for a current list of downloadable posters.
- Process and print tax forms: 940, 941, W-2s, W-3s.
Accounting and Accounts Payable
- Reconcile all bank statements. Resolve any outstanding checks. Record void checks and reissue the payments if appropriate.
- Balance petty cash to be sure payments related to the current tax year are recorded.
- Update asset records, enter adjustments, and record all the depreciation for the year.
- Print reports to verify vendor totals for 1099s.
- Print reports to verify vendor address and tax numbers. Correct missing information.
- Order supplies to print vendor 1099s. Check with your software provider to find out if standard forms from the office supply store will work or if your software requires special forms. Some applications print the form as well as the data. In this case, plain, perforated forms are all that is needed.
- Inventory. Do you have items that must be inventoried by calendar year-end?
- Process and print 1099s.
- Send contribution statements or donation summaries to donors.
- Remember to thank donors and ask for their continued support.
Fiscal Year End
- Account analysis. Print reports to verify balances and determine adjustments for year-end. Review account coding for errors.
- Prepare and record accruals.
- Print financials.
- Enter budget information for the new year.
- Review memorized transactions for applicability for the new year.
Consider this a general guideline for closing out your nonprofit fund accounting system. Your organization may have some specifics that you may need to add to the list. Finally, backup and archive your ALL of data. It is good to have a policy in place for regular data backups.
Important Information Regarding the New Medical Insurance Laws:
Make sure you are reporting for Medical Insurance Paid on behalf of all your employees due to the new Medical Insurance laws. If you do not have this information recorded in your fund accounting system as history, we can help you set this up. We can also help you verify all of the quarterly payments and help you balance them to your W2s. RBP Methods will help you review these records to make sure the dollars recorded in the system and reports balance with the numbers sent to the IRS.
We will be offering a class on how to set this up in your system in January 2014 so stay tuned for more details. As always, if you have any questions regarding year end, give us a call today at (503) 648-9051. We’re here to help!