Run your non-profit better with cloud accounting software
Running a non-profit is a labor of love. But when it comes to accounting for donations, expenses and volunteers – it becomes just labor. Your mission is to serve your constituents and provide financial transparency to donors, board members and volunteers. While this is a necessary responsibility – it can be time-consuming, especially when you don’t have the right accounting software but with Xero accounting software, it isn’t hard at all.
How Xero can help your organisation
Xero is the online accounting choice for modern non-profits because it’s easy to use. Based in the cloud, Xero enables you to keep your finger on the pulse of your non-profit anytime, anywhere. And sharing critical donation and expense data with key stakeholders is a snap. Best of all, Xero makes it easy to get up and running – or switch from cumbersome, outdated accounting systems – so your non-profit can better deliver on its mission.
Non-profit accounting: The basics
Running a non-profit organisation is different from managing a conventional business – and the accounts are handled differently too. So what do you need to know about non-profit accounting?
Non-profits are businesses too
Non-profit businesses are sometimes called not-for-profit entities, especially by accountants. Unlike a conventional business, a non-profit company’s main aim isn’t to make lots of money.
Instead these entities are often charities or small clubs. They handle money, such as donations and membership fees, but in a different way to a for-profit business.
In other respects a non-profit company works just like a regular business. Money comes in, money goes out, employees are paid and day-to-day operations are carried out.
All of this has to be accounted for, by law. There are legal processes that not-for-profit entities have to go through – when they are formed and on a regular basis from then on. Non-profit accounting is a big part of this work.
In this guide we’ll look at what you need to do to set up your non-profit company and keep it running smoothly – and legally.
Is your business really non-profit?
Not all types of business are suitable to be run as non-profit organizations. Here are some questions to ask yourself:
What’s your motive?
What is the purpose of your business? If it’s to provide charitable services, or to handle the accounts of a social or sports club, there’s a good chance it qualifies as a non-profit.
Where will revenue come from?
Non-profits tend to get most of their income from donations, membership fees, fundraising events, grants from the public or private sector and perhaps investment income.
Are there other non-profits like yours?
Whether or not your business will be granted non-profit status depends on a number of factors. It will help if there are other not-for-profit companies with a similar structure.
The regulations vary depending on where you set up your business, so check local laws for guidance.
Six steps to get started as a non-profit
There are some hoops to jump through before you can start running your not-for-profit business:
1.Incorporate your company
File the necessary paperwork with the appropriate government agency. It’s easy to forget to do this, but you may be liable for extra taxes if you don’t do it on time.
2.Apply for tax exemptions
Laws vary: in the US, for example, you can apply for Federal and State tax exemptions as a 501(c)(3) organization. Again, do this early on to get the most benefit from it. Note that although your business is tax-exempt, your employees will still have to pay taxes.
3.Create a business plan
Good quality non-profit accounting software can help you here, allowing you to run through different forecasts and scenarios. Play with the numbers and see which plan works best for you.
4.Plan your fundraising
You’ll probably have no products or services to sell, at least at the beginning. So how will you raise money? A well-thought-out fundraising plan will help keep cash flowing in.
5.Look into financing
Non-profits can apply for various grants and other forms of finance, from the public and private sectors. An online search can be helpful here. Check your government’s business website for details.
6.Structure your outgoings
How much can you afford to spend? Your business was set up to provide a useful service, but you’ll need to budget carefully to make sure expenditure doesn’t exceed income. Again, accounting software can help here.
Record all revenues
Non-profit companies can have many different sources of revenue. Each of these must be accounted for:
A pledge is a promise to give money. Some pledges might be conditional on a future event (such as the same amount being matched by another donor), so record these carefully.
These might come as a result of street collections, postal campaigns, cold-calling, web advertising or email marketing. All donations must be recorded, whether cash, check, money transfer or internet payment.
Time is money, and must be accounted for as such. That’s especially true if it adds value to your organization, or if the person concerned has a special skill such as bookkeeping.
These are collected by social clubs and societies in return for access to facilities or services.
If you collect entrance fees for a fundraiser or other event, this is revenue to be recorded.
Larger non-profit organizations might buy investments such as stocks or land. There are rules about this, so check your tax office for details.
Grants and other lump sums
Remember, there are grants available for non-profit companies, from central and local government and also from the private sector. All the money you receive in this way must be recorded in your accounts.
Think like a regular business
Just because you’re running a not-for-profit company doesn’t mean you can’t strive to make your business successful. The more efficiently you run your organization, the better the service you’ll be able to provide to the people who need it. Here are some ideas:
Hire the right employees
A non-profit organization doesn’t technically have an owner. But it does still have people in positions of responsibility, such as the secretary or treasurer. It’s important that these people fulfilll their roles to the best of their abilities. So make sure you hire well.
Strive to earn more than you spend
You’re not technically trying to make a profit. But if you collect more in revenues than you spend, that extra money can be either reinvested or spent on extra services or facilities.
Look for business opportunities
Network with business owners, talk to advisors and your peers. Learn about opportunities to raise money for your non-profit company or improve the services you offer.
Talk to your ‘customers’
The people receiving your company’s services can be considered as customers. Whether it’s the members of the club you run or the recipients of your charitable services, talk to them. Find out what they really need from you, then tailor your organization to match.
Make the most of your non-profit status
There are advantages to running a not-for-profit organization. Obviously the big one is not having to pay tax on net income (subject to local laws).
The paperwork tends to be lighter, too, as governments try to keep non-profit red tape to a minimom. For example, you may be exempt from providing regular balance sheets and statements of income.
All of this will hopefully leave your business with more money in its accounts. Use it wisely. Your organization was set up either to serve its members or improve the welfare of a group of vulnerable people – or society in general.
By following best practices and carefully monitoring all the money received and spent, you’ll be able to serve those people well – and make a real difference to their lives.
Please contact us if you like to know further.
High-tech firms run better with cloud accounting software
Innovating fast is in your DNA. But business basics – like balancing your books – can sometimes slow you down. Whether it’s preparing reports for investors or partners, or making key decisions based on cashflow and burn rate, getting your hands on the right financial data is critical. Especially in this 24/7 world where you’re just as likely to be working from home as in an airport.
How Xero can help your high tech business
At Xero, we understand innovation. Completely. That’s why we designed our easy-to-use accounting solution in the cloud, for the cloud. Xero gives high-tech organizations complete visibility into all aspects of the business, including cashflow, invoicing and online payments. And Xero provides anytime, anywhere access, so you and your key stakeholders always have the insights you need.
For you, this means less time balancing the books and more time innovating. And when you have immediate access to the health of your business all in one place, you can manage your business effectively and confidently – just what investors want to see.
As a small business owner, one of the most important decisions you can make is hiring the right accountant. As well as being experienced, your accountant needs to be highly personable and easy for you to relate to
When and why to employ an accountant
It’s wise to engage an accountant as soon as you decide to launch your business. A good accountant will help you set up your accounting and payroll systems properly. This will save you a lot of time and money in the long run.
But that’s just the start. A great accountant will also:
- offer business advice
- keep tabs on your cashflow
- keep records and prepare your year-end financials
- provide tax advice.
As you can see, your accountant will play a crucial role in your business and provide useful and timely advice. Here’s how to choose the right one.
Checklist for choosing an accountant
1)Write down what your business needs from an accountant
Make sure you think about what your business needs and define your criteria for selecting an accountant. A great accountant will do more than balance your books and make sure your paperwork is compliant. The right one will be able to meet all your requirements – and more.
2)Start your search by talking with peers and colleagues
Ask your family, friends, peers, even your attorney for recommendations. You could also contact institutions and organizations like the Institute of Certified or Chartered Public Accountants, or chamber of commerce.
3)Interview several accountants and ask plenty of questions
Talk to a few accountants so you can compare them. And consider hiring someone local if you’d like to have the option of meeting with your accountant in person. Ask questions like:
- How would we work together?
- Who will my main point of contact be?
- How do you usually work with clients?
- Do you hire junior staff to do the day-to-day work?
- How frequently will we talk?
- What experience do you have in my field?
- What’s your fee structure?
- How would your clients describe you?
- Why do you think we would be a good fit?
4)Ask prospective accountants about your financial and business needs
Towards the end of your first meeting, check whether they’ve understood your requirements. Ask them for advice on how you could manage your finances more efficiently. A good accountant will come up with some money-saving ideas before you hire them.
5)Conduct a background check and ask for references
Someone may look good on paper and perform well in an interview. But you should still do your research and make sure they are qualified:
- Review their professional qualifications and experience.
- Inquire about fees and charges to make sure they suit your budget.
- Discuss whether they have specialized services to support you if you are ever audited.
- Ask for references from past and present clients – then check them.
6)Hire someone you respect and like
Having an accountant you find approachable and easy to talk to is vital. Choosing an accountant is like choosing a business partner. Hire someone you know you can work with – someone who isn’t afraid to give you honest advice. Be sure you’re totally comfortable about them being your close business advisor.
7)Make sure your accountant has relevant experience
Small businesses have different accounting needs from large businesses. It’s important your accountant has worked with businesses of a similar size to yours. It also helps if they have experience in your particular field.
8)Make sure they are technically savvy and can use online accounting software
Business software has moved online, and that includes accounting software. Make sure your prospective accountant has experience with cloud-based accounting software. They should also understand online payroll software.
9)Confirm the fee structure in writing before you hire your accountant
You get what you pay for. So don’t just hire the least expensive accountant you can find. They may not be able to manage all your financial requirements proficiently. And once you’ve agreed on fees, make sure you get the agreement in writing.
10)Establish a review period to help maintain your relationship
Catch up with your accountant on a quarterly basis. Use these meetings to exchange feedback on how the partnership is working. You should be meeting regularly anyway, to review your finances. These quarterly meetings will keep your partnership on track.
Your accountant is your trusted advisor
The best accountant will guide your financial operations and make sure money is flowing in and out as it needs to.
So when you choose an accountant for your business, make sure you take care and time to find someone who’s a really good fit. The right person will help your business run smoothly and successfully.
Please contact us if you like to know further.
Cloud accounting software for Amazon sellers
As an Amazon seller, you face very specific challenges in building a seamless, easy-to-use back-office infrastructure. Unfortunately, there isn’t an all-in-one solution that you can buy, configure and run. So you have to build an Amazon seller solution with the right components that work together seamlessly.
How Xero can help your business
Xero – the modern accounting solution – is at the heart of many Amazon seller businesses. We understand what it takes to run an online business. So that’s why we developed Xero in the cloud for the cloud – with the ability to seamlessly integrate with best-in-class inventory management, sales tax and other key Amazon add-ons. Plus you get powerful cashflow, bank reconciliation and payments functionality that are easy to implement and that will grow with your business.
How to create an efficient inventory management system
Inventory management can be hard for any business to do well. Whether you’re in manufacturing or retail, your business can suffer if you have too little stock – or too much. Here’s how to get it right.
Inventory is money
Inventory management can be difficult because it’s hard to predict demand. If you stock up on a particular product line but demand drops, you’ll have stock that you don’t need. And if products are lying in your warehouse for too long, that will affect your cashflow because:
- unsold items don’t generate revenue.
- warehousing costs money, and so does inventory accounting.
- stored items take up space that could be used for something else.
- stock may deteriorate or become obsolete.
- items could be damaged or even stolen.
- So the money tied up in excess inventory could be put to better use elsewhere.
On the other hand, if you don’t keep enough stock and demand then spikes, you’ll miss out on sales – and maybe even lose customers. You won’t be able to fill big orders and you’ll have to scramble to catch up with your competitors.
Either way you could lose money. So it’s important to manage your inventory as efficiently as possible.
Understand the inventory types your business has
Inventory usually falls into one of three main categories:
These are the basic materials from which your final product is made. Depending on your field of work, they can take up a lot of space.
2.Work in progress (WIP)
These are goods that are in the process of being manufactured but are not yet complete. Examples include toys to be painted and ceramics that haven’t yet been fired.
These are products that are ready to be sold to your customers. They may be sent to distributors or you might sell them directly to your clients.
Each category has different storage requirements, but each one is dependent on the other. If you don’t have enough raw materials, you can’t make finished goods. And if demand for your finished goods drops, you could end up with too many raw materials.
Improve your forecasts
The first step to efficient inventory management is to understand the demand for your products. How does it vary over time? There may be seasonal fluctuations or other trends that can help you work out how demand will change.
Quality accounting software will generate reports into past sales. These can help you identify which products are popular at which times of year. Then you can adjust your stock accordingly.
Understanding the market which you operate in is the best way to fine-tune your predictions. Once you’ve done that, you’ll have taken a big step towards more efficient inventory management.
Please contact us if you like to know further.
eCommerce is no longer a luxury – it’s a vital part of any successful business strategy. But how do you make the online world work for you? From websites to social media, this guide will help you get started.
eCommerce can expand your business
eCommerce means doing business online. Put simply, it’s using the internet to promote and sell your products or services.
Some small businesses can survive without a strong online presence. For example, if you’re a one-person company working for long-term clients, perhaps you don’t need any extra work – at least not right now.
But for everyone else, being online isn’t just an option. It’s a necessity if you want to reach the widest possible audience.
Run your eCommerce business better with Cloud accounting from Xero
Building out a modern eCommerce system to support your specific requirements can be challenging. Because if you don’t choose the right technologies, you could end up spending more time managing your backoffice platform – and less time building your business. And how to ensure you have one, unified place to see the health of your business at a glance.
How Xero can help your business
Xero – the modern accounting system built in the Cloud for the Cloud – is the ideal hub of your eCommerce technology strategy. Because Xero connects seamlessly with leading shopping cart, inventory management, marketplaces, and sales tax packages, you can choose the backoffice solution that’s right for your eCommerce business. And with Xero’s powerful capabilities – from cash flow and inventory to receivables and payments – you can quickly view the health of your business anywhere, on any device, at any time.
So when you invest in Xero – and its eCommerce partner ecosystem – you can be sure you have the most up-to-date technology that’s robust yet easy to use. And as a hub for your successful eCommerce system – through Xero’s seamless integration with the best of the Cloud – you spend less time maintaining your eCommerce system and more time expanding your product offerings or acquiring new customers. Beautiful.
Five questions to understand your ecommerce goals
If you want to know how to make the best of ecommerce, you need to ask yourself these questions:
1)How important is ecommerce to my business?
If you already have an established ‘real world’ business, maybe you’re looking to expand your customer base online. A modest investment in ecommerce will let you test the waters. On the other hand, perhaps you’re planning an online-only business. In that case you’ll need to invest a lot more time and money.
A simple, open-ended question – so you can think about your motivation. Do you want an ecommerce presence because everybody else has one? Or because you understand how it could help your business? A useful resource here is the ‘Start with why’ TED talk from Simon Sinek.
3)What’s my timeline?
How long do you think it will take for ecommerce to pay off for you? Will it be profitable in three months, six months, or 18 months? Use your accounting software to make some forecasts, so you can budget sensibly.
4)Are my customers ready?
Ecommerce is widely-used and effective. It’s a must-have addition to almost every business. But not all businesses. Perhaps your customers come to you through word-of-mouth or local advertising. If your business is already growing well, the investment might be better spent elsewhere – or postponed for a while.
5)Is my business ready?
This could be the most important question of all. If your ecommerce investment is successful it could change your business almost overnight. Make sure your cashflow is good and all your accounts are in order. Be ready for any new business that comes your way.
Don’t forget your taxes
Doing business online means you might be selling into different jurisdictions – or even different countries.
This can make tax calculations tricky, especially sales taxes, which can vary a lot from one place to another.
Make sure you understand all your obligations when it comes to taxes. Ask an accountant to help you get started, and choose good quality accounting software to process the numbers.
This is something you can’t afford to get wrong, because the legal penalties can be high.
Keep your business compliant
Just because your business is online doesn’t mean you can ignore the real world. Like any other organisation, your business must:
Be registered as a business entity
Such as partnership, corporation or limited liability entity.
Keep detailed records
Of all transactions, sales and purchases.
Have suitable insurance
To protect you, your employees and your customers.
Obey all laws and regulations
Especially those regarding employment, payroll, accounting and taxation.
Don’t forget about mobile
More people are accessing the internet on mobile devices such as smartphones and tablets. In fact mobile users make up 50 perent of all web traffic – and it’s growing all the time. So your ecommerce website must be accessible and usable on mobile platforms.
This is something you should discuss with your web development company. There’s no need for you to learn the technical details, but make sure the following boxes are ticked:
- Fast and responsive. Mobile users don’t like to wait for sites to load.
- Easy to navigate. Don’t force users to tap their way around your site.
- Big user interface. A finger on a touchscreen is less precise than a mouse click.
- Uncluttered. Steer customers where you want them to go.
- Easy to search. Let your customers bypass your navigation to find the product they want.
Don’t confuse a mobile-optimised website with a mobile app. They are two different things. Start by getting your website right. Then you can move on to getting an app developed if you have the budget for it.
Tie your business together
Ecommerce shouldn’t be a separate part of your work. It should be tightly integrated with the rest of your business.
Whether you’re selling online or through a store, your customers deserve the same great service. Keeping everything together makes it easier to track sales performance and manage your inventory.
So use whatever tools you need in order to keep your business fully integrated. There are cloud applications to handle inventory, accounting, payroll, marketing and more. These will help you keep tabs on every aspect of your online presence.
That way you can make the most of your eCommerce business – wherever you happen to be.
Please contact us if you like to know further.
There’s a lot to think about when running a retail business. Good accounting software can make life easier, helping you manage jobs like inventory, staff payroll and taxes. Here’s how it could work for you.
Retail is about record keeping
There are many different types of retail operations, from eCommerce and mail order to direct retail, pop-up shops, catalogues and more. As a small business owner you might use more than one type, depending on the products you’re selling.
But as any retailer knows, success involves more than just exchanging goods for money. You need to understand product merchandising, advertising and marketing, stock control, customer service, market research, supplier negotiation and more.
Retail can be seasonal too, with peaks in the run-up to Christmas and the back-to-school periods. The best retailers think carefully about how – and when – their products fit into consumers’ lifestyles. They use that knowledge to market their products.
And then there’s the accounts. Cashflow, payroll, taxes, ledgers and so on, all have to be tracked carefully. With money coming in and going out all the time, you won’t want to let anything slip through the cracks.
All of this means that you can’t run a successful retail business without keeping detailed records. And that’s where good quality accounting software can help.
How Xero can help your business
Xero is online or cloud-based accounting software that automates many manual processes. Xero streamlines inventory management and point of sale and makes doing business a pleasure. Everything just works – seamlessly and securely. And since Xero was born and built in the cloud, it can grow as your business grows. That means more success, with less headaches – and that’s got to be good for business.
12 top tips for successful retail accounting
Using your retail accounting software regularly, as part of your daily business operations, will help you get the best out of it. Here are some practical tips:
- Keep a record of every transaction
Every sale, every purchase, every staff payment, every tax bill. Record them all, to build up a clear picture of your business.
- Check and reconcile
Check all transactions regularly (ideally once a day) and make sure the numbers add up. Either do this yourself or have a bookkeeper do it for you.
- Review the difference between money coming in and money going out
Because that difference is your profit or loss. Keep a close eye on this to see how your business is performing on a day-to-day basis.
- Collect all required tax information
And make backups. Check local laws for the information you’re required to hold for tax and payroll purposes. Make sure it’s stored securely.
- Ensure ledgers are properly defined
Set up the right ledgers in your accounting software – ask an accountant to help here if necessary.
- Keep ledgers updated
Move your receipts from sales and purchases into your ledger. Do this every day if possible, or at least three times a week. You won’t want to fall behind, especially if business is booming.
- Get an outside perspective
Have your financial advisor or accountant review your ledger once a week or once a month. It’s important to identify discrepancies or a shortage of cashflow as soon as possible.
- Get regular reports
Leverage your accounting software’s powerful features. The best retail accounting software can generate useful reports to help you understand how your business is running.
- Keep a paper trail
It’s important to keep paperwork such as receipts and invoices, along with payment notifications for inventory or payroll.
- Keep business separate from personal
Have separate bank accounts for business and personal finances. Consider setting up separate bank accounts for expenses and incoming revenue too. That may seem like extra hassle, but it could make it easier to notice discrepancies.
- Remember to file tax returns
Keep on top of government deadlines for tax returns, employee tax returns and all other necessary reporting. See government websites for key dates.
- Watch your cashflow
Set up processes and controls to check your cashflow on a frequent basis. Share this information with a trusted advisor, such as your accountant. Don’t let a cash shortage take you by surprise.
Keep up with these trends
The retail business space is changing fast, partly due to cloud-connected smartphones and tablets. Your customers now expect more from their retail experience, and are willing to shop around in order to get it.
So if you’re going to keep up with customer demand, you’ll need to keep up to date. Here are some of the trends that are likely to affect retail businesses in the near future:
- Mobile web and app presence
People are buying using their mobile devices. That means less screen space for your web presence, so make sure your website has a mobile version – and perhaps an app too.
- Apps for the retailer
In some countries there are mobile POS apps available that can connect to your accounting software. In the US Square is probably the most popular of these apps.
- Customers shopping with GPS
People are looking for shops and businesses in your area. Make sure your shop is listed on the main geo-location websites and apps.
- Self-checkout becoming more common
It’s already popular with supermarkets because it lowers staff costs. That’s likely to spread to smaller retail businesses over time.
- No more clerk behind the counter
Checkout staff will be able to walk around the store and let customers buy on the spot, thanks to mobile POS tools.
- Price comparisons mean savvy customers
If you don’t keep your pricing competitive, you’ll lose out. Customer pricing knowledge is increasing fast thanks to comparison apps and websites.
- Pop-up shops will spread
Food carts and ‘Christmas shops’ were just the start. The short-term pop-up shop concept is likely to spread to other retail areas, especially in shopping malls.
- Technology is an enabler for the consumer
They can read reviews, watch videos, find recommendations from their friends, and much more. Make sure you go where they go.
Don’t get left behind
It’s not just consumers who are benefiting from technology. Retailers are too – at least the smart ones. With the right software you can not only track your inventory and costs, but also plug into hundreds of other add-ons and apps to manage specific parts of your business.
Technology is also enabling retailers to manage their bottom line better. With all the numbers at your fingertips, good accounting software can draw up reports and presentations that will help you see exactly how your business is performing.
So don’t get left behind. The right retail accounting software will help you keep your finger on the pulse of your business and meet your customers’ ever-changing needs.
Please contact us if you like to know further.