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accounting for associations

Benita Lipps, Nov. 2018

Association Finances 101

Why?

Finance

101

Concepts

What?

Accounting: monitoring financial health and belongings of organisation (long-term, balance sheet)

  • Assets (resources owned): current (e.g. cash, receivables) & non-current (investments, buildings)
  • Liabilities (financial obligations): current (payables, tax liabilities), non-current (long-term loans)
  • Assets - Liabilities = Net-Assets or Equity

Accounting: taking care of 'accounts' ((temporary) storage units for financial info of similar nature)

  • Income Accounts for revenue (e.g. membership)& gains (investments, exchange rates)
  • Expense Accounts for expenses (bills, taxes) & losses (theft, investment, exchange rates)

When?

  • What's the accounting year: calendar (Jan-Dec) or fiscal (other)?
  • When are items booked:
  • Revenue or income is recognized when earned (regardless of when received) & expenses are recognized when incurred (regardless of when paid) (accrual)
  • Revenue or income is recognized when received & expenses are recognized when paid (cash)

the joy of the double-entry

Why?

  • Error detection: every financial transaction has equal and opposite effects in at least two different accounts.
  • To torture us & ensure we need accountants

How?

General rules:

  • definition: debits left, credits right
  • different effect on permanent vs. temporary accounts

Daily accounting (temp):

  • a bill = expense debit & asset credit (less cash)
  • a payment = revenue credit & asset debit (more cash)

chart of accounts

What?

ASSETS

LIABILITIES

4 main types of accounts that you will need (for AM):

  • Asset Accounts
  • Liability Accounts
  • Income Accounts
  • Expense Accounts
  • Accounts Payable
  • TVA / TAX Payable
  • Currency losses
  • Bank Account(s)
  • Accounts Receivable
  • TVA Receivable

INCOME

EXPENSES

Either

  • Take chart from accountant
  • Setup from scratch using IAM template

Good Practice

  • number them (e.g. assets 100x; liabilities 400x)
  • align with budget!
  • align with association structure/ goals/ activities
  • Membership Year 1
  • Membership Year 2
  • Association Services
  • Event Income
  • Accounting
  • Bank Charges
  • Communication
  • IT & TC Services
  • Office Expenses
  • ....

Let's

wave!

Setup

1. Setup Association

2. Setup Chart of Accounts

3. Setup taxes

If your association charges or recovers VAT, go to Settings > Sales Taxes to define any VAT rates you will use.

Record

2. Capture Receipts

3. Classify

1. Send Invoices Received

Whenever you receive a receipt, it’s a great habit to number it, snap a picture of it immediately and upload it to Wave so that it can be accounted for

properly. Wave provides free mobile Receipts apps for Android and iOS devices. Receipts are OCR treated, but accuracy varies, so do check!

On a regular interval, log into Wave and treat the expenses you emailed/ scanned or uploaded.

Make sure to:

  • check the OCR texts and numbers
  • get the date right (cash/ accural)
  • allocate to right accounts
  • split VAT from invoice
  • file original paper copy

Wave provides three options for uploading invoices: direct upload via website, email, and mobile upload. As long as the document is in a supported image file format, Wave will attempt to read the receipt and pre-fill as many of its fields as possible.

If you received a digital invoice by mail, you can send it to receipts@waveapps.com.

Follow these guidelines to successfully email receipts:

  • Send one receipt / attachement per email
  • The email must to be sent from your primary email address.
  • Send your receipt as a new email
  • The receipt must be an attachment.
  • The receipt must be in one of the supported formats: PDF, jpg/jpeg, tiff/tif, bmp and png.

--> same for invoices issued. You can even generate them via Wave.

Report

1. Monitor & Generate Reports

2. Consolidate with Budget

The list of all financial movements, classified by your chart of accounts is recorded in the General Ledger. You can run and export a summary report , as well as a detailed report with all movements, for a determined period of time

Wave has a set of pre-determined reports that will come in very handy when reporting to the board or treasurer. An overview is also displayed on the log-in screen.

Please note that some of these will require a more detailed bookkeeping from what discussed here to work.

Update your budget with the new numbers (be sure you book them to the right year (depending on cash or accrual approach).

3. Share with Accountant

You can either export the reports as Excel or CSV, or give the accountant (limited) access to the system, so that they can check and edit themselves.

Wave account owners can invite trusted individuals to collaborate on their account as a Viewer, Editor, or Payroll Administrator.

Next Steps

Next

Steps

  • Questions
  • Setup
  • Review
  • More: Invoicing, Integrations
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