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How Nonprofit Bookkeeping Is Different To Regular Bookkeeping - YouTube

Channel: unknown

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g'day justin hulk here from wright

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source we're talking not for profits

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and bookkeeping for not for profits how

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that's different from

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normal bookkeeping no this is an

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exciting one i'm really looking forward

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to it so

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let's get into it before i get into

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what's different

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let's just talk about why i want to talk

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about this and that's

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when you're a not-for-profit and you're

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looking for a bookkeeper whether it be

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in-house or or an

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outsourced provider either way you want

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to make sure that they've got the skills

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that are required to meet the needs of

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your organization so

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this is why i suppose this video is

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important to understand those

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peculiar things for not-for-profit that

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may not necessarily be something a

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normal bookkeeper is used to dealing

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with so

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let's dive in first thing that

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bookkeeper will need to deal with in a

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not-for-profit that is

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unique to not-for-profit space is how

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you deal with grants now grants are

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a little different enough for profit

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space where compared to the commercial

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stuff

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in terms of you need to be able to equip

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the grants which is again similar to

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your commercial grants but these grants

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can quite often be going for a longer

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period of time so you need to be

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able to record that information in terms

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of the costs

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correctly and be able to report back on

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it to understand where things are at

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with the grant because a not-for-profit

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is going to need to manage

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where where things are at and know if

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they're under over spending on that

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grant

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the other thing then from a grant

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perspective is also the income side of

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things

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so because these are often large grants

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and longer periods of time

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is how you recognize the income side of

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the grants

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can be a little more tricky than not for

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profit because it can often depend on

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the grand structure

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the timing the agreements what's

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happened previously

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and all that all those aspects feed into

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how you actually recognize your income

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or revenue

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that's coming off the grant in the

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account the next thing that your

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bookkeeper needs to have an appreciation

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of and potentially knowledge of

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is salary packaging and fbt because

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not-for-profits have an fbt concession

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which means that effectively they're

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able to pay their employees

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in kind or in a different way

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which would normally be subject to fbt

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and other commercial

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businesses but because of this

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concession they can do things

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like pay for employees rent which would

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if a normal

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organization was to do that would

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attract fbt

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if it's done in a certain way for

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not-for-profits which is completely

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legitimate and there are

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legislation in place to allow this to

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happen the not-for-profit doesn't have

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to pay

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fbt now these things were put in place

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to assist not-for-profits

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in attracting quality employees without

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having to necessarily pay the full

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commercial rate

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having an understanding of how that fbt

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concession works

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how it interplays the salary packaging

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and then making sure that the processes

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are put in place to ensure that it's

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taken

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full advantage of for the employee and

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the employer's point of view

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but also that it's not done incorrectly

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because with anything done with salary

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if you do it incorrectly can have an

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impact on both the employee

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and the employer so an appreciation and

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an understanding of fbt

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and salary packaging is something that a

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bookkeeper needs

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when they're dealing in the

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not-for-profit space the next thing they

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need to understand

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is they need to have a good

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understanding of gst now most i would

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say all bookkeepers have a good

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understanding of gst

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but gst as it can apply to not for

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profits because again with

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not-for-profits there's another

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a number of concessions in terms of gst

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that can be taken advantage of in terms

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how your not-for-profit run so how you

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manage fundraising events

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how also you deal with gst that relates

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grants donations or sponsorship and how

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that is differently

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accounted for and reported in your

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accounts

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also if you've got operations that

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aren't running

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at a commercially viable rate there are

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some concessions there for gst as well

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depending on the percentages and how you

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put that all together so

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having an appreciation of those things

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in terms of the gst

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space and how they affect the operations

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of the organization and how things need

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to be accounted for in the books

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can be very important and can help again

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the not-for-profit uh

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operate efficiently and make the most of

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the funds that have available to

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them the last thing a bookkeeper needs

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to be able to

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have an appreciation of when dealing

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with a not-for-profit

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is the number of different stakeholders

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that require reporting

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from the not-for-profit and how that

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reporting can be different

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so for example a not-for-profit often

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has a board

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and they will want reporting in a

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certain way to them at a certain

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frequency so whether they have a monthly

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report and they want a certain format

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and see certain things they'll want that

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distributed to them

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similarly a not-for-profit will also

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have to do financial reporting

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that may not be done in the same way as

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the board reporting there are different

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interpretations and different ways you

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need to compile it

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being able to create your base data that

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the bookkeeper is putting together

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that allows you to report one way for

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the board and potentially another way

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for your financial statements is

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important

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they'll also potentially need to be able

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to report back to

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large donors or sponsors in terms of

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where the funds have gone how they've

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been utilized so being able to

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maintain your books in a way that allows

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these things to be reported on

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differently but still maintain that

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transparency

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is definitely a skill set that is unique

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to the not

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profit space and something you should

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consider when you're looking

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for your bookkeeper whether they got

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those skills so that's a little bit of

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an insight in terms of

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some specific areas that a bookkeeper

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needs to be across when you're looking

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to hire someone to be your

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bookkeeper in the not-for-profit space

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and also if you're a bookkeeper is

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looking to get into the not-for-profit

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space

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there are things that you should look to

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you know get yourself up to speed off

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because that can help you provide a

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better service

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if you enjoyed this video um definitely

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feel free to subscribe or check out the

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