Update Your Chart of Accounts

Monday November 15, 2021 comments

Any accounting business and tax advice contained in this podcast is not intended as a thorough in depth analysis of specific issues. Nor is it a substitute for format information. Nor is it sufficient to avoid tax related penalties. If you have specific questions that you need advice for, be sure to schedule a strategy session and not solely rely on information in this podcast. All right, back to the episode.

Hey everyone, so it is Chyla Graham. This is The Nonprofit Ace Podcast and I want to get more nonprofit leaders comfortable talking about money. So this episode, I know we've been talking about budgets, you've been listening to conversations I've had with others. What they had to say about budgets. And the thing that I want to make sure that you do this budget season, or maybe your post budget, as you're prepping for the new year to start, look at your chart of accounts. 

So one thing that I've seen happen is the budget says one thing, the chart of accounts is something else. And so the two items aren't in alignment, and that can make budgeting very confusing. And that can make, are we on track with budget confusing because you're like, we're not using the same words, I don't know what this means. So what I want you to do this season, after you've prepared your budget after you're like, yep, these are the categories that make sense. This is the way if I read it, it's going to make sense, go into your chart of accounts and look to see what needs to be changed there. 

I think of this as an annual event. So at the end of each year to say, okay, as we realign things, what should change. And I'm not saying that you rename your accounts every year, or you change your account numbering every year, that doesn't help you be consistent. What I'm saying is that you kind of think about what is not as useful as it used to be so that you don't just use things just because. What are some accounts that you should make inactive, what are some accounts that are inactive, that you should activate because they reflect the items that are in your current budget. So this review is something that's gonna happen before you put your budget into your system, because you want to know that you're going to put the best information in there, the information that it's going to be easy for you to track, so that it's not just about Oh, yeah, we did the budget, now we never look at it. Well, that was wasteful, you have better things to do with your time. 

So really make sure that this budget is gonna be something that you can use, they can be used to make informed decisions, and that you actually understand and can read it once you get back to it. And that your board isn't confused because they're like none of the reports match the budgets that we thought we approved. Alright, so let me know if you have questions on that or if you want some support. I'm happy to do a strategy session if there's time in my calendar. So yeah, reach out. All right. 

Thanks for listening to another episode of The Nonprofit Ace Podcast. Until next time, bye.

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