by Doreen Martel

Created on: February 16, 2009

Nonprofit accounting varies from organization to organization. The size of your organization will determine the accounting procedures you need to use. Smaller nonprofit organizations who need merely to track expenses against budget are often able to use something simple like Microsoft Excel.

If you're one of those thousands of small nonprofit organizations, that has the ability to track income and expenses using Excel, is very simple to set up interactive spreadsheets that will automatically update. Setting up proper accounting procedures at the beginning of each fiscal year allows you to easily track income and expenses.

A) At the beginning of the year set your budget-once your budget has been set create a Microsoft Excel sheet with your budget.

B) Using the next tab in your Microsoft Excel sheet change the name of the tab to expenses.

C) Change the third tab to income.

D) Finally, set up your headers.

Headers should include date, item description, amount received for income, and amount spent for expenses. Using the formatting available in Microsoft Excel will allow you to set the proper format for each column. make sure that you have set up your categories to coincide with those listed in your budget.

Once you have completed the formatting on both your income and expenses tabs, you will need to return to your budget sheet and set up formulas to allow the system to automatically update.

To the right-hand side of your budget, set up one column marked expenses, and one marked income.The next step would be to set up your proper formulas.

Before setting up the formulas, you will first have to do totals for each category. To do this properly you may estimate the number of times you will use an individual category. Don't worry about not being 100% accurate, since you will be able to add additional rows. For example, let's assume you have three categories of income. Since most nonprofits receive the bulk of their income from donations, your first category with the donations. Since you do not want to have tons of blank space lets start with 10 lines of empty data. On the 11th line setup a formula in your balance column that adds all of the items in that column. You can do this using the at sum feature.

Repeat this procedure for both the income and the expenses sheets. Then you can begin setting up the formula on your budget sheet. Setting up formulas is not at all complicated. In effect you are teaching your spreadsheet to look at data you put in and recognize the difference.

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