How to create your own bookkeeping system for arts businesses
Managing your organization’s finances can tend to be overwhelming. Who gave us funds for what? Who is getting paid for their services? How do I show a final report to stay compliant with the grant I received? All of the above operating concerns can be best supported by using a bookkeeping system. So where to begin?
There are a number of different accounting softwares available–some are free while others require monthly, annual, or a one-time purchase fee. Depending on your bookkeeping needs and the amount of detail you wish to have available within your financial reports, you will need to research which software would be most suitable for your organization. At Pentacle, we use Quickbooks both internally as well as with our artists participating in our Fiscal Services..
Establish Your Chart of Accounts
Once you have your accounting software in place, you will then shape your Chart of Accounts (or categories) by which you will be coding your transactions. The selection of accounts is up to each organization and should be tailored to mirror the organization’s activities. A COA should also stay consistent with the accounts that will appear on Budget and Financial Reports such as the Balance Sheet and Profit and Loss Statement.
Build Structure and Consistency
You have your accounting software in place, now who will manage your books? Identify the individual, if other than yourself, who will operate as your Bookkeeper and be responsible for updating your books on a regular basis. The frequency at which your books should be updated depends on the level of activity your organization carries. If you have money moving in and out of your accounts every week, perhaps a weekly cadence would be best. At Pentacle, we advise staying on top of your activity as much as possible, and keeping your books reconciled with your bank statements to be sure everything is up to date.
Looking for more infrastructure support? Check out Pentacle’s Fiscal Services and fill out an inquiry form today. For more information, reach out to us on LIVE CHAT and we can walk you through how these steps may best apply to your organization.
Pentacle remains dedicated to continuing to provide a high level of support to artists during these extraordinary circumstances. Alongside many other key and respected organizations in the field, we have begun accumulating and curating resources for artists and organizations experiencing income loss and other troubles as a result of the COVID-19 crisis. Find our list of resources here.
NEXTSTEPS | 09.03.2021
Latest Blog Posts
Understanding A Cash Flow Statement What is a Cash Flow Statement? A Cash Flow Statement is a financial statement that tracks the movement of a company’s cash over a selected period of time. This is an all-inclusive statement because it includes the inflow and outflow...
Understanding a Balance SheetWhat is a Balance Sheet? A Balance Sheet is a financial statement that summarizes the company’s assets, liabilities, and equity at a specific point in time. The Balance Sheet is an essential tool used by organizational leaders, Board of...
Understanding A Profit and Loss Statement What is a Profit and Loss Statement? A Profit and Loss Statement (P&L) is a financial statement that measures the revenues, costs, and expenses incurred over a specific accounting period. P&Ls reflect an organization’s...