ALL charities MUST prepare accounts and make them available upon request. This applies even if they are not required to file any accounts with the Charity Commission because their income is below £25,000 or even if they are not registered as a charity because their income is below £5,000.
Regardless of registration status or size; all charities must prepare accounts and anyone, including the Charity Commission, can request a copy of them.
Unless you have prior experience it can be difficult to know how to approach this task. But it can be very straight forward by adopting a systematic and methodical approach.
Many over think the problem or dive in too early before looking to see what is actually required.
Many fear the mathematics involved, but you need nothing more complicated than first year primary school mathematics to do the necessary bookkeeping. Addition and subtraction, that’s it – and with calculators and spreadsheets you don’t even need to be good at that.
The trick is to ask – what end product is required? And what information do you need to be able to prepare it?
Before you start have a look at the example accounts here. Ultimately your bookkeeping records should be designed to provide the numbers needed without the need for any further work. Plan for that and the accounts will be easy.
That is of course if you chose the right sort of accounts to prepare.
There are 2 types of accounts:
Receipts and Payments (Easy)
Accruals (Difficult)
UKMSA recommend all Men’s Shed chose the Receipts and Payments basis (allowed if income is below £250,000).
If you chose Receipts and Payments then you are only dealing with cash transactions (money) and there are only 2 things that can happen with money
It comes in and
It goes out.
Keep it simple – the accounting requirements follow this premise, all you need to do is
• Record money in
• Record money out
• Check the difference between money in and money out equals the cash or bank balance (to ensure you have recorded everything correctly).
Keep it simple
• Keep separate records for each account, don’t mix cash and different bank accounts up
• Record transfers between accounts in both sets of records (eg cash banked is a cash payment and a bank receipt)
For each account (Cash, Bank Current and Deposit) each entry should be analysed between reasons why it came in or reasons why it went out.
Your lists might be slightly different.