Initial setup questions for a small non-profit membership startup (UK)
Mike or Penny Novack
stepbystepfarm at mtdata.com
Mon May 25 18:40:30 EDT 2015
I am NOT in the UK and so don't know your rules. But this is a case
where I'd THINK you'd need to refer to your bylaws and local
regulations. Answer the following question:
If a member pays advance several years advance membership, what happens
if that member either quits the organization or dies before the time is up?
IF the advance payment gets refunded, then your treating it as a
liability is correct. If not, then I think it should all be current
income (and accounting for the fact that member shouldn't be dunned for
dues till some time in the future a matter of record keeping having
nothing to do with the books)
> Our members pay subs annually and often pay in advance. When they
> pay, say, 5 years subs, I place amount for one year in the income>subs
> account and then the rest as liability. ie...
> Bank Account: £50
> Income > Subs: £10
> Liabilities > Subs > 2016: £10
> Liabilities > Subs > 2017: £10
> Liabilities > Subs > 2018: £10
> Liabilities > Subs > 2019: £10
> Then, on 1st Jan each year I transfer the funds from liabilities >
> subs > #year to Income > Subs
> On 20/05/2015 21:40, Cylindric wrote:
>> It's not quite that tricky, we're non-profit, but not a charity. We're
>> allowed to sell stuff and make money etc if we can, but it's a "surplus"
>> and not a profit, and there are restrictions on what we can spend it
>> on in
>> our constitution.
>> On 20 May 2015 9:52 pm, "Wm [via GnuCash]" <
>> ml-node+s1415818n4678408h72 at n4.nabble.com> wrote:
>>> Wed, 13 May 2015 08:23:20 <[hidden email]
>>> Cylindric <[hidden email]
>>>> Hi folks. I'm sort of starting out with this sort of company, which is
>>>> non-profit membership organisation.
>>> It either is or it isn't, the Charities Commission is your starting
>>> point (I'm in the UK too) if you want to formalise it or tell folks
>>> whether you're actually non-profit or not.
>>>> I'm going to need to record basic stuff like bank, rent and bills and
>>>> which is fine and I've done before, but I'm not sure how to handle the
>>>> members and their subscriptions. From time to time we may also sell
>>>> to our members.
>>> You've had good advice in the two replies so far.
>>> I'd like to re-enforce that the legal situation in the UK is not
>>> consistent (Scotland is different to England and Wales, for e.g.) and
>>> can be very different to that in some other countries like the USA
>>> it varies from state to state.
>>> You should be careful what you invoice formally (i.e. make a demand for
>>> payment) vs what you expect informally and what people have said they
>>> will pay you. Think carefully about whether you want to account as
>>> turnover the amount you expect or the amount you receive (it is very
>>> different elsewhere, you should start with receipts only, promises are
>>> for the future and un-enforceable).
>>> The Charities Commission (if you are a small enough org) will allow you
>>> to work on a cash basis. This is useful if you *do* *not* charge /
>>> invoices / demands for payment, etc. But you need to be squeaky clean
>>> about that.
>>> I was going to use Customers, but I can't see how to create
>>> monthly-repeating transactions for Customers, so should I set them
>>> up as
>>> Accounts Receivable accounts, and use normal recurring transactions?
>>> I'm also getting a bit confused with the number of transactions I'm
>>> creating, as I currently have, for example:
>>> £25 invoice in *Assets:AR:PersonName* to *Income:MembershipFees*
>>> £25 payment from *Assets:AR:PersonName* to *Assets:Current:Bank*
>>> A person might pay for 6 months up front, but I'll only want to "take
>>> their fee monthly.
>>> How does that sound? I realise it's probably all a bit wonky :)
>>> If someone pays 6 months up front you don't have a choice, you *must*
>>> recognize it, it happened.
>>> You could treat the 5 forward months as a liability but
>>> a) I suggest you bank the money you've received
>>> b) by creating a liability you're fucking with the Charities Commission
>>> and they were trying to be nice to you by saying you could use cash
>>> accounting because it was simpler.
>>> Be careful, honest non-profit orgs are given many chances to prove
>>> worth, those opportunities should not be abused on a whim. Offered the
>>> chance of recording things correctly in gnc as my accounting app and
>>> figuring out who promised what in a spreadsheet I'd do the formal in
>>> and the informal (but legal!) in a spreadsheet.
>>> The world of differences is wonderful, if you're in the UK, acknowledge
>>> that, the regime in some USA states (which I think you were heading
>>> towards) doesn't necessarily apply.
>>> Best wishes.
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