An association consists of members who organize activities together to achieve a common goal. While fun and collaboration are at the heart of the organization, it is also important that the finances are well-managed. Organized financial administration is essential for every association. Should you hire an accounting expert for this, or can you handle it yourself? In this article, we outline the key considerations to help you make that decision.
Why is an organized financial administration important?
Proper financial management is not only a legal requirement but also practical for the smooth operation of an association. The key reasons are:
- Legal Obligation: Associations must keep their financial records for at least seven years. This includes invoices, bank statements, and other important documents.
- Financial Clarity: A well-organized administration provides insight into income, expenses, and the financial health of the association.
- Accountability: As an association, you are often dependent on subsidies, memberships, and donations. A transparent financial record demonstrates how the funds have been spent.
When is an accounting expert necessary?
Hiring an accounting expert is not always mandatory. A financial audit is only required if an organization meets the following criteria:
- A balance sheet total of more than €4.4 million,
- A net turnover of more than €8.8 million, or
- More than 50 employees (FTE).
Since most associations do not meet these criteria, hiring an accounting expert is not a legal requirement. However, it can still be useful in many situations. Here are some examples where an accounting expert can add value:
- Complex Financial Situations: Does your association have many members, various income sources, or deal with VAT? An accounting expert can help manage this complexity.
- Lack of Knowledge: Not every association has members with financial expertise. An accounting expert prevents errors and saves time.
- For Grant Applications: When applying for grants or reporting to grant providers, an accounting expert can help ensure everything is documented correctly.
- Continuity: If financial tasks are handled by volunteers, continuity can be an issue. An accounting expert provides stability.
Advantages of hiring an accounting expert
Hiring an accounting expert brings several advantages:
- Time Savings: Outsourcing the administration allows board members more time to focus on other tasks.
- Professional Expertise: An accounting expert is up-to-date on the latest rules and regulations.
- Reliability: Working with a professional prevents administrative errors that could lead to fines or other problems.
- Peace of Mind: You can be confident that your financial matters are in order.
Although hiring an accounting expert brings costs, the benefits often outweigh them. Many accounting experts offer packages specifically tailored to associations, so you’ll know upfront what to expect.
Do it yourself or outsource?
Whether you manage the administration yourself or outsource it depends on the size and complexity of your association. Small associations with straightforward financial flows can usually handle the administration themselves using accounting software. Larger associations often benefit from the expertise of a professional accounting expert.
Key tips for associations handling their own accounting:
- Use accounting software specifically designed for associations.
- Keep a clear separation between financial tasks and other administrative duties.
- Ensure that at least two people have access to the financial records.
- An accounting expert is not always mandatory for an association, but in many cases, it can be a valuable addition. It brings professionalism, time savings, and security. Especially with complex financial structures or a lack of knowledge within the association, it is wise to consult a professional.
Are you curious about what an accounting expert can do for your association? Contact one of our experts for tailored advice.
