Grace’s story

PPSL was founded by Grace Ayanfalu in 2006, and has served all types of clients in London, whether personal, for-profit businesses or not-for-profit charitable entities. However, as PPSL grew and matured, she realised that working with charities brought her the most enjoyment and was her true passion.

Why? Charity has always been part of Grace’s life, having given back to her community and those around her, but on top of that, there is an intricacy and an art to charity bookkeeping that regular business accounting does not have. While every charity specialist is an bookkeeper, not every bookkeeper is a charity specialist, and this unique skillset is what sets Grace apart from the rest of the industry, and why she has pursued her passion for charity as her specialism.

If you run a charity or a not-for-profit organisation, PPSL is a charity’s best friend when it comes to accounting. If you’re unsure why Grace’s specialism makes such a big difference, ready on to find out the difference between charity and regular business bookkeeping.

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the difference between charity and business bookkeeping

You may be wondering, “Why do I need an accounting specialist if I’m running a charity?”, or maybe you’re curious about the difference between the two. Here are some key differences and why it pays to have a charity accounting specialist like PPSL to help with your bookkeeping if you are running a charity or a not-for-profit organisation.

Legal & regulatory Framework

Regular businesses must follow standard accounting rules set out by HMRC and, if relevant, the Companies Act 2006. Charities, however, have a much stricter and stringent requirement. Charities and non-profit organisations must comply with the Charities Act, Charity Commission guidelines as well as the Statement of Recommended Practice (SORP) for charity accounting, to ensure transparency on how funds and donations are used.

While all bookkeepers and accounting firms will be aware of the standard HMRC accounting rules in the UK, not all will be familiar with all the different additional regulations and frameworks that UK charities must comply with. Therefore, if you are running a non-profit organisation, it will save a lot of trouble and headache if you employ a charity specialist bookkeeper like PPSL from the beginning of your charity’s journey.

Fund Accountability

In general, businesses only need to track income and expenditure in one main set of accounts, whereas with charities, it is much more complicated and complex than this. Charities must use fund accounting, meaning that funds are split into pots, and every transaction must be explained to ensure transparency and expenditure accountability.

Charity funds are split into restricted funds, where the money has been donated with specific instructions on how they should be used, and unrestricted funds, where the money can be used for general use. Furthermore, the restricted funds can be further divided into smaller pots, each with different instructions and requirements on what the money is for and how to spend it.

Since charity bookkeeping has such high standards of documentation and accountability, those with no or little specialist experience can easily misallocate funds in the wrong pots, which can result in mistrust with donors and, in some serious cases, complaints and lawsuits. With PPSL, we have extensive experience with charity accounting, so we will ensure all your funds are allocated correctly and to your donors’ wishes.

Charity-Specific Terminology

Accounting is already a headache for regular business owners because of all the different language, terminology and legislation. With charity accounting, it is even more complex, so much so that regular bookkeepers may be completely unfamiliar with the terms. For instance, a non-profit’s income and expenditure account is called a SOFA (Statement of Financial Activities), while one of the rules charities must follow is the SORP (Statement of Recommended Practices). The concept of restricted and unrestricted funds is also one that does not exist in the world of regular business and commerce.

By hiring a charity and not-for-profit bookkeeping expert such as PPSL, you can rest assured that Grace knows all the terminology and jargon well, and will not be confused or intimidated by all the charity-specific concepts that regular non-specialist bookkeepers may be.

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