Charity and Community Accountants

A grant given for the youth project cannot quietly pay the electricity bill, and a donation to the roof appeal belongs to the roof. That one rule, that money given for a purpose stays tied to that purpose, is what separates charity finance from every other kind, and it decides how the books have to be built. Our charity accountants at Midlands Accountancy, a Birmingham practice working across the West Midlands, structure a charity’s records by fund from the first entry rather than trying to unpick them a year later. Trustees are volunteers, so the conversations happen when committees actually meet, which is often after everyone else’s working day has finished.

Where to go next

This hub covers the charitable and community sector as a whole. For detail on registered organisations specifically:

• Accountants for charities: registered charities, charitable incorporated organisations and charitable companies, from fund accounting through to accounts in a form the regulator will accept.

Smaller community groups that are not registered charities are welcome too. The same fund discipline applies wherever money is held for a purpose rather than for owners.

Funds, and the varied income that fills them

Charity finance is not small business finance with a halo. Accounts must track each restricted fund separately from general funds, showing that money given for a purpose was spent on that purpose, and that means the split has to exist in the bookkeeping rather than being estimated at the year end. Income is varied too, spanning donations, Gift Aid, grants, legacies, fundraising events, room hire and sometimes trading, and each type has its own accounting and tax treatment under the GOV.UK rules on charities and tax. Trading income is the one that surprises boards most often, because a charity’s primary purpose trading and its fundraising trading are handled differently. Our guide to restricted and unrestricted charity funds explains the fund split in more depth.

Legal form changes what you file, not what you owe

The sector runs on several structures and they file in different places. An unincorporated association is governed by its constitution and leaves its trustees personally exposed to the organisation’s obligations. A charitable incorporated organisation gives the protection of incorporation while answering to the Charity Commission alone. A charitable company answers to both the Commission and Companies House, so it has two sets of deadlines rather than one. Some churches and other places of worship are excepted from registering with the Commission while their income stays below the level set out on GOV.UK, which changes what they file but not their duty to keep proper accounts. A community amateur sports club is a different animal again, registered with HMRC rather than the Commission, with its own reliefs. Choosing between them, or changing later, is a governance decision with real accounting consequences, and it is worth taking before growth forces it.

What trustees have to report

Registered charities report to the Charity Commission each year, but what has to be sent depends on income. Smaller charities update the Commission with basic figures, while larger ones file a full trustees’ annual report and accounts, and the level of external scrutiny steps up with size too. Every charity has to prepare accounts and make them available whether or not they are filed. Many mid-sized charities need an independent examination rather than a full audit, and knowing which side of that threshold you sit on saves both worry and fees; our guide to independent examination versus audit sets out the difference. Add Gift Aid claims to HMRC, payroll where there are employees, and possible VAT questions around buildings and trading, and even a modest charity has a real compliance calendar. Trustees can delegate the bookkeeping, but never the accountability. Our guide to what charity accounts should include shows what the finished accounts need to contain.

What our charity accountants take off a volunteer committee

Volunteer treasurers do remarkable work, but some jobs are usually worth external hands. We provide regular bookkeeping structured by fund, so the year end is not an archaeology project, and payroll with auto enrolment once the first employee is hired, because employer duties apply to charities exactly as they do to businesses. Where a board wants figures between year ends, management accounts showing each fund’s balance are what stop a committee approving spending it does not have. We also help committees set up sound records: a cash book analysed by fund, Gift Aid declarations for every claiming donor, grant letters stating any conditions, and minutes recording financial decisions. Our charity bookkeeping records checklist lists what to keep.

Simple controls when everyone is a volunteer

The sector’s classic weakness is concentration: one trusted person counts the collection, banks it, writes the cheques and keeps the books. Almost all charity fraud, and many honest but unprovable messes, start there. The fix is procedural, not personal: two people counting cash income, a second signatory or approver on payments, and someone other than the bookkeeper reviewing the bank reconciliation. Small organisations can achieve all of this with goodwill and a rota, and we help boards put it in place.

Frequently asked questions

Do we need an independent examination or a full audit?

It depends on the charity’s income, assets and governing document. Many mid-sized charities only need an independent examination, which is a lighter and cheaper review than an audit. The current thresholds are published by the Charity Commission and on GOV.UK. We do not carry out independent examinations or audits ourselves, but we can tell you which regime applies to your organisation and prepare the accounts and records an examiner will ask for.

What Gift Aid records does a charity need to keep?

A valid Gift Aid declaration for every donor whose gifts are claimed on, plus records linking each claim to the donations behind it. HMRC can review claims years later, and a missing declaration means repaying the tax reclaimed on that donor’s gifts.

Do charities have to run payroll like a business?

Yes. Once a charity employs staff it takes on the same PAYE and workplace pension duties as any employer, including auto enrolment. Volunteer expenses need care too, because paying more than actual expenses can create an employment relationship.

Can one volunteer look after all the money?

It is common and it is risky. With a single person counting, banking, paying and recording, honest mistakes become impossible to untangle and fraud becomes hard to detect. Splitting those duties between two or three people is usually enough for a small organisation.

Our group is not a registered charity. Do these rules apply?

The regulator’s filing rules do not, but the fund discipline still does. A community group holding grant money for a purpose has to be able to show the funder where it went, and members are entitled to accounts even when nobody is legally obliged to file them. Grant conditions are usually the tighter test in practice.

Get a quote for your organisation

We support charities, churches and community groups across Birmingham and the West Midlands. For an accurate price we need to know your legal form, approximate income, number of funds, whether you have staff, and the state of the current records. Request a quote with those five things and you will get a figure rather than a range.