Expert accountants for charities facing complex demands.
Our charities team will help you to:
Streamline your financial processes and improve efficiency across your organisation
Integrate your systems with modern online accounting software for greater clarity and control
Navigate the complexities of VAT, including registration, exemptions, and reclaim opportunities
Maximise your funding potential with tailored management accounts and grant support
Register for and optimise Gift Aid claims, enhancing your charity’s income
Access all core accounting services, giving you peace of mind that your organisation is in safe hands
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Our Services
Outsourcing bookkeeping for charities can provide a cost-effective and highly efficient solution tailored to the sector’s unique financial management needs. By leveraging the latest cloud-based systems and integrated technologies, charities can streamline their bookkeeping processes, reducing manual input and the risk of error.
Ultimately, outsourced bookkeeping offers charities the dual benefit of operational cost savings and insightful financial reporting, supporting informed decision-making and sustainable growth.
Our team specialises in charity bookkeeping and financial management. We work closely with trustees and staff to provide tailored support that ensures your records are accurate, compliant, and easy to access. By taking care of the day-to-day bookkeeping, we allow you to focus on advancing your charity’s mission with confidence and clarity.
There are legal thresholds governing the independent scrutiny that is required for the accounts of charities.
If the gross income for your charity falls between £25,000 to £1,000,000, its accounts will have to be independently examined. If your income exceeds £1,000,000, its accounts will have to be audited. An audit is also required if the total assets of your charity (excluding liabilities) are worth more than £3,260,000, and its gross income exceeds £250,000.
Sometimes, the accounts of charities whose gross income falls below the £25,000 threshold have to be scrutinised externally. This depends on what the governing documents for these organisations stipulate.
Navigating these thresholds and understanding what is required can be complex. As charity specialists, we offer cost-effective and highly competitive services tailored to the sector. We support organisations in determining their obligations and carrying out the necessary scrutiny—whether an independent examination or a statutory audit. In addition, we can provide bookkeeping services to help streamline financial administration and ensure compliance with regulatory obligations, all delivered with professionalism and minimal disruption.
An independent examination is a form of external scrutiny available to charities in England and Wales whose annual income exceeds £25,000 but does not surpass the £1 million audit threshold. It offers a proportionate and cost-effective alternative to a full audit, while still ensuring that financial statements are accurate and that proper accounting records have been maintained.
Unlike an audit, which involves more detailed testing and a higher level of assurance, an independent examination is less intrusive but still robust. The examiner’s role is to review the accounts and confirm that they are in accordance with the underlying records and comply with the relevant legal and accounting requirements. This helps to reassure trustees, supporters, and the public that the charity’s finances are being properly managed.
Under the Charities Act 2011, trustees are required to appoint an independent person with the necessary ability and practical experience to carry out the examination competently. While formal qualifications are not strictly required, a sound understanding of charity accounting principles is essential.
As charity specialists, we conduct independent examinations in accordance with these expectations—delivering not only compliance but also helpful, constructive feedback where appropriate. We support trustees in fulfilling their statutory duties with clarity and assurance. Our accountancy services are cost-effective, supporting charities with financial clarity and assurance. We also offer professional bookkeeping services to help maintain accurate records and relieve administrative pressures, keeping the process streamlined and minimally disruptive.
Navigating year-end accounts can be a complex and time-consuming task for charities, particularly given the specific reporting requirements and regulatory obligations within the sector.
As experienced charity accountants, we provide dedicated support to guide organisations through this critical process with clarity and efficiency.
Our team ensures that your financial statements are prepared accurately and in full compliance with the Charity Commission and relevant accounting standards, including the Charities SORP. We work closely with trustees and finance teams to ensure all necessary disclosures are made, reserves are properly explained, and financial activities are clearly presented.
By using advanced cloud-based systems, we streamline data collection and reduce the administrative burden, allowing you to meet deadlines with confidence. Beyond compliance, we take the opportunity to highlight key insights and trends, helping you to understand your charity’s financial health and plan effectively for the future
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Forming a New Charity
If you're considering setting up a registered charity, social enterprise, or unincorporated association, we can provide advisory support to help you evaluate your plans and identify the most suitable legal structure.
This will affect who runs the organisation, whether it employs people under its name, whether trustees are accountable for the organisation’s actions, and whether it has a broader membership. In most cases, there are four main charity structures, namely: a Charitable Company (a not-for-profit business limited by guarantee), a CIO (Charitable Incorporated Organisation), an Unincorporated Association (UA) and a Trust.
Incorporated structures, such as CIOs and Charitable Companies, are distinct legal entities. These can enter contracts, employ staff, own property, and limit personal liability for trustees. Unincorporated structures, by contrast, carry greater risk for trustees and face restrictions in financial and contractual matters.
If your charity is structured to include a wider membership, its members can vote on key issues at annual general meetings, etc. They might vote to appoint committee members, or they could hold a ballot to change the governing document or ‘Articles of Association’ for the charity.
Charities with wider memberships must not exist to benefit their members solely, a large enough percentage of the general public must be able to become members and enjoy the benefits too. Amateur sports clubs, which are open to everyone, are a good example of this. This ensures that your charity operates in the interests of society as a whole.
Sometimes, the trustees of a charity might decide that its structure should change, to better support the work they do. However, this can sometimes prove difficult or in some cases not possible, therefore hiring a specialist accountant from the outset will allow you to choose the right structure to achieve your future goals.
Your questions, answered
Over recent years, direct government funding for the Third Sector has decreased, so the competition for private donations, Trust Funds, government grants, and local authority contracts has skyrocketed. This is why charities should prioritise legal compliance and sustainability as an integral part of their financial planning strategy when approaching fundraising and bid management.
If you run a charity or social enterprise, you need an accountant who can help you fulfil the statutory filing duties stipulated by the Charities Commission (CC) – and an impartial advisor who can support you in making good financial decisions for your charity.
Specialist guidance in this area is vital, because accounting standards and SORP (Charities Statement of Recommended Practice) in the UK is set to change in 2023.
Value Added Tax (VAT)
When it comes to VAT, charities often struggle to determine the specialist VAT rules that apply to the Third Sector, as these are more complex than for businesses in the private sector.
A specialist Charity accountant will be able to help you understand these and introduce systems for effective tax planning and VAT management. This way, you will understand your obligations clearly and avoid costly mistakes – which could lead to HMRC sanctions. Better still, you will benefit from any opportunities that exist to claim VAT relief on expenses and donations.
Tax Considerations
A notable issue that charities face is their tax liability, which is different to private companies. Some of the key considerations include:
- Tax planning to include things like trading subsidiaries and the small trading tax exemption.
- Checking that Gift Aid, tax and VAT reporting are being handled in a compliant manner.
- Calculating any tax liabilities on profits not qualifying for tax relief.
- Organising and optimising systems for Gift Aid.
- Ensuring that fundraisers receive training on tax implications.
- The specific taxation rules surrounding the profits of Community Amateur Sports Groups (CASC’s).
A good accountant will explain the issues to you and advise how to approach them to increase your charity’s revenue.
Accounts, Annual Reports and Annual Returns
You will need to prepare annual accounts that are available on request, regardless of whether your Charity is registered with the Charity Commission or not (you must be registered if your income is £5,000 or higher, or you are a CIO).
There are different rules about accounting for charities, based on their size and type. To understand the rules for your organisation, check its income to date for the year, and the value of its assets. Also, you should know whether you have to register as a charity, and whether you are classed as a CIC or a company.
A registered charity has to prepare an annual trustee report, and make this available when requested.
For all CIOs and for charities whose income exceeds £25,000, they must file both annual accounts and the trustee’s annual report online with the Charity Commission.
Annual return form – This allows the Charity Commission to update the information about every organisation on its register. These forms are supplied to registered charities yearly and provide the commission with basic financial data, as well as details of activities, trustees, and contacts. They indicate which classification a charity falls under too.
All charities with income exceeding £10,000 must file the annual return form with the commission. Registered charities with lower income levels just have the obligation to keep their registered details up to date and can use the annual return form to do this.
Financial accounts for charities might be prepared based on an accruals basis, or on a receipts and payments basis. The method will depend on your charity’s income, and whether it is classed as a company.
Receipts and payments is the simplest preparation method. This can be used if your charity is not a company, with an annual income no higher than £250,000. This involves preparing an account summarising the money received and paid out and received by your charity during the financial year. Also, you must provide a statement detailing your assets and liabilities at the year end.
All charitable companies and non-company charities with a gross income exceeding £250,000, must prepare financial accounts on the accruals basis, in accordance with the Charities Statement of Recommended Practice (SORP). You will have to complete a statement detailing
your financial activities (with explanations) and a balance sheet. This information is needed to provide a ‘true and fair view’.
Choosing an accountant who knows which elements of legislation affect your charity gives you confidence that your accounts will be handled correctly, in a timely manner. In addition, hiring an accountant with expertise in digital accountancy ensures that your records will be kept efficiently, in the right way. This will speed up the accounting process and reduce its cost going forward.
Accounting Services For Charities From David Howard
Hiring an accountant who can carry out the checks described in this guide is vital to ensure the long-term growth of your charity. Accountants who understand this entire process will be able to assist you with record keeping, accounts and bookkeeping. This way, you will comply with all applicable regulations and have a strong operational foundation to spend and receive money on behalf of your charity.
David Howard provides a full range of accountancy, bookkeeping and payroll services for charities, along with professional guidance. Our services are affordable and designed to offer value for the best price possible. This makes us ideal for organisations with limited budgets.
Don't wait - take advantage of this free consultation today! Contact us to schedule your appointment and take a step towards a brighter financial future for your charity.
Our team has extensive experience working with charities of all sizes and across various causes. We understand the challenges you face, and we're committed to providing you with the guidance and support you need to ensure your charity's long-term sustainability.
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