Keeping financial records might not be the crowd-pulling activity that you had in mind when you started your campaign. But it's a necessary part of campaign management.
By law, any club or association that makes money needs to keep a record of the money that comes in and goes out. There are certain ways that this can be achieved and most are fairly simple. If you don't keep proper records, you could face a fine of up to £3,000 from the Inland Revenue.
2. Appointing a treasurer
The first thing you need to do is appoint a person from your campaign group to be the treasurer. They need to be an honest, accurate and responsible person, without any outstanding financial court cases or significant debts (except a mortgage).
Financial qualifications are not necessary but experience of keeping records of income and spending, paying bills, banking money and preparing basic financial statements is useful.
Next you'll need to open a bank or building society account. Your campaign committee will need to pass a resolution to open the account. Banks can provide forms giving the necessary wording for the resolution. The completed form is returned to the bank along with the names and signatures of those who will be authorised to sign cheques, a copy of the minutes of the meeting at which the resolution was passed and a copy of the group's constitution.
It's worth shopping around for the best bank account deal. Some make charges for deposits and withdrawals unless you keep a balance of £100 in the account, some have a quarterly service charge and some make no charges at all.
The group must also decide whether it wants a deposit or a current account. You may decide to have a current account for everyday transactions and a higher interest deposit account for reserves.
Building societies will write cheques for you. This means that no one has to hold a cheque book, but it also means that the signatories must go to the building society to sign the withdrawal slip.
You could also consider setting up an account at an internet bank. This would mean that the account could be managed from your home computer, and by more than one person.
A reliable system of book-keeping must be established. Ideally, you need a proper cash book as all the columns are drawn for you. You should be able to find one in any good stationers.
It's also possible to keep accounts on a computer, using either a spreadsheet or a specialist accounting package. You should still keep a hard copy though, in case your computer crashes or the data corrupted.
Set up a system for acknowledging cheques received. This can be either a receipt book or voucher, or a form designed for the purpose. Keep copies (or duplicates) of all vouchers or forms.
Similarly, if you deal with petty cash, a system for recording 'ins and outs' is required. Keep copies of all receipts for petty cash.
The important thing is to have a system which you keep to, and ensure it's done on a regular basis. The basic financial report, a Receipts and Payments Account is, in effect, a summary of the cash book. The cash book is also used to check the bank statement.
The treasurer must be prepared to make regular reports to the committee detailing income and expenditure, and how much is left in the bank.
All elected committee members are jointly responsible for the management of funds. The treasurer should make sure that all committee members are kept informed of the financial position.
It's sensible for the treasurer to make monthly reports, even if the committee meets bi-monthly or quarterly. These reports should be presented to the committee at the first available opportunity.
If committee meetings are infrequent but the treasurer has to deal with a great many transactions between meetings, a small finance sub-committee may be organised for the purpose of checking the finances to ensure there are no problems needing urgent attention.
No matter how small or large your organisation, it is sensible to set a budget for expenditure for the year. It may be that a strategy for fundraising is also required. You can read the Action Network guide, A2128033.
Make sure that no expenditure is committed unless there is enough money available. The committee can make resolutions like 'we intend to buy a computer should the funds become available', to prevent problems.
Keep appropriate files. You should have a file marked 'invoices' in which all invoices (bills) to be paid are kept until cheques have been written. Mark the cheque number and date on the invoice. Once it has been paid, and the money has left the bank account, mark the invoice “paid” and put into a separate paid file for reference.
It is important to keep clear records of your group's accounts in case the Inland Revenue asks to see them.
Your group will be treated as a club for tax purposes, unless you become a registered charity. This means that you will have to pay corporation tax on any income that is deemed to count as a profit. However, corporation tax is set at 0% on profits below £10,000, and once you raise more than £1,000 per year you must become a charity anyway.
There are some tax advantages to being a charity. For example, charities do not have to pay tax on any bank or building society interest earned. So if you do find yourself paying tax bills, you might want to consider applying for charitable status.
For more information on the tax implications, see the Inland Revenue leaflet on Trading by Charities.
If this guide helped you sort something out, please tell us! It's the only way we'll find out whether people think Action Network is useful. To send us an email, please go to the Contact us page and choose the "Tell us your success" option.
The BBC runs Action Network as an open forum for people to influence issues they care about. Most of the content is written by the public and reflects their views. Content provided by the BBC is clearly marked. If you read something which you think breaks the Action Network rules, please use the "complain" link nearest to the content.
The BBC is not responsible for any external sites to which there are links on Action Network.
MMV
