Your management committee / Board or Steering Group should take on the responsibility of financial management, and your treasurer should be someone who has some experience managing budgets. If your organisation is led by a board of trustees, they are legally responsible for the production of yearly accounts (if applicable) and for responsible financial management.

Using a budget and keeping an accurate record of transactions to and from your organisation will help you to forecast your income and expenditure and plan for further events or fundraising.

CASH FLOW FORECAST
Preparing a cash flow forecast will help with long-term planning, as well as ensuring that you have sufficient funds to cover your outgoings. A cash-flow helps you to plan out when you are going to need to spend money, and can show when that money is coming into your accounts.

Remember - although your overall budget may add up, there can be times when you will need to make payments before your funding is received or any cheques have cleared.

Voluntary Arts Network have produced a cash flow forecasts guide for when you are comfortable with your management systems.
When you are planning further into the future, you may consider creating a financial risk policy. Many funding bodies will ask you to prepare a risk policy, and the charity commission encourages all voluntary arts groups to prepare one as a matter of good practice. If you are a registered charity with a turnover of over £250,000 a year, you must produce one by law. It would be useful to begin to prepare one, so that as your organisation grows, this practice is embedded and you are experienced at producing them.

• You can use the Voluntary Arts Network guide to creating a Financial Risk Policy (a PDF in a new window). 

RECORD KEEPING AND ACCOUNTS
To complement and support the planning you have done, on expenditure, income, cash-flow and risk, you will need to develop an accurate record-keeping system.

This does not need to be a complicated process. It is basically a way of keeping a clear record of everything that goes in and out of your organisation financially.

You will need to not only keep a note of the incomings and outgoings, but also hold on to other record keeping documents such as invoices to you for fees or services, cheque books and stubs, and receipts for expenses, and remittance advice for funding or earned income.

You should establish the regularity of your bank reconciliation (reconciliation is the matching of your outgoings with your bank statements). It is usual to do this every month and keep your accounts in order so that your accountant can prepare end of year accounts and auditors can track your activities.

Resources:

• Tourism North East have an extensive finance and funding toolkit
• Business link guide to Financial Management
• They also have a guide to setting up a basic record-keeping system.
• Companies House also provide guidance on how to keep account and what you will need to do to produce and submit your yearly accounts in their booklet 'Accounts and Accounting Reference Dates (PDF)' 

BOOK KEEPING
There are several book keeping packages for computers that might be worth investigating if your organization grows.

• Quick books http://quickbooks.intuit.co.uk/
• Sage http://www.sage.co.uk/
• Iris http://small-business-software.iris.co.uk/default.aspx

AUDITORS AND VAT

AUDITORS
An audit is the independent assessment of the accuracy of the financial management and recording of a company or organisation. Most small companies are exempt from having an audit, which is only required if your company had a turnover of more than £6.5 million per year.

For charities, there is a slightly different procedure. Only charities with an income of £10,000 in a financial year are required to have their accounts independently examined or audited. An independent examination is needed if gross income is between £10,000 and £500,000 and an audit is needed where gross income is greater than £500,000.

• The Charity Commission provides a very helpful publication called 'Charity Reporting and Accounting (PDF)'
• This website also provides a good guide for voluntary organisations and charities. http://www.aceggleton.co.uk/guide_charities.html

The booklet 'Accounts and Accounting Reference Dates' explains more about audit exemption for small companies - see the link in the above section to access this.

• Companies House have produced a booklet explaining how to appoint an auditor and the process of auditing in more detail. 

VAT
You must register for VAT if your annual sales are £67,000 or above, and you can voluntarily register if you earn less than this.

HMRC have a very good section explaining the benefits of voluntary VAT registration, particularly if you sell items with no VAT but buy standard rated items.

This could bring some small benefits, but will contribute to more financial paper work for a small reward. If you are unsure, then speak to a local accountant, or your local tax office or you can call the HMRC VAT advice line on 0845 010 9000 and they can put you in touch with your local tax office or give you advice over the phone.

You can find out about registering and what you need to do after you are registered on this website.

• http://www.hmrc.gov.uk/vat/vat-registering.htm

OTHER - STAFFING
You may, as you grow, need to take on staff. It is important to consider the administration required in becoming an employer and the responsibilities you will have to take on. Sometimes, employing the services of a freelance worker, or offering a freelance contract can help in the process of growing your organisation.

If you plan to take on paid staff, then the Voluntary Arts Network has two guides to how to do this:

• Taking on Paid Staff - good practise in recruitment (pdf)
• Taking on Paid Staff - selection and induction (pdf)

HMRC also have a very comprehensive guide to explain your responsibilities as an employer:

• http://www.hmrc.gov.uk/employers/index.shtml