How do I start keeping accounts for a new charity?

England and Wales: This page sets out the position in full. Scotland: the same starting point, but the income at which the cash basis stops being available is lower than in England and Wales — see below. Northern Ireland: the same starting point, and the cash-basis ceiling is lower there too, and has not moved.

Charity bookkeeping: the two first tasks

Charity bookkeeping begins with two tasks for the treasurer and the trustees. The first is a true record of every receipt and payment. The second is a minuted decision on the accounting basis. This page assumes the charity already exists and has adopted its governing document; if it has not, draft your governing document first.

Both are the same in England and Wales, Scotland and Northern Ireland. What differs is the income ceiling for the cash basis, and the regulator: the Charity Commission, OSCR or the Charity Commission for Northern Ireland.

The year-end accounts come later. For those, see What goes in a receipts and payments account? or How do I put together a Statement of Financial Activities?. For the rules behind them, see the accounting thresholds and 2026 threshold changes explainers.

Keep the two apart. Recording is not optional and has no threshold. From the first transaction, keep every receipt and every payment, however small.

Choosing a basis — cash or accruals — is a real election for most new charities. The two-part test at Do I need accruals accounts, or can I use receipts and payments? decides it in full. At this stage, the aim is a deliberate choice, minuted by the trustees. It is not a watertight full determination on day one, before there is even a year’s figures to test it against.

When does record-keeping have to start?

Record-keeping starts with the first transaction. There is no threshold below which it does not apply, and no grace period while the charity gets organised.

A cash book is a dated list of every receipt and payment, with a running balance. A simple one — date, description, in, out, balance — is enough to start with. CharityIQ’s Cash book template (planned) is built to this shape. How long the records must then be kept is a separate rule, covered in how long a charity must keep its records.

The reason is evidence, not tidiness for its own sake. An independent examiner has to be able to trace the first year’s opening position back to something.

“We started keeping proper records once income arrived” leaves the earliest weeks unaccounted for. Those are often the weeks with the founding donation, the first grant, or the launch event. That gap does not go away. It becomes next year’s opening-balance problem instead.

None of this depends on whether the charity is registered yet, or ever will be. In England and Wales the registration threshold is £5,000.

Record-keeping and the choice of basis apply whether gross income is above or below it. Registration and accounts are separate duties, tested separately. A charity below the registration threshold still has to be able to show what it did with its money.

Is the cash basis a choice or a default?

The cash basis is a choice the trustees make, not a default. That applies to a charity that is not a company and is under the income ceiling.

Charities Act 2011, s.133: the charity trustees “may elect” to prepare receipts and payments accounts and a statement of assets and liabilities instead of accruals accounts, where the charity is not a company and its gross income does not exceed the prescribed amount.

Nothing forces the simpler basis on anyone below the ceiling.

Plenty of charities choose accruals from day one. A funder may require it, or the trustees may want the fuller picture it gives. A charitable company cannot make this election at all, however small its income. See the full two-condition test at Do I need accruals accounts, or can I use receipts and payments?.

This is the income side of the test, where it applies. The table shows the receipts-and-payments ceiling in each jurisdiction.

The Scottish and Northern Irish ceilings are both lower than the new English figure. Neither moved as part of the 2026 changes. Do not apply the English figure to a Scottish or Northern Irish charity.

Both ceilings are tested against the charity’s gross income. That is a defined term, with its own rules about what is and is not included. It is not the total on the face of whatever statement the charity is looking at.

The definition in the Act is short:

Charities Act 2011, s.353(1): “‘gross income’, in relation to a charity, means its gross recorded income from all sources including special trusts.”

Those nine words do almost no work on their own. Regulator guidance, not the Act, answers the practical detail: what to do with endowment movements, a trading subsidiary’s turnover, and gains on revaluation. It is set out in full in the step on which accounts to prepare, once there are real figures to apply it to.

Group accounts, if a trading subsidiary is planned

A charity that expects to have a trading subsidiary should design its bookkeeping around a second, separate ceiling: the one for group accounts. Whether you need one at all is covered in when a charity needs a trading company. Most new charities will never need this.

If aggregate group gross income goes above that ceiling, there is a separate duty to prepare group accounts. That duty is on top of whatever basis the charity uses for its own accounts. The table shows the group-accounts ceiling in each jurisdiction. Scotland, like England and Wales, is mid-transition.

Northern Ireland’s figure is the lowest. It is far cheaper to keep the charity’s own transactions apart from the subsidiary’s from the start than to rebuild that split later.

What can force a change of accounting basis?

Growth in income is what usually forces a change. The basis minuted today may not be permanent. Income that grows past these ceilings does more than change which accounts are available. The same growth usually also brings in a scrutiny requirement, worked out in full when you determine your external scrutiny requirement.

If either determination puts the charity onto accruals for the first time, convert your records to the accruals basis. That means building an opening balance sheet at the transition date, rather than starting the accruals records from nothing. Both start from the minute made here. So it is worth recording the reasoning, not only the conclusion.

You now have a record of every transaction and a minuted basis. Next, build your chart of accounts so that restricted and unrestricted money are kept apart from the first entry.

Common mistake: assuming a company can choose the cash basis

The income ceiling is quoted everywhere. The structural condition almost never is. A charitable company can never use receipts and payments accounting, however small its income. See the two-condition test at Do I need accruals accounts, or can I use receipts and payments?.

Accounts prepared on the wrong basis have to be redone from the underlying records. By then, those records may not support accruals.

Common mistake: starting the books only when the first grant arrives

Small early receipts — committee cash, a returned hall-hire deposit, a raffle float — feel too small to record. But the opening balances for the first year have to be evidenced from something. That gap is the scope limitation an examiner has to raise.

Worked example

Wrenfield Village Hall holds its first fundraising event before it has finished registering. From day one, the treasurer records each item as a separate line. The lines cover the raffle takings, the float advanced to the stall, the hall hire and the raffle licence fee. They are never netted against each other.

By the first year end, the cash book reconciles exactly to the bank statement. The opening balance for the second year needs no reconstruction.