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Are you looking to learn more about church accounting? Maybe you’re starting a church soon and need to know how to delegate your finances. Perhaps your church has been going for a while but needs to double-down on its finances.
Whatever the case might be, there are several things to know about church accounting. It differs from business accounting and thus requires a different approach.
With church accounting, you need to consider things such as ethics, duties, and budgeting.
See below for several tips and church accounting practices that can help you excel at this part of your house of prayer’s financial situation.
1. Strive for Ethical Solutions
Every church accounting plan needs to have ethics embedded in its core. This will help your church community grow confidence with how you and your leaders delegate the finances.
Each and every decision that you make will be critiqued. If you give your pastors a raise, the community will want to know why. If you decide to build a new facility, your churchgoers will want a laid out plan.
Instill a code of ethics for your accounting from this day forward. This is something that the leadership staff, board members, elders, and deacons can use to evaluate financial decisions.
2. Invest in Church Accounting Software
Odds are that you didn’t start your church because you wanted to focus on the financials of it. You might feel as if this is a weakness of your church because of your lack of experience with it.
Fortunately, you can invest in church accounting software and minimize the number of hands-on decisions that you have to make. It can help you with bookkeeping and budgeting to ensure your church’s finances are on the right track.
This can also help you with things like income statements, balance sheets, accounting funds, salaries, owner’s equity, and many other aspects of accounting.
Be sure to visit https://www.iconcmo.com/blog/church-accounting-software/ for more information on how big a role that church accounting software can play in your establishment’s finances.
3. Prioritize Payroll Best Practices
Unbeknownst to them, many churches are paying their employees incorrectly. While you might not think it, the Internal Revenue Service views churches as the ones responsible for paying their staff fairly and filing accordingly.
It’s tough for churches to know the specifics on things such as identifying a person as an individual contractor or a part-time employee. There are many moving parts to their staff, a lot of which require irregular hours that are hard to keep track of.
It’s important that you treat your church as a business entity for your finances. This will help you view your church the same way the government does, and thus make correct financial decisions accordingly.
Be sure to perform research on things like how to administer payroll, how to create a legitimate paycheck stub, what employee benefits you should offer, and so on.
4. Build an Annual Budget
Too many churches make the mistake of going month by month without looking at the bigger picture of their finances. As a church, you’re expected to move your community forward through bigger projects and engagement.
To get things started, build an annual budget that includes your bigger projects and day-to-day operations.
It can be hard to project an accurate budget for an entire year, but remember that you can always adjust it down the line. Some months you’ll receive more tithes than others. Try to lowball incoming revenue and plan your operations accordingly.
Are you wanting to offer help and resources to missionaries in another country? Do you have your eyes set on building a new facility in the next few years? Are you wanting to put more money into evolving your kids’ ministry? Consider all of these goals.
5. Not Keeping Accounting Records
As previously mentioned, the government views your church as a business. Therefore, you’ll be expected to file taxes at the beginning of every new year. That’s why it’s vitally important to back up all of your financial records.
Having them stored under one computer isn’t good enough. If that computer crashes, then you’re left with no way to retrieve your records on the back end (without spending thousands of dollars to do so).
Think of different ways that your church can store its financial records that will a) keep them secure and private and b) give you several backup options.
For example, have you considered storing them in cloud storage? Can you save them on a USB that you can keep in a safe? What about printing them out and keeping them safely hidden?
6. Low-Ball Your Fundraising Projections
It’s already been mentioned once in this article, but it bears repeating: always low-ball the projections of your fundraising and tithing from churchgoers.
It’s easy for church leaders to get fixated on the need for more money, but remember, God will always provide.
In the meantime, practice fiscal discipline as a leader by adjusting your budget to handle the bare minimum of fundraising. That way, any extra money that you receive can be viewed as “extra money” that you can add to your budget.
Find the Right Resources for Your Church Accounting
Now that you’ve seen all the different aspects of church accounting, it’s time for you to invest in the right resources for your needs.
If you find the right software for your church accounting, you can turn that weakness into a strength. Your churchgoers will notice your financial discipline and start to tithe more as their confidence in your church is raised.
Be sure to browse our website for more articles on church accounting. As well as many other helpful topics!