You need a church bookkeeping system that not only tracks expenses and income, but also tracks your assets and liabilities. How to do church bookkeeping might differ from church based on size and budget. However, there are some basic church bookkeeping tips that every church should follow. Let’s learn how to make solid financial decisions for your church’s development and growth.
Establish your church budget categories for best management. These include, but are not limited to:
- Administration and operating expenses
- Personnel, salaries, benefits, and contractors
- Facility and maintenance (utilities, insurance, expansion, etc.)
- Missions Outreach and Events
- Direct Ministries within the church
You should have the ability to quickly record, manage, and track contributions. This can be done through rapid entry of cash and check donations, automatic posting of online church contributions made through online giving or importing from other systems. Bookkeeping for churches requires discretion- remember that giving information is sensitive in nature. You need administrative control over who can view contribution information and also who can enter or post gift information.
Or biweekly, especially if your ledgers have different banking and credit card accounts with a lot of entries to maintain the integrity of and reduce the confusion of transactions in order to create budget reports, income and expense statements, and balance sheets. This comprehensive information should be consistently reviewed by an internal and/or external team/financial controller for best church stewardship practices.
Labor Classification and Payroll
Labor and employment laws are in effect for both nonprofit and profit companies. Better to err on the side of caution than to be penalized for misclassification. This step also clarifies next steps for payroll. You want to be able to maintain important details about your employees (full time, part time, etc.) and accommodate special tax requirements and allowances for your ministerial staff. The right ChMS will split employees into manageable groups for processing pay periods or for structuring compensation for specific jobs and give you complete control over how employees are paid. Plus, it (the right ChMS) can keep track of employee benefits, additional compensation, employer-paid items, and special situations such as housing and auto allowances, phone reimbursements, retirement plans, insurance, and one-off deductions.
Year-End Giving Statements
Donations made to 501(c)(3) organizations are tax-exempt, and the IRS requires that you acknowledge any single donation of $250 or more, although acknowledging donations of all sizes is a better practice. That way nothing falls through the cracks and every donor knows their contributions were of value. That’s a win-win. Philanthropy News Digest reports that “Your donors will appreciate a timely, accurate giving summary. Sending year-end tax statements is a good way to close out the past year and start the new year strong.”
The first step in how to do church bookkeeping is to acknowledge that the handling of church funds from beginning to end is an act of worship. Therefore, being a good steward to see that your church’s resources are properly managed and cared for (no matter if it’s for a large or small church bookkeeping) is a top priority. How do churches do bookkeeping? The answer is together with processes and integrity. The money a church receives is a tool to bring glory to God.
As the Vice President of Marketing for ACS Technologies, John is responsible for Marketing’s overall corporate strategy and direction. Storyteller, promoter, problem solver to churches of all sizes and shapes. John has traveled the world working with prominent non-profit ministries. He also serves on the board of directors for Dayspring International.