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How to Prepare to Close Out the Year for Your Church

How to Prepare to Close Out the Year for your church

As we approach the end of the year many churches begin preparing for tasks that need to be completed to close out their financials for the year. Realm Accounting provides you with the tools your ministry needs to ensure that you have a successful closeout. You may be asking “what does my church need to do to close out the financials for this year?”

Let’s talk about what your church may need to do:

  • Prepare General Ledger for closing year
  • Year End Reporting
  • Create new budget
  • Prepare 1099s
  • Preparing W2s
  • File W2s
  • Take specific steps to close the year

Prepare your General Ledger

  1. Complete all postings – Once you get to the end of the year you want to ensure all of your postings are completed. Before you close your year, make sure that you enter any additional journal entries. 

To do this, you’ll want to go into Realm Accounting → General Ledger → Transactions. Here you’ll see any transactions that are open that you may need to edit and post.

  1. Print all checks – this includes completing all in-process check runs. This step must be completed before you can close out the year.

To view and complete your check runs you’ll need to go to Realm Accounting → Print Queue. Here you’ll want to see if there are any checks listed and click on Generate Checks to print the checks or post them.

If you see any checks listed that have already been processed all you have to do is assign the check number that was printed to remove it from the queue and it won’t be generated again.

For in-process checks, go to Realm Accounting → Print Queue → Printed Checks Log where you can see the checks that need to be printed.  Then click on the check run number (this will generate a PDF for the checks to be printed), then click the print icon to print. If it’s a check that’s already been printed, the steps are the same, but instead of clicking on the print icon, you should click on close. On the next screen, confirm that your checks have printed correctly to complete the check run.

  1. Complete bank reconciliation. Although not required to close out your year, completing your bank reconciliation is highly recommended. This will help you uncover if there are any uncleared transactions. You also want to confirm that your Calculated Balance and Statement of Financial Position Balance match.

To complete a bank reconciliation go to Realm Accounting → Bank Reconciliation.

Consider Year-End Reports

Here are some common reports your church may want to run for year-end:

  • Statement of Activities
  • Statement of Financial Position
  • Trial Balance
  • Summary of Restricted Net Assets

If you are using Realm Payroll, you may want to run the following reports:

  • Payroll Liability Report
  • Wage Report

Create a Budget

When preparing for year-end, you may also want to consider adding your budget for the new year into Realm Accounting. You can add a budget by:

  • Creating a new budget – allows you to start from scratch
  • Copying previous budget and update – if your budget is staying the same you can copy the previous year’s budget and update it
  • Import budget from a CSV file

Keep in mind that you can only budget for revenue and expense accounts and it is not required to close your year out. If you do create a budget at year-end this serves as a marker to help you know where you are in relation to your planned expenditures and your actual expenditures, which can help you with some of the end-of-year reports you may be generating.

To create a budget go to Realm Accounting → Budgets → +Create Budget

Prepare 1099 Forms

1099s are tracked in Realm through the Core Accounts and Vendors.

There are two types of 1099 Forms:

  • 1099 NEC (Nonemployee Compensation) used to report nonemployee compensation of $600 or more
  • 1099 MISC (Miscellaneous Income) used to report $600 or more for rent, royalties, attorney fees, and others

Both the Core Account and Vendor must be flagged for a 1099 in order for it to populate a value from a transaction that you may have done. For example, if we issue an expense check to someone from a Core Account that’s flagged as a 1099 and the Vendor is also flagged as 1099 then Realm Accounting will populate a value on the 1099. If neither or only one of these have been flagged for a 1099, then a 1099 will not be generated for that individual.

You can view the 1099 totals on the Vendor Total Report or Vendor Profile or Tax Forms.

You also may want to review all of the data before processing your 1099 Forms to ensure all core accounts and vendors are listed and to add adjustments to edit the total if necessary. To process your 1099 forms, you will need to print them or e-file them. If you chose to print them, you will need to purchase the forms or you can e-file them through Nelco, which is connected with Realm.

Prepare W2s

  1. Review and ensure the information you have for your employees is correct such as their addresses, social security numbers, and their email address, especially if you will be e-filing. You also should review that your church’s information is correct and in the right format such as address, filing contact, and your tax IDs.
  1. Review your values and correct any warnings that you may see on the employee or church’s information. You also should confirm your taxable base for what was withheld and ensure that it is accurate.
  1. Ensure adjustments are listed in the correct boxes such as any deductions or employee contributions.
  1. Print off the W2 list to review if you have a large number of employees.
  1. Compare the total from the 941 Form to W3.

Filing W2s

With Realm Payroll, you have the ability to print your W2s or e-filing. If you choose to print your W2s you will need to purchase the form that is compatible with Realm to print. If you prefer to e-file you can do so through Nelco, which is connected to Realm.

To prepare, print, or e-file your tax forms you will need to go to Realm Accounting → Period End → Tax Forms

Additional Steps to Close Out Your Year

  1. Review and close any prior months not closed.
  2. Review and complete all transactions and forms.
  3. Review closing accounts for income and expenses accounts.
  4. When you close the year, Realm Accounting will transfer the balances of all income and expense accounts into a specified closing account.

Resources to help you have a successful year-end

We know that this time of year for many churches is a busy one. Especially as you prepare to send out contribution statements. And close your financial year out. We’ve put together a series of year-end resources including live webinars, on-demand courses, and guides to help you with your year-end tasks.

Check out one of our recent webinars on Preparing for Year-End Closing, which goes into greater detail on how your church can best prepare for year-end.

Lily joined the ACST team in 2020. She worked six years at a large church in Atlanta, GA, as the Business Systems Analyst. Lily understands the mission and challenges of the church. She spent her time in ministry utilizing Realm to help solve those challenges. She is passionate about helping our Ministry Partners leverage technology to fulfill their mission and grow their ministry impact.

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