One of the most important parts of running any organization whether it is for-profit or non-profit is proper bookkeeping. If you have recently been thinking to yourself that you can’t keep up with the accounting at your church or if you are currently looking to help your church’s bookkeeping, you are in the right place. We are going to share our top church accounting tips below.
Keep reading to learn more and start applying what you learn today.
Spread Out Financial Duties
Even though you want to trust people in the church organization, you always want to implement safety measures to avoid being a victim of fraud. Assign different financial responsibilities to multiple people. For example, you can have someone in charge of tracking expenses and a different person keeping track of the income.
This will create a layer of accountability between several folks, making it easier to notice number discrepancies faster. (1)
Annual Budget
Creating a realistic budget for the year will help the church stay on track. You can come back and re-evaluate the budget every quarter or as you see fit to make corrections or make the budget bigger.
Make sure that the budget is seen by those in charge of everything that has to do with the church’s finances.
Classifying Workers
An easy mistake to make is to misclassify workers in your church bookkeeping. Churches are under most of the same laws for labor and employment as “for-profit” organizations. This means that independent contractors and employees have to be classified correctly.
If not, your church will end up with high penalties for making mistakes such as classifying and paying a worker with 1099, when they should have been classified as an employee. To avoid this mistake, look at each individual you are paying for a service and use the IRS guidelines to determine the correct classification for each person.
If you are ever on the fence, classify and pay them as an employee to be on the safe side.
Don’t Do It Yourself
When it comes to taxes this is not a DIY project unless you have experience with non-profits, accounting, and taxes. Usually hiring an experienced bookkeeper might not be high on the list of necessities, but it honestly should be a top priority.
Setting up and maintaining a proper accounting system will be important in the long run. This will help avoid ending up with an ineffective church bookkeeping system where bills are not being paid or bills are being paid twice.(2)
Feeling Like a Church Accounting Pro?
Now that you have our top tips when it comes to church accounting you can put them to work and optimize your church’s bookkeeping. Following the above tips will help you maintain an accurate account of the money that moves around within the church.
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