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We are passionate about church bookkeeping. However, we enjoy maintaining books for small charities and churches. We see a lot of mistakes made in bookkeeping, which could have been avoided had the bookkeeper known the right way to do it.
To avoid making a mistake in church bookkeeping, you should carefully examine each person who is being paid for a service. The IRS guidelines (link to the Misclassification article), will help you determine whether they should be classified either as an employee with proper payroll tax withholding and matching, or as an independent contractor.
You should also be able to view your bank balance, see which funds are designated and restricted, and what amount is available to keep the lights lit.
While mistakes in church bookkeeping are not uncommon, there are steps that you can take to avoid them.
Internal controls are a key area where churches are at risk. Having someone outside of the financial system reconciling your bank accounts, tracking, and verifying your deposits and checks means there is a second set of eyes going over all of your systems, increasing the safeguarding of your congregation’s resources.
You might need more functionality than QuickBooks Premier Plus provides as your church grows. Your church's growing needs will include the ability to manage volunteers, events, allow online giving and run email campaigns.
81% of church revenue came from individual donations. 34% of congregations have endowments, which constituted on average 4% of their revenue. Only 2% of churches received revenue from government grants; 12% received finance from non-government grants.
Churches call the traditional balance sheet a statement of financial position. It uses the accounting equation “Assets = Liabilities + Equity” to show a snapshot of your organization's financial health. It also shows the current balance of each of your funds if you've been implementing fund accounting for your church.
Churches And Transparency
The standards of the Evangelical Council on Financial Accountability require that member organizations provide audited financial statements on request.