Church accounting — how does it differ from a regular business? Well, to sum it up, a church’s mission is focused on activities that benefit its congregation and are not there to maximize profits. Additional income should be recycled back to the church and into their mission.
When it comes to the best accounting methods for your church, there are a few key factors to know about in order to keep everything succinct. Knowing these items can help you get started, and weed out any programs that don’t serve your niche accounting needs.
To get you on the right track, we have outlined some of our best tips for getting started with church accounting and how TrackYourFunds can optimize your efforts in keeping those church books clean and organized.
Create an Annual Budget
Budgets are essential in all forms of nonprofit structures and essential to churches both big and small. Creating a realistic operating budget at the start of each year is crucial to ensuring that your targets remain in check, and corrections can always be made later on should you need to make them.
Fluidity is key for a budgeting tactic as the year progresses, and it will more than likely evolve based on your contributions, donations, and activities planned.
In addition, ensure that your internal team is aware of planned activities and initiatives throughout the year. It’s important for key figureheads in your organization to be aware of upcoming activities, as they may need to make budgetary decisions to aid the process.
Establish A Team & A Code of Ethics
Implementing a safety structure for your organization is beneficial to ensure that you have multiple people in your corner. Nobody ever expects to be a victim of fraud and nine times out of ten you can trust the people in your group, but you always want your financial responsibilities divvied up among multiple people.
This not only creates security but also creates a sense of accountability within your organization. If you start seeing discrepancies or another person continuously taking on another’s assigned tasks, then you have the foresight to look into it.
Establishing a code of ethics throughout your group, with internal policies and procedures will also significantly improve your fraud prevention and showcase the values of your church.
Create A Multi-Year Plan
Planning is crucial for any business or nonprofit and creating a multi-year plan can be fruitful in ensuring that your church is adequately meeting goals for years to come.
Financial planning that spans the course of multiple years creates a strategic growth plan and means garnering early support from your church’s leaders or elder board.
Managing Fundraiser Expectations
When it comes to churches and nonprofits, fundraising is a big factor in achieving fiscal goals, but it’s not something you want your entire leadership team completely focused on.
It’s easy to get in the mindset of having more money would allow you to do more, so it’s important to keep yourself and your staff grounded during those times. Staying humble and realizing that there are a lot of churches out there who also believe in their mission is pivotal.
Create realistic fundraising plans using your past data to set your goals. If you’re branching into new tools or technologies for this upcoming year, consider lowering your goals until you have tested and tried out these new strategies.
Remember that there is nothing wrong with making an adjustment if things don’t exactly go according to plan, or even if they go right. Avoid feeling tied to past commitments that just aren’t working for your organization anymore.
Statement of Activities vs. Income Statements
A church is not a business structure. Churches write up a Statement of Activities, while the traditional business creates an Income Statement. The majority of nonprofits as a general rule will utilize a Statement of Activities, which quantifies the revenue and expenses of a nonprofit entity for a reporting period.
The Statement of Activities includes revenue, expenses, and net assets. Revenues can consist of contributions, program fees, membership dues, grants, investment income, etc. while expenses are reported in categories such as major programs, fundraising, and management and general. The change in net assets is the result of these two items.
Our TrackYourFunds software for churches utilizes an easy-to-use tracking ability to organize all of your revenue, and expenses, and accurately calculates the difference so that you don’t have to spend additional time crunching numbers.
How We Can Help
With these tips in mind, TrackYourFunds is here to offer a solution to track and organize all of these pivotal points in your church’s journey. Our back-to-basics approach to accounting software allows you to track your church’s expenses without all the overwhelming and unnecessary features.
Our various simplified features include:
- Checks & Payments
- Reports
- Reconcile
- Collections
- Adjustments
It’s time to escape the spreadsheets and switch over to a web-based platform for your team to all collaborate and stay in the know when it comes to your books.
If you’re looking for an easy solution for your church organization and are interested in learning more about TrackYourFunds, book a demo with our team today! We’re here to help and assist in any way we can.
