Church Accounting Tips
Church accounting is usually different than the traditional method of accounting used in for-profit businesses. Many churches have copious amounts of cash or checks that run through their accounting offices as a result of the tithes or offerings collected during church services. This money must be carefully accounted for and handled as they prepare deposits and track money given to any special projects such as missions. Churches usually develop basic accounting functions to help their personnel manage cash flow.
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Separate Funds
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Many churches have separate funds for the projects under their operational umbrellas. Church projects may include support for missionaries, a private school, new building projects or various other projects throughout the calendar year. Churches may be able to create specific funds and simple accounting ledgers to track the money given by church members for each project. While the cash is usually deposited into a single bank account, separate funds in the accounting ledger help church personnel keep a running tally of the specific amount given for each project.
Create Budgets
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Developing budgets for expenses is a common way churches track disbursements for their internal functions and facilities. While the church pastor or other senior staff members may be involved with creating a budget, churches may have a budget committee or require budgets to be approved by church members in a business meeting. A budget can also be used as a financial roadmap for a church; designating specific amounts for the church's operating expenses can help the church have more money left over for conducting local ministries.
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Use Financial Statements
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While a church may not need to create standard financial statements for its operations, pastors and senior staff may develop financial statements for church member review. These financial statement reviews help church members understand where the church is spending money and how much cash the church has on hand for future ministries. A church may also use a financial committee to help it prepare and develop financial statements.
Implement Internal Controls
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Most individuals working for a church are careful, honest people. However, churches need to implement internal controls to protect their sensitive financial information and cash deposits from theft or embezzlement. The copious amounts of cash found in churches after weekend services usually require a few church members or personnel to count the money, prepare the deposits and take the money to the bank. Using more than one individual to perform these basic accounting functions ensures that one person does not have too much access to the church's cash resources.
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