Do Churches Need Accountants?
The world of church accounting is vastly different from accounting for for-profit entities. There are many unique challenges facing religious organizations such as restricted donations, differences in financial reports, payroll for ordained ministers, and so forth. Churches may opt to try to handle this in-house, but below you’ll find several reasons why it may be helpful to get an accountant for your faith-based organization.
What Is Church Accounting?
Church accounting includes documenting expenses, monitoring offerings, and overseeing expenditures for projects and activities. The primary focus is not on generating profit but on supporting the congregation and society’s members through accountable financial management practices. This is why accountability is the cornerstone of their accounting approach.
As nonprofits, churches are required to utilize fund accounting to monitor both income and expenditures. Fund accounting enables churches to categorize revenue and expenses according to their sources and purposes. Essentially, the recommended accounting type for churches is fund accounting.
Church accounting often falls under these categories:
- assets
- liabilities
- equity
- income
- expenses
Reasons for Receiving Church Accounting Services
1. Maintaining Designated Funds
As already alluded to, churches oftentimes are tasked with managing designated funds, also referred to as restricted funds or donor-designated giving. These are donations that have a donor-imposed restriction and can only be used for one specific purpose. Designated or restricted funds can be problematic for several reasons. Sometimes churches may have thousands of dollars in a fund, but regular funds may be down and they are tight on money for regular operations. Restricted funds also can cause much confusion among pastors and ministries leaders regarding its intended purpose. Church accounting also requires extra attention and care as it is vital that restricted donations go to the proper account and not a general account.
Hiring an accountant may be a wise choice in order to manage designated giving. A good accountant will help you to streamline your finances and ensure that any earmarked donations get recorded to the proper account. An accountant would allow churches to always be able to see how much money is in all funds and ensure it is spent accordingly.
2. Good Accounting Can Help Churches Grow
How are the financial processes at your church? Are the books reconciled? When was the last time you saw a freshly prepared set of financials? Where is the money being spent? These are the important questions every church should be able to answer without hesitation. It is of utmost importance that the church finances be organized in order to maintain fiscal viability and invest wisely in your church’s mission. Proper church financial management will help your church leadership to make wise decisions and push your church’s mission forward.
3. Save Time
All too often in church accounting, there are ministry leaders taking away their time from what really matters to focus on record keeping. Church leaders can spend countless hours trying to track incoming donations, funds, vendor invoices and bills, and so forth. Hiring a professional that is efficient and experienced in church accounting will free you up for what really matters.
4. Stay Compliant
Churches and faith-based organizations may face more scrutiny than other businesses because of their tax-exempt status. There are regulations, standards, and legislation that affect churches that accountants must stay up to date on. It can be quite a challenge to keep up with these changes, especially during a pandemic when everything seems to be moving at a dizzying rate. Hiring an accountant will take all the daily accounting work and compliance research of you and put it in the hands of a professional. You’ll have a weight lifted and more time to devote to ministry.
Contact A Church Accounting Professional at Marshall Jones
Many churches have over-zealous church secretaries or administrators who assume accounting duties. While they have the best of intentions, they don’t know the ins and outs of accounting for churches like the professionals at Marshall Jones. Reach out today to learn more about the services Marshall Jones offers for faith-based organizations and churches.