Accounting for churches is not the same as accounting for businesses. A church bookkeeper must be aware of the special tax codes that govern the church's unique tax standing. But it is often hard for overworked or volunteer administrators to know every aspect of tax code that affects their church's ability to accept donations, oversee a benevolence fund, file church payroll, and offer a compensation package for their minister.
Lisa London, The Accountant Beside You who brought you QuickBooks for Churches & QuickBooks for Nonprofits, explains the specialized needs of church accounting in an easy-to-understand manner for church administrators and volunteers. A CPA with decades of experience working with businesses as well as churches and other nonprofits, Lisa explains complex concepts in a reader-friendly, engaging manner. She is joined by Vickey Boatright, an accountant who runs THE online site for free church accounting, www.freechurchaccounting.com. Together, Lisa and Vickey guide you through every essential aspect of church bookkeeping, including the specifics of small church accounting. Joining them is Terressa Pierce of freechurchforms.com as she steps the reader through how to organize the church office.
Church Accounting: The How-To Guide for Small & Growing Churches is a must-have reference for all the nuts and bolts of church accounting no matter what your accounting system. Lisa and Vickey help you set up accounting spreadsheets and explain the different types of accounting packages. If you are already using QuickBooks, it is also a perfect compliment to QuickBooks for Churches and Other Religious Organizations.
Additionally, The Accountant Beside You will show you how to:
- calculate and file employee payroll without paying for an outside service
- design and implement a compensation package for your minister, including a housing allowance
- set up and administer a benevolence fund
- track church contributions
- acknowledge donations per IRS guidelines, including vehicle donations
- prepare for an annual audit
- budget and forecast to provide for future church growth
- reimburse employees' expenses per IRS guidelines
- set up proper internal controls to guard against fraud or error
- implement the basic steps of starting a church
The Accountant Beside You series of accounting books for churches and nonprofits have been sold in all 50 states and every inhabitable continent. Besides the detailed, step-by-step instructions provided in the guides, both ebook and print, Lisa London offers supplemental and often free information online at www.accountantbesideyou.com and through her popular YouTube videos and webinars. Church accounting will be less worrisome with The Accountant Beside You every step of the way.
About the Author
Vickey Boatright has worked as a fund accountant for a nonprofit for over 12 years and is a staff accountant for Wisdom Over Wealth. Her site, www.freechurchaccounting.com, is a treasure trove of valuable information on all things churches! Started in 2008, her site has grown exponentially with information on all of the ins and outs of church accounting. She is the treasurer for her church of 37 years.
Table of Contents
I. Proper Procedures and Internal Accounting Controls I-1 II. What is Special About Accounting for Churches? II-15 III. How do I Select an Accounting System? III-29 IV. Contributions-Part I: Receiving and Recording IV-35 V. Contributions-Part II: Acknowledging V-42 VI. Contributions-Part 3: Other Topics VI-59 VII. Benevolence Fund VII-64 VIII. Paying the Bills VIII-70 IX. Reimbursement Policies and Procedures IX-78 X. Payroll-Part I: Basic Steps X-89 A. Terminology X-89 B. Forms & Publications X-91 C. Setting up the Payroll X-92 D. Summary X-99 XI. Payroll-Part II: Calculating & Filing XI-100 A. Tax Table Method XI-100 B. Percentage Method XI-101 C. State Tax Withholding XI-103 D. FICA-Social Security & Medicare Taxes XI-103 E. The Employee's Payroll Check XI-104 F. Posting the Payroll Expense XI-105 G. Other Taxes XI-106 H. Payroll Tax Deposits XI-106 I. Payroll Tax Filings XI-108 J. Year End Filings XI-112 K. Summary XI-115 XII. Payroll-Part III: Ministers and the IRS XII-116 A. Who is a Minister (for Tax Purposes) XII-116 B. Employee or Independent Contractor XII-117 C. Housing or Parsonage Allowance XII-118 D. Income to be Reported by a Minister XII-124 E. Minister's Business Expenses XII-125 F. Exemption for Self-Employment Tax XII-126 G. Tax Filings for Ministers XII-126 H. Designing a Minister Compensation Package XII-131 I. Summary XII-137 XIII. Budgeting for Churches XIII-139 A. The Budget Process XIII-139 B. Example Budget Spreadsheet XIII-141 C. Monthly Budgeting XIII-142 D. Forecasts XIII-144 E. Cash-Flow Analysis XIII-146 F. Summary XIII-146 XIV. Month-End Financial Requirements XIV-147 A. Monthly Processes for Complete Financials XIV-147 B. Bank Reconciliation XIV-147 C. Investment Account Reconciliations XIV-151 D. Generate Reports XIV-151 E. Summary XIV-156 XV. Year-end and Audit Issues XV-157 A. Forms W-2 and W-3 XV-157 B. Form 944, Employer's Annual Federal Tax Return XV-157 C. Form 1099 XV-160 D. Form 1096 XV-161 E. Year-end Donor Acknowledgements XV-162 F. State Filings XV-163 G. Audit Needs XV-163 H. Summary XV-165 XVI. Administrative Issues XVI-166 A. Basic Steps to Start a New Church XVI-166 B. Church By-Laws XVI-167 C. Organize the Office XVI-169 D. Record Retention XVI-171 E. In Conclusion XVI-173 XVII. Appendix XVII-174 A. Example Chart of Accounts XVII-175 B. Month-End Checklist XVII-183 C. IRS Website Addresses XVII-184 D. List of State Websites XVII-187