Best Church Accounting Software 2024

Policies and procedures around payment and bill pay keep individuals from making errors while keeping the church above reproach. Our favorite AP Processor for churches is BILL (formerly bill.com). If one person approves payments and signs checks, your church is at higher risk for embezzlement.

Churches should use fund accounting

Every ministry needs a budget regardless of the size of the church. An operating budget should be created at the beginning of the year. This budget is not set in stone and can change throughout the year as needed. An annual budget is a roadmap for the church to stay on track, meet goals, and stay financially healthy. No matter the organization—even churches—there should always be some internal controls and safeguards to prevent fraud.

Best for Church Project Financial Planning and Tracking

On the other hand, businesses focus on generating profits for the business owner or shareholders. Dedicated accounting software for your church will streamline your processes, reduce accounting errors, and save time on administrative tasks. There are fund accounting courses and degrees for CPAs and bookkeeping professionals. If your church has a dedicated bookkeeper, it may be helpful to have them take a professional course or gain certification.

Step 5: Train your team on all of the accounting processes that affect them

Fundraising events such as bake sales, charity auctions,  and special events can often require a bit more tracking. You will want to record the income from each event under a specific fundraising category. Keep detailed records of not just the revenue but also the expenses related to the fundraising efforts to measure the accurate profits. You can say goodbye to the stress of keeping track of scattered tithing envelopes as you simplify financial processes with accurate financial reporting.

• Its free plan offers unlimited income and expense tracking, key reports such as Profit and Loss reports, the ability to add unlimited collaborators, cash flow tracking and an intuitive dashboard.
• W-2 forms are also important for employees and payroll, as is Form 1099 for contractors.
• These voluntary cash contributions are the primary source of funding for many churches.
• If there isn’t a consistent process, bills may go unpaid or not have the appropriate oversight.
• But if that missionary leaves the mission field, and you don’t have an approval process to review your payment to them before it’s sent, extra payments to them are more likely to slip through the cracks.
• However, there are a few small differences between the two that we’ll cover in more detail later.
• Kristine Ensor is a freelance writer with over a decade of experience working with local and international nonprofits.

Church Accounting 101 = Keeping Your Money on Mission

Here is a list of best practices for managing your church’s books, which will help demonstrate accountability and protect your finances. In addition, be sure to read up on the IRS’s latest rules and regulations to supplement these best practices. Ask yourself the question, “Should I know how much money I’ve set aside for _____ ? While cash and check contributions are still important for many churches, they’re less significant than they used to be.

• Discover the art of creating an inspiring welcome speech for church services.
• This creates multiple ledgers within your church, which at some point must be consolidated to track your organization’s overall financial activity.
• Also, list extra financial capabilities your church needs, such as the ability to process payroll, maintain a CRM or categorize restricted funds.
• The “two eyes on every bill” rule keeps the church from overspending—or simply from the headache of having to ask for a refund.
• When it comes to accounting, churches and businesses operate in different worlds.
• These reports should be prepared regularly and reviewed by church leadership and finance committees.

Parable Church Accounting, an accounting service specifically for churches, faced significant challenges with manual expense management involving paper receipts, spreadsheets, and manual reconciliations. This process was time-consuming and error-prone, diverting leadership from their mission. QuickBooks is a well-known bookkeeping software for church accounting. It has several bookkeeping software versions, each tailored to church and accounting needs. Financial professionals should have a good understanding of the generally accepted accounting principles and the IRS requirements.

The pastor or other clergy member is frequently heavily involved in managing the church’s finances. They offer direction and leadership when it comes to making financial decisions, particularly when coordinating financial procedures with the goals and principles of the church. Pastors collaborate with other individuals and groups to efficiently handle the church’s resources. The congregation is more confident and trusting when the church finances are managed well. Members of the church are more committed and financially prepared to give when they perceive that their contributions are being handled sensibly and openly.

• The process of church accounting is most similar to nonprofit accounting, since every church is also required to reinvest all of its funds into the organization and its mission.
• From templates to tips, find everything you need to greet your congregation warmly.
• An alternative to accrual accounting is cash accounting, which entails recording income and expenses when they are received or paid.
• Since churches don’t bring in as much revenue as other businesses, budgeting can be even more crucial.
• This requires meticulous tracking to ensure that donations are used in accordance with donors’ intentions.
• It tracks income and expenses and ensures that money is collected and spent in a God-honoring and accurate manner.

Most business accounting software will mask funds as classes or categories to track income and expenses. However, it’s very difficult to find out how much money remains in each fund. We’ve highlighted all of the major differences church accounting best practices in our comparison of QuickBooks® versus fund accounting for churches. Instead of using business accounting products like QuickBooks®, you will likely benefit from true fund accounting software made specifically for churches.

• That leads into Step 6 … if you have a great payroll platform, that platform will typically file those forms on your behalf.
• Planning ahead of time means garnering early support from your church’s leaders and elder board.
• Shoeboxed is an expense & receipt tracking app that helps you get reimbursed quickly, maximize tax deductions, and reduce the hassle of doing accounting.
• Understanding these reports is vital for clear communication with both leadership and members.
• One more notable feature is FreshBooks’ highly customizable invoices.
• Their involvement promotes accountability and supports the mission and ministry goals of the church by ensuring that its financial resources are managed efficiently and openly.
• Utilizing budgeting software tailored for non-profits, such as Aplos or ChurchTrac, can streamline this process by providing tools for tracking income, expenses, and budget variances.

Accountability within the company is guaranteed by transparent financial processes, which make reporting regulations easier to comply with. Forming an impartial board or committee for financial oversight is another essential step. It comprises people with financial knowledge who are not directly involved in the day-to-day financial activities. However, we’ve found that most churches need at least some support when it comes to money management.