Proper bookkeeping is an important process for any organization, but for a religious organization, it is critically important. The church must adhere to specific tax guidelines with proper documentation, but it must also be accountable to the parishioners that support the church. Enlisting a virtual bookkeeping service like Dennison's CPA, PC is a convenient way to ensure you check all the appropriate boxes.
Churches must provide tax documentation to the IRS for their churches' financials and the people who give to the church. In terms of the church's affairs, the IRS requires a detailed account of the money received to the church and spent to ensure these transactions are in line with the tax-exempt status. You will also want to provide a record of donations that they can use on their own tax returns for parishioners. Therefore, keeping records is essential.
Fund Allocation Records
It is also essential to keep a concise record of how funds are allocated. Depending on the organizational structure of your church, the church may or may not need to inform the congregation when it wants to use a large sum of funds for a specific purpose, such as renovating an area of the church. A virtual bookkeeper will keep a clear record of how all the money is being used so that there are few questions about transparency.
Equally crucial to tracking how the church chooses to spend its money is a report on the church's expenses. While churches do not typically claim the title of a business, if the church wants to be successful, they need to track its expenses the same way a company does. Essentially, the church needs to ensure that its expenses are not greater than the sum of all its donations. A running tally of monthly, quarterly, or yearly expenses is a great way to stay on track.
Some churches operate other entities under their church organization, such as a childcare center or a church with a fully staffed office. It is critically important that the financials for these entities be kept separate from the church's affairs. If they are not separated, the church could face tax issues or mismanage church funds. Without proper bookkeeping, this task can be nearly impossible to achieve.
For more information about virtual bookkeeping options for your church, contact a bookkeeping service to learn more and determine which plan options are best for you.Share