These are the signs your church may need a bookkeeper.
- The purchase of a car that requires financing: Creating the proper accounts in the church’s chart of accounts is important. Recording the portion that reduces the principal and properly tracking the interest can get tricky.
- Putting the pastor on payroll: Whether the pastor is employed full-time or part-time at the church, getting it right can make the difference between the pastor owing taxes or getting a refund.
- Paying the pastor and staff and the complexities of Section 4958: Has the church implemented a compensation agreement in compliance with Section 4958?
- Paying vendors: Are they incorporated? Are they not? Do you know when to issue a W-9 form, a 1099-MISC, or a 1099-NEC?
- When your church has cash, but you do not know how much can be spent on day-to-day expenses: This one is complicated. I often see churches with over $50,000 in cash, but very little of it is available for day-to-day expenses. The problem comes when the church doesn’t know that it is not available. This happens when the church has money in its building campaign or missions fund that must be used for those purposes only. Having a good balance sheet or Statement of Financial Position will quickly show what is available.
- Receiving stock or crypto donations: Has anyone ever wanted to donate stock or Bitcoin to the church? While this is not currently common, it is happening with growing frequency. Properly recording stocks in your church books can get tricky.
- Putting non-ministerial people on payroll: Once a church puts a non-minister on payroll, it must deduct Federal, Social Security, and Medicare taxes and file quarterly 941 forms. Usually, the church also has to open an account with the State Department of Labor and keep track of unemployment insurance.
First published on StartChurch.com. Used by permission.