Church accounting can be a challenge for churches, especially those that are just starting out. But sound bookkeeping and accounting remains a necessity, even with technology and user-friendly accounting software.
Understanding church accounting is key
When Steve Dawson started working with churches, much of the accounting work was done by hand.
Churches were just starting to use computers for spreadsheets and bookkeeping software. Not everyone was convinced that was a good idea, said Dawson, president emeritus of Chicago-based National Covenant Properties. And not every church had someone who understood both finances and how computers work.
These days accounting software is easier for churches to use and much more sophisticated. But churches still need someone who understands the unique aspects of church finances.
“That’s probably the biggest challenge for churches,” he said. “Do you really have someone who knows what they are doing?”
Knowing when to outsource church accounting
Finding the right person can be especially hard for small churches or for congregations that are just starting out. That’s why the Evangelical Covenant Church—the denomination served by National Covenant Properties—decided to outsource all the bookkeeping for its church plants.
“We’ve got a couple people scattered around the country who understand churches—and they handle 20 or 25 church plants at a time,” he said.
Those outsourced bookkeepers can help churches get their finances in order from the start. As a result, pastors can focus on building the congregation and not on making sure all the bills get paid and all the accounting is done. It’s one less thing for a church planter to worry about.
“All they have to do is worry about getting the church up and going and make a deposit with the offering,” he said.
Once the church is up and running, the outsourced bookkeeper can hand the finances back over the church. Or, the church can keep a long-term relationship with the bookkeeper.
“In most cases, the churches are continuing with the bookkeeping being outsourced,” he said.
Dawson also suggests that churches consider using a payroll service whenever possible. Those services can file all the paperwork that churches need to file for tax purposes. And they get the forms filed on time, he stressed. That’s one less headache for a church to worry about.
Portions of this article appear in “The Changing Dynamics of the Church Treasurer Role.”