Your church's mission and focus should be about serving the
needs of its congregation rather than worrying about its money. But finances
are also an important part of carrying out that mission. And one of the best
ways to ensure that the church's finances aid its services rather than create
more problems is to work with an outside accountant on a regular basis.
While you likely don't need a full-time accountant for the
congregation's finances, the church should engage one on a regular basis for
specific reasons. Here are five of these situations.
1. To Perform a Checkup of Procedures
Many businesses have a regular audit by an outside
accountant to ensure that their financial statements meet generally accepted
accounting principles (GAAP). Occasionally, a church may need to have a
traditional audit to comply with loan terms or when required by a
covenant.
However, most churches are more in need of an audit that
focuses not on GAAP rules but on how it's protecting and managing funds. This
type of audit could assess your internal checks and balances, separation of
duties for fraud protection, cash controls, use of restricted funds, insurance
coverage, and account balancing procedures. The accountant will also offer
recommendations and adjustments.
2. To Set Up Accounting Software
Are you still entering things into books by hand? If so, now
is the time to update your systems. Accounting software specifically designed
for nonprofit entities is reasonably priced and accessible to all. It will
improve accuracy and budgeting ability, ensure no missed payments, and help you
cross-train staff so you always have accurate records. An accountant can help
you choose and learn how to use a system.
3. To Handle Annual Tax Obligations
Even a tax-exempt organization like a church has various
federal and state tax responsibilities. Most churches need to file an annual
Form 990 with the IRS and may have state obligations as well. If you have
employees, you will need to collect and remit payroll taxes. You likely must
provide tax receipts for donors. And certain income-producing ventures may need
to be tracked and checked for tax obligations.
Your accountant will help you complete all these
responsibilities correctly. They can often help you create an internal system
to handle the day-to-day work while engaging them at designated times of the
year to do the final stages, like filing with the IRS.
4. To Ensure Good Payroll Practices
If the church has employees or contractors, its leadership
should make sure that it's meeting all legal obligations regarding the
employees and contractors. From the beginning, an accountant can help you avoid
misclassification of independent contractors and create payroll records that
meet government rules. They will also aid you in managing payroll remittance
obligations. And you get help navigating the unique IRS rules for church
employees.
5. To Help You Learn to Budget
Planning ahead helps you meet the changing and growing needs
of your congregation and your community. Whether you want to build a new
church, fund a missionary trip, or just replace worn-out equipment, you'll need
to plan ahead to pay for various projects or they may never happen.
Budgeting, though, can be difficult even for professionals.
Accountants are trained in forecasting and budgeting, and they can help you set
contribution goals and decide how (and when) to deploy restricted funds or
not.
Where to Learn More
Could your church use assistance in any of these areas?
Whether you've had financial or legal issues already or you just want to assure
your congregation that their funds are used wisely, working with an independent
accountant could be an easy solution.
At Williams &
Associates Tax Services, our team of finance professionals is ready to
provide ongoing services or help with specific projects. Call today to make an
appointment.
