....Another good reason to keep financial records is to make informed financial decisions. If you can pull up a report, you will be able see that your expenses are higher than they were in previous years.
Even if you have a church member who is a certified accountant or bookkeeper, hiring a specialist for your church's bookkeeping needs will likely be a large investment. We recommend that you make this an important priority. Three ways that investing in your church will benefit you are:
The IRS can impose severe penalties on churches for failing to classify and pay a worker with a 1099...which the IRS considers an employee.
An area of high risk for churches is the lack of internal controls. External auditors can reconcile bank accounts and track deposits and check them. This increases the safety of your congregation's finances.
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Avoiding this error in church bookkeeping is by taking the time to look at every person you pay for a service. You can then use the IRS guidelines (link below) to determine if they should classify themselves as employees with payroll tax withholding, matching or independent contractors.
It will make it easier to assure your congregation that their tithes, donations, and taxes are being used correctly. Congregants who know their donations will be used wisely are more likely than not to donate again.
Bookkeepers maintain the financial records of the church that includes income and expense records. They are supposed to keep records of the dates and amount of every transaction of the church.
Churches call the traditional balance sheet a statement of financial position. It uses the accounting equation “Assets = Liabilities + Equity” to show a snapshot of your organization's financial health. It also shows the current balance of each of your funds if you've been implementing fund accounting for your church.
How To Manage Church Records
Identify The Church Records That You're Going To Manage. Based on your local state laws you will need to figure out what records are imperative to keep. ...
Implement A Retention Schedule. ...
Establish Retention And Destruction Policies.