3 key essentials to better stewardshipbudgeting, Business Activity, FINANCE, Financial Services, IRS Compliance, Latest News, LEADERSHIP Monday, January 4th, 2016
By Christy Qualle
As your church settles down from Christmas celebrations, things are no doubt getting into full swing for the person managing all your church’s accounting. If that person is you, you likely still have several time-sensitive tasks on your horizon that need to get finished by January 31. Putting a good system in place can help keep you on track — and that’s what we’ve outlined for you below.
We encourage you to look over these three essential things that (we’re confident!) will help keep your church finances in order. After all, you want to be a good steward of your church’s funds, right?
#1: Required filings for churches
While we all know churches are tax-exempt, they are still required to follow several important reporting procedures to help your donors, contractors and staff file their annual returns by April 15th. This means all of these forms are due by January 31 so those individuals have time to prepare their return before tax time rolls around. Here’s a quick list of the included forms you’ll need:
- W-2s for all employees, including ministers
- Form 941 for all employees that have taxes withheld
- 1099 Returns for Independent Contractors to whom you paid more than $600 over the past year
- Contribution Statements for donors that have more than $250 in giving –but it’s a good idea to send to all of those who have supported your church, no matter the contribution size.
#2: Starting your bookkeeping fresh for the new year
For the majority of churches that start their fiscal year in January, closing the bookkeeping for the year and reviewing the financial position of your church is something that your accountant is probably in the middle of right now. If you would like some tips on how to close your books, download the free eBook from Aplos for Year-End Closing Procedures for a Church.
#3: Evaluating your church accounting software
The start of the fiscal year is also the perfect time to evaluate how your accounting software is meeting the needs of your organization and if it is time to upgrade. How do you know if you need to find a better solution? Here are some good signs that it is time to look for new options:
- Did you struggle to get the financial reports you needed to determine your church’s financial position and did the ministry use all of its funds last year?
- Can you accurately track how much money is available in each of your designated funds without using manual spreadsheets or multiple bank accounts?
- Are you spending valuable time manually tracking donations by individuals in a separate spreadsheet, rather than it being integrated into your system?
- Does your church manage multiple entities or plan to start a new program in the coming year that will require a separate set of books?
A strong accounting program is vital to demonstrating good stewardship. If you aren’t able to pull the reports you need or you have been wishing you had an easier solution, it might be time to explore your options. The beginning of the fiscal year is the absolute best time to test out a few new systems to see if there is a better fit for your organizations needs. Here are a few helpful hints to evaluating a new solution:
- Make a list of features you desire, and note which are essential and those not as important
- Review your budget to determine your ideal price range and what amount you do not wish to exceed
- Research product reviews for church accounting software options
- Request a free trial of your leading choices. For example, Aplos offers an unlimited, 15-day free trial for its church accounting software.
Once you have chosen new accounting software, you will need your chart of accounts, starting balances, and all your contacts. Before you toss that old system in the trash, be sure to export your historical reports and keep them on file so you can still reference them as needed. Now you are ready to hit the ground running with a fresh start on your finances for 2016!