Much like businesses, churches receive money, spend money, purchase inventory, pay bills, and transfer money between banks. Keeping up with these daily, weekly, or monthly transactions will speed up your month-end closing process. Here is a quick breakdown of some of the most common tasks you will need to accomplish when doing your church bookkeeping.
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Enter Income and Expenses
You will need to track what Asset account each transaction impacts, the Income or Expense account category, and the Equity account.
Track Contributions and Prepare Bank Deposits
Make sure you track your contributions by fund, and note what part of your income is tax-deductible for giving statements.
Pro Tip: Always have two people count the giving received each week and prepare the bank deposit slip. This improves accountability and transparency that all contributions received were deposited.
Track the due date of new bills so you can more easily anticipate your cash flow.
Pro Tip: For good internal controls, choose a separate person to sign checks to confirm the amount matches the invoice or estimate, and is an approved expense.
When you have a transaction that is not a standard expense or deposit, a journal entry can help you keep track of it. For example, if you need to transfer dollars between funds or bank accounts, such as allocating a portion of your General Fund to your Missions Fund, you would note this in a journal entry.
Complete a Bank Reconciliation
Bank reconciliations are an important internal control for your organization. They are designed to reconcile your bank statement with the information in your bookkeeping. If your accounting software doesn’t accurately reflect your bank’s statement, it can make it hard to find errors and manage your church’s account balances. Most organizations perform them monthly, but that could vary depending on your needs.
Pro Tip: Have someone other than the bookkeeper check the month-end financials and bank reconciliation report to help spot errors. It is much easier to fix them if you catch them early.
Your Free Checklist
Having a monthly checklist can help ensure all financial transactions that affect your bottom line are accounted for. Setting a deadline for the month-end closing helps too. For example, close the month and run reports by the fifth of the following month. Here is a checklist of all the tasks to complete when closing out your bookkeeping each month.