Looking for church accounting software can be tough. If you’re looking for the cheapest option out there, then QuickBooks® is probably on your radar. QuickBooks® for Churches may be one of the most popular accounting software options out there, especially when it comes to creating your chart of accounts. But it comes with limitations and annoying workarounds.
Your Church Chart Of Accounts
A chart of accounts is part of your organization’s foundation. It is one of the most important things you’ll need to set up to correctly record transactions and contributions, and to generate financial reports.
If you’re using QuickBooks®, there may not be an easy way to set up your church’s chart of accounts. Why? Because both large and small churches need accounting software that can break down a chart of accounts into funds. Churches use fund accounting, and QuickBooks® is a software built for businesses. Businesses don’t use fund accounting.
What Are Funds?
A fund is money your church receives that must be used for a specific purpose. Some of the most common examples are: mission funds, building funds, youth ministry funds, children’s ministry funds, or benevolence funds. Great church accounting software gives you the ability to not only create funds, but also track the income, expenses, and running balances of those funds.
The Problem With Business Software
In regards to your chart of accounts, the big problems (and workarounds) you will face when trying to use QuickBooks® for small and large churches are:
- Needing to set up separate asset accounts for each fund your church has (this can get overwhelming fast!)
- Needing to set up sub-accounts for each fund
- Creating a cluttered chart of accounts that won’t accurately reflect your real-life fund scenario
- Dealing with user error as a result of required workarounds
Setting up multiple checking accounts for each of your funds can get complicated quickly because most churches have many ministries and programs. In QuickBooks®, this would require you to create a totally separate asset account for each of your ministries or funds. Good luck!
Another way churches attempt to set up funds in their QuickBooks® chart of accounts is by setting up sub-accounts. This limits how to track funds, as it requires setting up sub-accounts under the correct asset account. This can get tricky if you have money in more than one checking account. For example, if you have money in a checking account for a specific fund, you’ll need to create a sub-account under that checking account. But if you also have money for the same fund that’s in your savings account, you’ll need to create another sub-account under your savings asset account. Plus, you’ll need to ensure those two sub-accounts are used for the same fund. Confused yet?
QuickBooks® For Your Church’s Chart Of Accounts Doesn’t Have To Be The Answer
At the end of the day, setting up your church’s chart of accounts shouldn’t be a hassle. You need fund accounting software that can easily create funds in your chart of accounts. It should also track the income, expense, and overall balance of your church’s funds.
You’ll want church accounting software that can easily help you set up reports and give you the tools to edit your church’s chart of accounts. Just like how each church is different, each church’s chart of accounts is different. You should cater your chart of accounts to your church’s exact needs and operating accounts.
What To Look For In Church Accounting Software
What to look for in any software that helps you build your chart of accounts:
- An easy way to add/edit all of your church’s specific accounts
- Easy navigation and great UI
- A way to track funds correctly (instead of annoying workarounds)
Here is a sample template of a chart of accounts. It’s based on a church with common assets, liabilities, equity, income, and expense accounts.
Remember, your church’s chart of accounts is crucial to accurately recording transactions and generating relevant reports. For more information, check out our comparison of QuickBooks® and an accounting platform designed specifically for churches.