Church Accounting

When most people think of accounting, they think of taxes. Those who are more versed in accounting may think of auditing or US GAAP. What about those people who just need to account for their church or small business? Luckily they need not memorize the IRS tax code.

The Basics of Accounting

Accounting most likely started as humans tried to gather useful information about their lives. A nomad may have used accounting to track where the animals were moving. A farmer to track how his crop is doing. And an army general to track war movements.

Nowadays accounting is thought of much differently. Instead of a useful tool, it is a burden. That is because so much of accounting is involved with compliance.

This train of thought doesn’t have to be the case for church accountants. They should be using church accounting software to track information that will aid the church. The church accountant can decide what is useful. Some ideas may be church donations, church attendance, or number of conversions.

Many churches use fund accounting to help track useful information. A fund is simply money that is set aside for a certain purpose. A fund is not a bank account. You can have one bank account and still have many funds.

Why Fund Accounting?

To understand why churches use fund accounting, it helps to compare them to a normal, for-profit organization. When you buy groceries at a local Food Market, you have no say over what the Food Market uses your money for. When you donate money to a church, you can tell them what you want the money to be used for. The church than sets aside a fund for your money.

Church Accounting Software

Because church accounting is different than normal accounting, a special type of software has been created. This software, called church accounting software, is used to easily manage the different funds a church has.