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6 Questions To Prepare Your Church Finances For Tax Season

It’s April, which means that tax season is in high gear and accountants across the country are stressed. After your church finance team has spent countless hours combing through the numbers, the last thing they want to do is deal with the pressure and questions of auditing.

Yet, we’re amazed by the number of churches we hear about that haven’t established safeguards when it comes to providing accountability for their finances. 

With more and more transparency required in how churches manage money, it’s important to make sure you’ve created a solid financial system. Not only for the sake of your individual church, but also for the Church as a whole.

How can you prepare your church finances for tax season by creating safeguards for financial accountability?

Preparing your church finances for tax season and creating safeguards for financial accountability is crucial for compliance with tax regulations and ensuring that your church's funds are managed properly. 

By keeping accurate records, establishing financial policies and procedures, performing regular audits, and using accounting software, you can ensure that your church's finances are in good order and ready for tax season.

Here are six questions every church should ask to help prepare for tax season.

1. Do we use a financial management software system for bookkeeping?

This is the easiest way to maintain and monitor your church finances. Not only does using a financial management software make it easier on your accountant, but it also provides an added level of accountability when tracking the numbers.

2. Do we have someone outside the church staff who is responsible for reviewing the financial statements?

Having someone who is not on your church staff will help provide another layer of accountability. While it’s helpful to have someone with experience in accounting or bookkeeping, you need to find someone you trust who values integrity more than anything else.

3. Have we established specific policies and procedures?

By creating policies and procedures—from properly counting and recording the weekly tithes and offerings to handling an expense report for a church staff member—your finance team will know how to handle issues that arise.

If you’re unsure about how to write a policy or procedure for your church finances, one of our strategic ministry partners would be a valuable resource.

4. Are we maximizing the way we use our church management software?

By utilizing the contribution and donor management feature, your church management software can provide a comprehensive and growing list of financial reports that help you analyze donor trends and statistics. 

Most importantly, it can help you surface lapses in giving that often indicate a crisis or a family slipping through the cracks.

5. How can we be transparent with our members?

While you may not be required to provide an annual report, consider ways that your church can go above and beyond to provide an added level of financial accountability. 

Create a resource where your members can view a financial report any time they want. This will also help you prepare for any questions that may arise during tax season.

6. Should we consider using an outsourced solution for our church's bookkeeping needs?

It’s not unusual for a church to hire an outside source to review or assist with the church’s bookkeeping efforts. By finding an additional resource to review the numbers, you’re getting an extra set of eyes and an added level of expertise.

As you prepare for tax season, consider asking yourself and your team these questions.

How does your church prepare for tax season? 

What other levels of accountability have you created to safeguard your church’s finances?

And if you need any help from our Accounting Services, here is where you can get started.