Most people who end up keeping a church's books did not set out to. A member with a head for numbers agreed to help, or an office administrator inherited the file. If that is you, or if you sit on the board and want to know what you are asking of that person, this is the job described plainly: what happens each week, each month and at year end, and where church books part ways with business books.
What the IRS expects a church to keep
IRS Publication 1828 says all tax-exempt organizations, churches included, are required to maintain books of accounting and other records. It names the usual ones: general ledgers, receipts and disbursements journals, payroll records, banking records and invoices, along with minutes and organizing documents. It also says there is no specific format. The church picks the system, and the test is whether the records explain where money came from and where it went.
The weekly and monthly work
Week to week, the job is recording what came in and what went out.
- Record the offering. The signed count sheet and the deposit are entered, split by fund. The counting itself is covered in counting and depositing offerings.
- Record electronic giving. Platform payouts are matched to the bank, with fees recorded separately. See recording online giving.
- Post gifts to giver records. Each identifiable gift goes onto the giver's record with its date, amount and fund.
- Enter and pay bills. Each bill is approved by someone other than the person who records it, then coded to an expense account and a fund.
- Handle reimbursements and card receipts. A receipt and a ministry purpose sit behind every one. See reimbursing church expenses.
Month end is where the books are proved. Every bank and card account is reconciled to its statement, payroll is entered, fund balances are checked against cash, and leadership receives reports. The full sequence is in the month-end checklist for church books, and the reports themselves are described in what a monthly financial report for leadership should include.
The year-end work
- Contribution statements. IRS Publication 1771 describes the written acknowledgment a giver needs for any single contribution of $250 or more. Most churches meet that with an annual statement; see what belongs on a year-end contribution statement.
- Payroll year-end. Wage statements for staff and information returns for anyone else the church paid, prepared by whoever handles payroll filings.
- Housing allowance. The board's written designation for the coming year, made before the allowance is paid. See pastor housing allowance records.
- Next year's budget. Built from this year's actual figures; see how to build a church budget.
- Closing the year. December reconciled, fund balances carried forward, and the records filed where the next treasurer can find them.
Difference one: funds
A business has one pot of money and asks whether it made a profit. A church holds several pots at once: general giving, gifts donors gave for a stated purpose, and amounts the board has set aside. The books have to show each balance separately while the cash sits in the same bank account. That is fund accounting, and it is the largest single difference. Start with restricted, designated and general funds, then see how the church chart of accounts keeps funds and accounts apart.
Difference two: giving records
A business tracks customers because they owe it money. A church tracks givers because it owes them an accurate record. The giving records live in a second system, often church management software, and they have to agree with the deposits in the books. When the two are compared monthly, January is routine. When they are compared once a year, January is a reconstruction project.
Difference three: clergy pay
Ministers are generally treated differently from other employees for Social Security and Medicare, income tax withholding and housing. IRS Publication 517 sets out those rules. How they apply to a particular pastor is a question for the pastor and the church's tax adviser, not the bookkeeper. The bookkeeping job is narrower: set payroll up to match what the board approved, and keep the written record behind it. Church payroll basics explains what that looks like on a pay stub.
Difference four: the readers are volunteers
A business owner reads their own profit and loss every month and learns its shape. A church board is made up of volunteers who see the numbers for a few minutes at a meeting, and membership changes every year or two. Reports have to be short, laid out the same way each month, and written so a new board member can follow them at a first meeting. The same turnover is why written procedures and internal controls matter more in a church than in a business of the same size.
What bookkeeping does not cover
Bookkeeping produces accurate, reconciled records and reports. It does not include tax advice, an audit or financial review, legal advice or investment advice. Those belong to a CPA, tax adviser or attorney, who works faster and at lower cost when the books are in order.
If you have just taken the role, the first 90 days for a new church treasurer puts all of this in order. For how the same work looks when an outside bookkeeper carries it, see church bookkeeping.
