If we know one thing about being a church leader, it’s that when your feet firmly hit the ground as you spring out of bed every morning, you exclaim excitedly, ‘I can’t wait to work on my church's chart of accounts!’
We kid. That is unless numbers and accounting and charts of accounts for your church are actually your jam. In that case, more power to you!
But for those of us mere mortals who would rather do, well, just about anything else, the ever-menacing thought of handling bookkeeping for our church just doesn’t really inspire us.
And that’s putting it mildly.
But we’ve got a little secret to share: It doesn’t actually have to be difficult. Or painful. Or hard, even. In fact, we’re here to tell you that you can do it – and we’re going to tell you how. But just keep this between us since, well, you know, we provide bookkeeping services as one of our core offerings.
So don’t say we never did anything for you.
What: A Church Chart of Accounts
The chart of accounts for your church is – at its simplest – just a list of all your financial accounts. But ‘list’ doesn't exactly have the same ring or panache – and certainly doesn’t evoke the same intimidation as ‘chart of accounts,’ now does it?
‘Chart of accounts:’ Demystified. You don’t scare us. Not anymore, anyway.
Your ‘list’ is created to meet your church’s unique needs and the accounts listed therein represent the eight typical financial buckets of your church, plus one bonus ‘help’ bucket:
- Assets, or what you own: 1,000 range
- Liabilities, or what you owe: 2,000 range
- Equity, or overall worth: 3,000 range
- Income, or the money you make: 4,000 range
- Personnel Expenses, or the money you spend on people: 5,000 range
- Facility Expense, or the money you spend on your facilities: 6,000 range
- Ministry Expenses, or the money you spend on ministry: 7,000 range
- Outreach Expenses, or the money you spend on outreach: 8,000 range
- Things to leave to the professionals, like your bookkeeper: 9,000 range
See? Not so bad. Your church’s chart of accounts is really just a glorified list of every classification of incoming and outgoing money. Now, we’ve got to set it up.
How: A Church Chart of Accounts
Another secret? The above section was half the battle. Here, you just have to start organizing every account in the right place. So here are some pro tips as you create your church’s chart of accounts:
- It’s easier to add accounts than to delete them
- Don't use exact names – like Amazon Prime, for example. Instead, use generic account categorizations – like ‘Dues and Subscriptions’
- Define the levels of your assets, liabilities and net assets to determine the sort and subtotal on your statement of financial position – or balance sheet – report
- Determine how you’d like the accounts grouped on your financial statements
- Define the levels of your income, expense and dedicated accounts to determine the sort and subtotal on your statement of activities – or income statement – report
- Leverage sub-accounts to detail donations and expenses out
- Collapse sub-accounts to run more generalized reports
- Use tags to designate and identify certain things you want to track and run reports on
- Be sure all checks, invoices and deposits are in sequence and in your checkbook register
- Pay bills using vendor invoices, not statements
You’ve Got This. And We’ve Got You.
Setting up your church chart of accounts lays the foundation that all other accounting will build upon, and is necessary for providing you and your congregation the financial stewardship your church needs – and deserves.
Need a little extra help? Still not sure where or how to start? Like we said – we’ve got you. Here is a sample chart of accounts for your church to help you take the first step to ensure financial health and vitality for your church today.