QuickBooks Church Accounting

QuickBooks is the most widely used accounting software among small businesses in North America. This has prompted some church leaders to ask:

"Can I use QuickBooks for church?"

Whether you're new to QuickBooks or have been using the program for an extended period, perhaps on QuickBooks Desktop, I'll guide you through all the essential information. This way, you can determine if it's the right fit for your ministry.

QuickBooks for Churches - Why Some Leaders Use It

QuickBooks stands as the definitive industry standard for business accounting. Despite its initial steep learning curve, business owners recognize that investing effort to master it pays off when managing budgeting or tax filings. Once QuickBooks is properly set up and its features are effectively utilized, you'll be amazed by its capabilities and the benefits it can bring to your organization.

QuickBooks (QB) will assist your church or nonprofit in handling payroll, organizing your chart of accounts, maintaining budget equilibrium, monitoring income and expenses, and can even produce contribution statements for your generous donors. It encompasses all the essential tools a busy church administrator or bookkeeper requires to effectively manage and steward your church's financial resources.

QuickBooks is widely recognized as a robust accounting tool, and coupled with positive word-of-mouth recommendations from friends and church members, it often piques the interest of many church leaders as an ideal solution. However, before contemplating implementing QuickBooks for church use, there are several important aspects that ministry leaders should carefully consider.

Church Accounting with QuickBooks: How Does It Work?

QuickBooks enables your church to allocate every dollar it receives into specified categories. So, whenever you receive tithes, you can monitor the allocation based on committee, program, or fund. This proves especially beneficial when your church takes a fund accounting approach.

This allows you to easily understand the church's available cash and what expenses it is addressing. Thus, when you need to make a case for support or present impact data, all the necessary information will be easily available through this tool.

Additionally, by using multiple user accounts with different access privileges, multiple individuals in your church can collaborate on the application simultaneously. This feature proves especially beneficial if you have volunteers overseeing your accounting tasks.

In conclusion, QuickBooks simplifies church accounting, allowing you to dedicate less time to financial concerns and more time to serving your community!

For Church Accounting - It's All About Funds

Before diving deeper into QB, let's discuss fund accounting. After transitioning into full-time ministry, I had to find a new approach to financial tracking.

What is Fund Accounting?

Fund accounting serves as an accounting system employed by churches and nonprofit organizations to monitor funds designated for specific ministry purposes or programs. It's tailored for churches and ministries since these organizations prioritize designated funds for specific purposes rather than focusing on assets versus liabilities.

Fund accounting places a higher emphasis on accountability rather than profitability. It meticulously monitors the sources and destinations of funds, optimizing their usage. This dedication to accountability ensures that the money is utilized for the organization's benefit and aligned with its mission.

Within fund accounting, each dollar is allocated to a specific fund and is exclusively utilized for that designated fund. For example, if a donor specifies that their contribution should support the organization's single moms ministry, the nonprofit is bound to allocate and use that money solely for that intended purpose.

Business Accounting

In a business setting, income can be allocated to any department or aspect of the organization as determined by the business owners. Every dollar acquired by the company can cover various expenses such as employee salaries, utilities, equipment upgrades, decor enhancements, or marketing initiatives like boosting a Facebook ad. As long as the business fulfills its tax obligations, the remaining profits can be utilized according to the discretion of the business leaders. Although publicly traded companies have additional oversight in managing their finances, the fundamental reality remains that businesses have the flexibility to allocate their funds based on their needs.

QuickBooks certainly reflects this reality in its accounting system.

Nonprofit Accounting vs Business Accounting

Nonprofits are held to distinct standards compared to businesses, and rightfully so. Donors require assurance that their financial contributions are directed towards a meaningful cause; otherwise, they may choose to support other initiatives. In churches, donors frequently designate their contributions to specific ministry funds such as missions, education, or building funds. It is imperative that the funds allocated to these programs are utilized for their intended purposes, and church bookkeeping must accurately reflect and uphold this principle.

Given that donors designate their donations to particular funds, it's essential to have a straightforward method for labeling each donation according to its intended fund and tracking the amount allocated to each fund. Personally, as someone who enjoys creating equations during my free time (yes, I know it's a bit unusual!), I initially managed this using Excel. However, when you also need to produce giving statements and keep a comprehensive record of your church's income and expenditures, using Excel alone can swiftly become a challenging task. I've mentioned this before, and I'll emphasize it again.

Effective Accounting Software

Your task, if you accept it, is to discover optimal accounting software tailored for churches. Look for one that places a priority on fund management, avoids the need for duplicating every transaction, and simplifies bookkeeping for religious organizations, eliminating the necessity for costly accountants.

While locating accounting software that aligns with your requirements might require some time and effort, it is a worthwhile endeavor. Being stuck with an expensive program that doesn't meet your needs is far from ideal. Although recommendations from others are valuable, conducting thorough research before finalizing your software choice is highly advisable.

QuickBooks Online Can't Track Funds

There is a considerable amount of misleading information circulating, my friends. I've come across multiple ministry blogs and various church software companies making inaccurate statements that QuickBooks Online lacks fund accounting capabilities.

This is incorrect. In reality, thousands of churches throughout North America effectively use QB to manage their fund tracking. I've personally engaged with hundreds of these churches, providing concrete evidence that it is entirely feasible.

Fund accounting with QuickBooks requires a solid understanding of how the software works. In QB, you'll need to:

• Enable Class tracking.
• Associate a class with each fund.
• Establish a dedicated banking sub-account for each fund.
• Generate a Profit and Loss report categorized by Class.
• Thoroughly review all income and expenses.

This process is manageable if you are well-versed with the software. Comprehensive setup instructions are available on their website if needed. However, if you encounter challenges and require assistance, access to direct support via phone typically requires a higher-priced account.

Pros of QuickBooks for Churches

Using QB for your accounting has a few nice perks:

• Enhanced communication with your accountant, streamlining financial discussions. For intricate church finances, this translates to cost savings in labor and reduces complications.
• Abundant free online resources, including videos and guides, simplifying QuickBooks usage.
• Nonprofits with a 501(c)(3) status can acquire QuickBooks Premier through Techsoup at a discounted rate, often priced below a few hundred dollars.

Cons of QuickBooks for Churches

Using Quickbooks products is not all unicorns and rainbows. Here are a few things you will encounter:

• The cost of QuickBooks Online can be high.
• QuickBooks has a notably steep learning curve.
• Human support is not included and comes at an additional cost.
• QuickBooks employs double-entry accounting, adding complexity that may not be necessary for churches without Accounts Receivable.

A Great alternative to QuickBooks

Church leaders require an accounting program tailored for churches right from the start. Many lack the time to learn and navigate a complex platform, especially if adjustments are needed for proper functionality. Fortunately, numerous accounting programs designed specifically for fund accounting are available, offering a much better fit for your needs.

If this situation resonates with you, referring to Capterra's 2023 Church Accounting Shortlist can significantly streamline the options and guide you to programs genuinely suited to your needs. During your research, seek a platform that incorporates essential features like memorized transactions, transaction attachments, and bank import capabilities. Emphasizing this point: be cautious of companies that impose additional charges for support, have high monthly fees, or present "setup" fees. These are significant warning signs to watch out for.

Frequently Asked Questions