Many churches are often in need of guidance when it comes to matters of finances. Church Investors Fund recognizes the impact of every church’s ministry in advancing the Kingdom and the underlying importance of good financial stewardship. It is important to develop responsible, clear, and transparent practices and controls in Accounting and Bookkeeping for biblical stewardship.

Stewardship in Accounting

Scripture calls for stewardship among the body of Christ. The Church of Christ is in need of faithful financial stewardship that is transparent and trustworthy (Luke 16:10-13). It is important for churches to track their finances carefully as they seek to advance the Kingdom of God on Earth in a responsible way (Proverbs 27:23).

The primary reasons for maintaining a compliant accounting system are, first, to follow government recordkeeping requirements and, second, to provide leadership and congregations with the necessary financial information to assist in responsible stewardship of finances by providing transparency and accountability.

Most church ministries are funded by offerings and donations from their congregation. A proper accounting system will help provide assurance to congregations that their donations are being properly used. Donors value seeing how much income and what type of expenses the church has incurred to see if their funds are adding value to the ministry. Another important figure that donors look at is the Assets and Liabilities of a church to see if the church is properly managing that with which they have been entrusted and if it’s positioned to meet the needs of their congregation. By being able to provide this information to your congregation you are proving yourself to be a trustworthy steward.

A church must account for all income and expenses on a Profit and Loss report and for its Assets, Liabilities, and Equity on a Balance Sheet. Behind these reports are many transactions that have recordkeeping requirements that vary based on the type of transaction. Make sure to follow these legally mandated recordkeeping requirements as the federal government may want to audit the numbers in the previously discussed reports. If you are unsure of the requirements it may be a good idea to hire a CPA for a consultation.


Accounting is simply the process of documenting and recording financial transactions of the business operations —such as income, expenses, assets, or liabilities—and reporting the information in an organized manner. Utilizing accounting can allow a church to track and provide reports as to whether contributions exceeded expenses or vice versa on an annual basis. Accounting also keeps track of the value of all assets that the church may own and any liabilities that the church may owe. Using the accounting formula Assets = Liabilities + Net Assets, a church may be able to find their net worth, or financial value the church has added over the years.

The two main reports that churches, lenders, and governments need to see are Profit and Loss reports and Balance Sheets. When balanced, these reports can help improve the credibility of the ministry when looking to borrow or build, etc.

Profit and Loss

Income – Money received from non-funding purposes such as contributions, donations, offerings, rental income, etc. All income from designated offerings should be properly categorized.

Expenses – Money paid by church for costs it incurs to operate and function. Amounts should match up with carefully documented receipts.

Balance Sheet

Assets – Property that is owned by the church such as land, buildings, vehicles, bank accounts, etc. Most assets require depreciation. It is recommended to consult with a CPA for more information on how to properly categorize your assets.

Liabilities – Financial obligations of the church, such a loan or credit card.

Equity – This is net value of the church after all liabilities.

A proper accounting system always starts with clean “books”, or complete and accurate bookkeeping. The church must be able to maintain a Balance Sheet, or Statement of Financial Position, listing all Assets that belong to the church as well all liabilities the church may have and any equity remaining that is created as a result of positive income over the years.

All contributions that come in physically via offering collection or donation box need to be accurately recorded and documented by designated staff utilizing proper accountability measures such as a minimum of two or three collectors and an independent recorder, with no single individual tasked with reporting and depositing funds. All contributions, including any online or direct contributions, need to be reported on a regular basis.

Expenses should also be documented with corresponding receipts and made within the framework of the approved annual budget. Both contributions and expenses are reported on the Statement of Activities, what is more commonly referred to as the Income Statement. This statement reports the annual activity of the church in income and expense and—most importantly—whether the church experienced a surplus or a deficit of contributions over expenses.

A proper budget is prepared by using financial information from the past years to forecast incoming funds and spending for the upcoming year.

Internal controls are mechanisms that are typically documented in a policy outlining the responsibilities and delegation of duties that are fundamental in maintaining the integrity and security of church finances. Some of these controls include: bank controls that include a required minimum of two signers on any transaction, carefully recorded minutes of church leadership or congregation meetings, delegation of duties including separate individuals being responsible for deposit and reporting, proper authorization and approval, computer and system controls, and accurate financial reporting. Having internal controls such as those briefly mentioned above will help ensure transparency and accountability in matters of church finance. Having proper internal controls also helps identify and prevent any wrongdoing by having independent double checks in areas where money is coming in or leaving the church’s bank. If your church does not have proper internal control methods in place speaking to a CPA or trusted advisor may be a good option to implement necessary controls.

Consider Your Needs

Churches vary in size and scope of ministry and operations. Complex ministries such as schools, thrift stores, camps, coffee shops and cafeterias usually need industry specific accounting and bookkeeping software, while ministries that have simple operations might be able to get away with a cheaper, more generalized accounting and bookkeeping software.

General facets of accounting include staff payroll and benefits, tracking income/expenses, purchases of assets/liabilities, properly classifying designated funds, itemizing donations to apply to correct donors for tax receipt purposes, etc.

Taking time to identify all the different needs your church has will be helpful in figuring out what type of software you may need.

Accounting software needs to vary from church to church based on operations and size. For churches that are smaller and simpler in size and operations, basic software such as Microsoft Excel can be a starting platform to track finances. For mid-size churches, a general accounting software such as Intuit’s Quickbooks can be helpful in bookkeeping and producing financial statements such as a Balance Sheet and an Income and Expense statement. For larger and more complex ministries, specialized church accounting software such as Aplos Church Accounting and FellowshipOne can be helpful in more comprehensive accounting for donation receipts and offerings, as well as generating reports and accounting for designated funds.

Help! (Accounting Stories)

A church was getting ready to build an addition to their current building and decided to apply for a loan. The lender requested 4 years of financial statements. After a few months of back and forth the lender was not able to provide financing for their building project because their finances were not properly reported in complete financial statements. The church was committed to this construction project, so they decided to hire a Certified Public Accountant (CPA) to fix their reporting. After three months, with the help of a CPA, the church was able to clean up their books and put together financial statements that the lender required. They reapplied for financing and were approved by the lender. However, the cost to build went up by 3% over that time period and the church was forced to apply for a bigger loan and bring more money to the table for the project to account for the rising construction costs.

This can be avoided by regularly preparing and maintaining your accounting and reporting.

The contents of the Church Resource Center are for general information and educational purposes only. The reader should not rely upon the material or information on the website as a basis for making any business, legal or any other decisions, and should not make any decision without first obtaining professional legal and accounting advice specific to your circumstance. Church Investors Fund will not be held accountable for any legal actions the reader may take. 2021 Church Investors Fund. Terms of UsePrivacy PolicyDisclaimer.

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