Blog

Part 1 – The Gathering

It’s that time of year, time to begin thinking about closing out the financial records for the current year and preparing for the new year. Most churches are on a fiscal calendar that corresponds to the calendar year-end. This is something you may want to consider changing in the future. And that is a discussion for a different blog! But year-end in December is rough because of the many church activities surrounding the observance and celebration of Christ’s birth and the fact that there is usually a limited staff available at this time of year.

So, where to begin. Mid-November is not too early to start thinking about your plan for closing out the year successfully. It’s time to start gathering transactional support, verifying payroll reports, and ensuring reconciliations are complete to facilitate a smooth year-end closing.

Processing Expenditures

Start now by encouraging staff and volunteers to get in all receipts for accountable expense reimbursements in and processed before December 15th. Of course, you will have some expenses to process for the last two weeks but minimize this.

Ensure that any vendor invoices are recorded and paid prior to year-end and that any checks issued have been recorded. Do you have W-9’s on file for all vendors who are sole proprietors or contractors? You will need these to prepare 1099’s in January.

Take the time to review your expense categories to ascertain that your expenses are properly recorded to the right ministries or expense categories.

Processing Donations

Remind your membership in early December that donations can be included in the current year only if:

• Received in the church office by 12/31, or
• Postmarked by 12/31 if mailed, or
• Processed in donor account by 12/31 if initiated by debit/credit card.

Ensure that any donations received are posted in the appropriate year.

If your church maintains a separate donor database, reconcile the total donor statement balance to the donations reported in the financial statement and review records for completeness and accuracy.

Pull information together as to donations made during the year that would fall into the quid pro quo category and be prepared to report the value received for the donation.

Reconciliations

Ensure in early December that all bank and credit card account reconciliations are up-to-date. Encourage staff to ensure any receipts for December charges are submitted in a timely manner.
If your credit card statement closes in, for example, mid-month, you should download transactions from the credit card on-line site for transactions from your December closing date to 12/31 to include in your current year expenses. These will be “unreconciled” transactions on your reconciliation but will be recorded as expenses in the proper year.

Staff Payroll

Consider having staff complete new W-4’s for upcoming year to ensure their withholdings are correct.

Review payroll journals to date and perform a reconciliation of benefits reported to expense and liability accounts as appropriate.

Ensure that a Housing Allowance/Payroll Reduction form, approved by appropriate church leadership is in place for the new fiscal year.

Good job! All of this preparation is going to facilitate closing your books at year-end! Are you keeping appropriate records at your church? Do you have a formal bookkeeping system? If not, why not? GoodBooks makes keeping good books affordable for every church. Contact us today!