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Take the Guesswork Out of Church Finances with Outsourced Accounting

November 10, 2022 jill Blog
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By Sarah Barham

Even in the best circumstances, managing church finances can be daunting. Factor in complex tax reports, bank reconciliations and ever-changing IRS and state guidelines, and you can guarantee church staff is overspending valuable time on accounting processes that could be streamlined. Thankfully, there’s an alternative.

By outsourcing your payroll, bookkeeping, or a combination of services to a trusted third party, you can gain the freedom to focus on ministry — and potentially save time and money, too.

Experienced providers can handle everything from basic accounting to payroll and contribution tracking, financial reporting, accounts payable, bank reconciliations, and internal safeguards — all designed to lift the financial burden off church leaders’ shoulders.

How Outsourced Accounting Can Help

The first thing to consider is the security of your church’s information. Outsourcing provides an added layer of privacy and protection — not only for your church, but for donors, too. With multiple personnel assigned to manage your congregation’s day-to-day financial operations, outsourced accounting firms provide layered levels of review, creating the separation of responsibilities necessary to deter fraud and safeguard donor confidentiality. This separation is often difficult for churches to provide for themselves, since it can be hard to justify hiring multiple staff members to serve in financial roles.

That reticence to hire accounting professionals is another reason to outsource. Teaming up with an accounting firm ensures that only qualified experts are assigned to handle your church’s finances. Such a relationship provides access to highly trained accountants, attorneys and other relevant professionals that many ministries simply don’t have the resources to retain.

Outsourced accounting also guarantees real-time financial information and error-free reporting through powerful online bookkeeping and payroll software. This puts real-time information about your church’s finances at your fingertips, ensuring church leaders always have access to the information they need to make decisions.

Finally, outsourced accounting can be a more affordable option. Hiring a full-time or part-time employee comes with considerable expenses. Payroll tax costs can include an employer’s share of FICA, federal and state unemployment taxes, workers’ compensation, health insurance, retirement plans, onboarding costs, training, and providing office space and equipment.

When you outsource accounting responsibilities, you only pay for the services you need. What once might have been a full-time job can often be reduced to a part-time administrative position, cutting 30-40 hours of work per week down to 4-10 hours, depending on church size. Some accounting firms even provide customizable service options, enabling church leaders to pick and choose which services best fit their ministries.

What to Look For

It’s clear that outsourced accounting has advantages, but there are a few things to consider when selecting a provider for your church. For example, ministry experience is key — finding a provider with both accounting expertise and an understanding of how churches work.

While there are likely many respected accounting firms in your state, it’s harder to find one that has knowledge of ministerial operations as well as internal controls. Some accounting firms cater specifically to churches and ministries, and a few even operate as nonprofits, which often means additional savings over traditional, for-profit businesses.

It’s also important to choose a provider that has the time and resources to make your church a priority. Often, for-profit accounting firms will bump pro bono or discounted clients to the backburner during tax season or other times when staffing is limited. Make sure your provider can give your church their full attention on your schedule — not theirs.

One problem you don’t have to worry about? Location. COVID-19 has pushed many accounting firms to become adept with the technology required to maintain long-distance clientele. The ability to use audio or video conferencing software not only enables ease of service but provides access to a larger and more qualified pool of providers for your ministry to choose from.

Though the idea of moving your church’s accounting to a third-party provider might be difficult for some of your leadership, remember that outsourcing is all about balance and outcomes.

Juggling the spiritual and business sides of a church is a daily struggle. Outsourced accounting can alleviate an administrative burden, providing confidence that your congregation’s day-to-day financial activities are being cared for by professionals — freeing you to remain focused on ministry.

Sarah Barham is vice president of ministry accounting at WatersEdge Ministry Services, Founded in 1946, WatersEdge supports hundreds of Christian causes across the United States and around the world. Through biblically grounded giving solutions and ministry-focused financial services, the nonprofit organization helps individuals, families, churches and ministries transform lives with the Gospel of Jesus Christ.