Should You Purchase Church Accounting Software?
Accounting For Churches
Most people believe that accounting equals April 15th (the tax deadline date). Others who are more experienced with accounting know about auditors and U.S. GAAP. There also exists a certain contingent who just want to do accounting for their church.
Accounting in a Nutshell
Accounting in its basic form was about collecting useful information. Hunters used accounting to effectively hunt and kill animals. An army general used accounting to see how his troops were doing. A banker used accounting to track his funds.
Nowadays accounting is thought of much differently. Instead of a useful tool, it is a burden. That is because so much of accounting is involved with compliance.
Luckily church accountants don’t have to use church accounting software as simply a compliance tool. They can use the software to track information that will make their church better. Whether that information be church attendance, church donations, or retention.
To track helpful information, most churches use what is called fund accounting. The word “fund” means a reserve of money set aside for some purpose. Fund doesn’t necessarily mean a separate bank account. A church may have one bank account with hundreds of funds.
Why do Churches Use Fund Accounting?
To understand why churches use fund accounting, it helps to compare them to a normal, for-profit organization. When you buy groceries at a local Food Market, you have no say over what the Food Market uses your money for. When you donate money to a church, you can tell them what you want the money to be used for. The church than sets aside a fund for your money.
Fund Accounting Software
Because church accounting is different than normal accounting, a special type of software has been created. This software, called church accounting software, is used to easily manage the different funds a church has.