Why Use a Church Accounting Software?
Why is it necessary to have a church accounting software instead of just using any conventional accounting programs? This question will undoubtedly come up when the church treasurer or anyone in the church suggests updating a church’s accounting system.
The reason as to why it is better for a church or religious organization to have a different accounting system and the accounting software customized to fit its needs lies in its status of being a non-profit organization.
A non-profit organization is defined as a group that aims to deliver goods and services without profit. Classified as non-profit groups are religious organizations and church-owned entities such as stores, clinics, adoption centers, schools, and cemeteries. Non-profit organizations can earn income because of their various activities. However, no member is allowed to get the profit or loss incurred from a certain activity. Usually, the assets of non-profit organizations come from people or groups that do not expect any payment in return. Because churches are non-profit groups, they enjoy tax exemption at the state, local, and federal levels.
People who give contributions to the church may opt to deduct them from their income tax. Majority of big contributions provided to the church include instructions on how the funds should be spent. A contribution may be used for scholarship fund, missionary activities, building a new church, renovating a church, or any church project or event. For these reasons, churches need an accounting system for managing their funds properly.
In the fund accounting system, funds are classified whether they are restricted or unrestricted. Restricted funds are from resources given for a specific purpose as spelled out by the examples given above. Unrestricted funds come from regular offerings, tithes, or donations and can be used for the general administrative and operational costs of the church. In the church’s accounting records, these funds and the disbursement of which must be clearly differentiated from the unrestricted funds and from each other.
Though it would be convenient to open a separate bank account for each fund, it is not required. It also might be more tedious in the long run to keep track of all the bank accounts as projects and donations are added to the list. This is where the need for a church accounting software comes in.
A church accounting software primarily allows easy and convenient accounting of church funds. This software is designed to meet the specific needs of a church’s accounting system. With an accounting software, various church funds are given their own bank account numbers. The accounting software offers an option to maintain individual cash flow entries under each account number of church funds. Apart from that, the accounting software can easily prepare and create reports for every fund. The financial reports can be accessed simply by clicking a button. So one can access and print the reports on some or all the church funds at any given time. That is why an accounting software designed for church accounting systems can be a valuable asset.