How to Do Church Accounting: 7 Steps for Small Churches
Learn how to do church accounting step by step: set up funds and accounts, record gifts and bills, reconcile the bank, and give the board clear reports.
How to Do Church Accounting, Step by Step
If you just became your church's treasurer, you may be wondering how to do church accounting without an accounting degree. The good news: church accounting follows a simple, repeatable routine. Once the setup is right, most of the work is recording what came in, what went out, and checking it against the bank each month.
Here are the seven steps, in the order you will actually use them.
Step 1: Understand What Makes Church Accounting Different
Businesses track profit. Churches track stewardship: where gifts came from, what they were given for, and whether they were used as intended. That leads to two ideas you will use every week:
- Funds. Money is separated by purpose, such as general operations, missions, or building. Gifts given for a specific purpose must be used for that purpose.
- Donor records. Each gift is recorded under the person who gave it, because donors need a year-end contribution statement.
Our article on church fund accounting explains funds in more detail.
Step 2: Set Up Your Chart of Accounts and Funds
The chart of accounts is the list of categories you use to label every transaction: tithes, offerings, salaries, utilities, and so on. Keep it short and clear. A volunteer should be able to pick the right account without guessing. Start with our sample church chart of accounts, then add the funds your church actually uses.
Step 3: Record Gifts Every Week
After each service, two counters should count the offering together and sign a count sheet. Then:
- Record each gift under the donor's name, with the date, amount, and fund
- Record online gifts from your giving platform the same way
- Make the bank deposit and confirm it matches the recorded total
See our weekly offering workflow for a detailed checklist.
Step 4: Pay Bills With Approval and Records
Every payment should have a reason, an approval, and a receipt or invoice. Record each expense to the right account and fund. A few habits prevent most problems:
- Pay by check or electronic payment, not cash
- Require a second approval for larger payments
- Keep receipts with the transaction, either on paper or scanned
Step 5: Reconcile the Bank Account Every Month
Reconciling means confirming that your records match the bank statement. It is the single most important habit in church accounting, because it catches errors, missing entries, and bank fees early. Our guide to bank reconciliation for small churches walks through it.
Step 6: Close the Month and Prepare Reports
Once the bank is reconciled, the month is closed. Most boards want three reports:
- Balance Sheet: what the church owns and owes, and fund balances
- Income vs. Expense: what came in and went out this month and year to date
- Budget vs. Actual: how the church is tracking against its budget
Our month-end close process article shows a simple routine.
Step 7: Handle Year-End Tasks
In January, the treasurer usually prepares donor contribution statements, payroll forms for staff, and an annual report for the congregation. Keeping clean records all year turns this from a weeks-long project into a few days. Use our year-end checklist so nothing slips.
Should You Use Software or Spreadsheets?
A very small church can start with spreadsheets, but they get harder to manage as gifts, funds, and reports grow. Church accounting software ties donations, funds, and reports together, so you enter something once and every report reflects it.
ChurchBooks3 was built for volunteer and part-time treasurers. It handles donation tracking, fund accounting, check printing, and board reports, and every new trial includes a free 30-minute training session with a service manager. You can learn more on the How It Works page.
Frequently Asked Questions
Can a volunteer do church accounting? Yes. Most small churches rely on volunteer treasurers. A clear routine, two-person counting, and monthly reconciliation matter more than accounting credentials.
How much time does church accounting take? For a small church, a few hours a week for gifts and bills, plus a few hours at month-end, is typical once the system is set up.
Do churches need an annual audit? Not always, but many churches have an internal review or an outside review each year. Ask your denomination or board what is expected.
What is the most common church accounting mistake? Skipping monthly bank reconciliation. Small errors grow into big ones when they go unnoticed for months.
Start a free 30-day trial of ChurchBooks3, with no credit card required.