Church Balance Sheet, a Statement of Financial Position
The church is a non-profit organization that has a distinct special way to handle their income and expenses. They are focused on beneficial activities for society rather than on maximizing profit. Furthermore, churches are excluded from income tax payment (they pay to state and property taxes). In the past, churches used separate checkbooks to keep the money for their ministries. Over the years, many creative ways have been developed to manage church financial (tracking assets and liabilities, calculating the total savings, and producing financial reports). One of them is a detailed church balance sheet.
The Statement of Financial Position
Since churches do not operate with owners, they apply the statement of financial position as a church balance sheet that uses the equation of “Assets= Liability+ Equity” to be the basis for the management of their finance besides showing the current balance of the church fund. In an easy way, you can say the mentioned accounting equation above in simple imagery like the total worth you have is equal to the things that you own minus things you owe.
Making a Balance Sheet for Your Church
If you are about to create a church balance sheet or just need to know how to make it, follow these simple steps below:
- Gain accurate information
Ensure that all of the information to be input into the balance sheet is verified so that it will result in accurate assessments.
- Include completed and detailed categories
A good suggestion is making your balance sheet is to involve all of the income and expenses calculation items. Doing a re-check will be better to make it clear and fixed.
- Utilize a table format
It is the best choice to help you to ensure the accuracy in the data or information input and calculations. In this case, choose Microsoft Excel or Google Docs if you want to work online and even make the sheet transparent for all church members.
- Categorize properly
Set assets, liabilities, and subdivisions as the main categories to classify the data you have. A proper categorization leads to an easy and accurate calculation of the income, expense, and saving to establish the church’s financial position.
- Spot the total
Highlight the total amount of income and expenses in different colors to make it easier to spot.
Tips to Maximize the Church Balance Sheet
Got your church balance sheet handled well? Now check these tips and make the sheet even better in supporting your church fund!
- Consider outsourcing
With a tight budget, usually, churches employ only a few staff having responsibilities for many roles in which they often push aside the bookkeeping to deal with a bunch of other church activities. Outsourcing is recommended rather than hiring new staff to cut down administrative expenses.
- Use balance sheet templates
A free ready-to-use balance sheet template is the best choice to make church financial management easier but still accurate and efficient rather than utilizing accounting software that may costs more. Both sheets and the software still work on the same basis anyways.