For profit ministry is a business that sells a product or service and makes a profit. Young ministers starting for profit ministries generally operate from a do-it-yourself mentality handling everything from accounting to administration. More often than not, they aren’t aware of the consequences of poor bookkeeping or the importance of proper accounting structure.
Here are five accounting tips to aid in operating your for profit ministry.
- Don’t comingle bank accounts. One of the biggest mistakes a young minister makes is not keeping separate personal and business bank accounts. They comingle personal and ministry funds and often have poor recordkeeping for backup support. Separating accounts makes accounting for your ministry’s monetary activity easier during tax time. Moreover, “for profit” and “non profit” ministry financials should be kept apart as well.
- Track your expenses. Tracking expenses insures you are maximizing your deductions at the end of the tax year. It also allows you to budget for larger purchases throughout the year such as software upgrades, industry conferences, and expenses during slow periods.
- Record deposits – accurately. Correctly categorizing deposits will identify taxable income from other deposits. In addition, it will help you monitor any engagements that have a remaining balance and account for historical payments.
- Start off on the right foot – daily. The accounting function of your ministry needs daily attention. Find software or an app for your phone or tablet that fits your needs and use it! QuickBooks is a great software that offers both a desktop version for those who are always at a desk and an online version for those who are on the go. They also have an app for mobile devices. The Mint (www.mint.com) is another great option which has both online and mobile versions.
- Hire a part-time bookkeeper. If you don’t have the time or if accounting just isn’t your thing, hire someone. You may only need them a few hours a week, monthly, or quarterly for support. Any experienced bookkeeper or small business accountant should be able to assist. Keep in mind their cost and your budget during your search.