When is the Right Time to Hire a Bookkeeper?

By Raul Rivera

Pastor John started a small church in his living room, with just a handful of people gathering each Sunday to worship. Over the next two years, the church experienced remarkable growth, reaching 50 attendees. Initially, the growth was manageable within the confines of Pastor John’s home. The church family expanded steadily, with 75 people regularly attending services.

As the number of congregants increased, it became clear that the home setting was no longer sufficient. The church began renting a hotel conference room to accommodate the growing number of worshippers. This new setting allowed for more structured services and provided a sense of stability as they continued to welcome new members. They hired three musicians to play on the worship team and a part-time children’s pastor. Now, the church board believes that it is time to pay the pastor a housing allowance.

This growth brought new challenges, particularly in managing the church's finances. With the church being too small to justify hiring a full-time financial officer and too large to rely on volunteers, Pastor John found himself in what he called the "pivotal moment in growth." This phase is a test of the character and integrity of the church's leadership. Many churches experience an increase in the pace of growth, only to find that they have not done the preceding work of preparing for that growth, and they fizzle out. It’s why the average church in America is less than 100 people.

The church's current focus isn't on how to keep expanding its numbers but rather on how to sustain growth in a responsible and transparent manner. By prioritizing integrity and compliance, Pastor John’s church aims to set an example for others, demonstrating that growth is not merely about numbers at any cost but about maintaining a solid foundation that will sustain growth.

3 Signs It’s Time to Let StartCHURCH Keep Your Books

1. When your books keep getting more than 30 days out of date: Keeping up-to-date books is very important. Knowing how much cash is available and how much is in a lockbox, such as building pledges or other restricted funds, is crucial. I know of a church that got into serious trouble because its growth caused it to spend beyond what had come into the church's general fund. In a matter of two years, they spent over $150,000 from the building campaign. That was restricted money and could not be spent on anything except purchasing a building campaign.
   
   
2. When your volunteer keeps asking for help: One of the best ways to know it's time to hire a bookkeeper is when your volunteer bookkeeper keeps getting more added to their plate. At first, it's exciting and awesome to see the church grow. In every Sunday service, new people are added to the church, which means spreading your volunteer base thinner and thinner. That's when the volunteer bookkeeper realizes they are spread too thin. I often see the pastor's spouse keeping the books and working late into the night, trying to make sense of the finances. This is on top of helping the church grow and keeping a full-time job. You may not hear your spouse say the workload is getting heavy, but you can see it in their eyes.
   
   
3. When the books get complicated: Nothing will complicate your books quicker than growth. As the church grows, many things will become increasingly harder to track. The following are just a few challenges that a growing church will face.

Seven Examples of Complicated Books   

1. The purchase of a car that requires financing: Creating the proper accounts in the church’s chart of accounts is important. Recording the portion that reduces the principal and properly tracking the interest can get tricky.
   
   
2. Putting the pastor on payroll: Whether the pastor is employed full-time or part-time at the church, getting it right can make the difference between the pastor owing taxes or getting a refund. Did the church set up the housing allowance the StartCHURCH way? We call it the StartCHURCH way because, even today, many churches do not know how to fully take advantage of this excellent benefit, forcing the pastor to leave money on the table every tax season.
   
   
3. Paying the pastor and staff and the complexities of Section 4958: Has the church implemented a compensation agreement in compliance with Section 4958?
   
   
4. Paying vendors: Are they incorporated? Are they not? Do you know when to issue a W-9 form, a 1099-MISC, or a 1099-NEC?
   
   
5. When your church has cash, but you do not know how much can be spent on day-to-day expenses: This one is complicated. I often see churches with over $50,000 in cash, but very little of it is available for day-to-day expenses. The problem comes when the church doesn’t know that it is not available. This happens when the church has money in its building campaign or missions fund that must be used for those purposes only. Having a good balance sheet or Statement of Financial Position will quickly show what is available.
   
   
6. Receiving stock or crypto donations: Has anyone ever wanted to donate stock or Bitcoin to the church? While this is not currently common, it is happening with growing frequency. Properly recording stocks in your church books can get tricky.
   
   
7. Putting non-ministerial people on payroll: Once a church puts a non-minister on payroll, it must deduct Federal, Social Security, and Medicare taxes and file quarterly 941 forms. Usually, the church also has to open an account with the State Department of Labor and keep track of unemployment insurance.

How StartCHURCH Can Be Your Bookkeeper

Now that you understand the complexities and challenges that come with managing a growing church's finances, it's clear that having a dedicated bookkeeper is crucial. At startCHURCH, we specialize in providing comprehensive bookkeeping services tailored to the unique needs of churches. Our team of experts is well-versed in handling everything from payroll and tax compliance to managing restricted funds and preparing accurate financial statements.

By partnering with StartCHURCH, you can ensure that your church's financial records are kept up-to-date and fully compliant with state and federal regulations. This allows you to focus on your primary mission—ministering to your congregation and growing your church—without the burden of financial management weighing you down.

Let StartCHURCH be your trusted partner in maintaining financial integrity and transparency so you can continue to grow responsibly and effectively. Contact us today at 770-638-3444 to learn how we can support your church's financial needs.

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