Using a certified public accountant (CPA) for your church finances can benefit your ministry in several ways. Depending on your needs, CPAs can be hired by the church as in-house staff, or services can be provided by a CPA firm. Consider these five reasons to hire a CPA for your church:
1. They understand current accounting practices.
CPAs are required to pass competency tests and meet strict licensing requirements in order to practice. In addition, they must stay up to date on current accounting standards. From daily bookkeeping to annual auditing, a CPA can also help you determine what services your organization may need.
2. They will prepare your financials using generally accepted accounting principles (GAAP).
Obtaining financial statements is recommended for every church, although the format and frequency may vary based on church size and the intended user, whether leadership, the congregation, or a potential lender. The advantage of a CPA is that they can prepare your financials using GAAP. This is a set of standards used in the U.S. to consistently report accounting information. Financials prepared using GAAP can be read by most financial institutions and help your church project a professional image. Quarterly compiled statements could cost as low as $350-$500 and are well worth the investment.
3. They can help you avoid payroll tax liability.
Without proper training and experience, it’s easy to improperly file payroll tax returns, which could leave your church with costly tax liabilities. Even if you currently use an in-house bookkeeper for most accounting, consider hiring a CPA for payroll.
4. They can help your church maintain accountability and protect against fraud.
A professional review or audit by a CPA will provide assurance on the finances of the church. At minimum, consider periodic reviews of internal controls and accounts susceptible to fraud or mismanagement. This is especially important if your church budget (tithes, missions, and building fund combined) has reached $1 million or more. An CPA firm can work with you to identify agreed-upon procedures for handling church funds and can assess your practices against them to ensure maximum protection.
5. They can help you qualify for a church loan.
Having a CPA perform periodic audits or reviews not only maintains accountability but may also be a requirement for obtaining a loan or grant. In addition, as mentioned above, GAAP prepared financials help your church project a professional image to potential lenders. In fact, a lender will often require this before they will consider you for a large loan. It’s something to keep in mind if you intend to finance your next expansion project. Click here for more information about ministry financing.
Although your church may not need the services of a CPA on a regular basis now, as you grow, hiring one will help ensure proper accounting, reporting, and compliance. It's a smart move for your ministry.
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