Accounting is an important and complicated part of any church. While financial management may be necessary in all cases, is it something that your internal team needs to handle on their own, or should you outsource it to a third-party accountant?

Let’s look at the pros and cons of outsourcing church accounting versus passing it off to a qualified professional — and consider which option is best for your ministry.

In-House Accounting in Church

In-house accounting takes place within the four walls of your church. It requires a competent team and the right tools to execute correctly. However, it is completely within reason for churches to invest in keeping their financial management and records on-site.

Every church is different, which means each ministry must decide if it makes sense to keep their accounting in-house or not. As with most organizational responsibilities, there are pros and cons to doing this yourself.

Pros

• In-house accounting is affordable: One of the biggest selling points here is that doing your own accounting is the cheaper option. It saves money that you can invest elsewhere in your ministry.
• In-house accounting is in your control: When you do your own church’s bookkeeping, payroll, and tax work, you maintain a close sense of control and oversight. Just make sure that you’re using good software that is up-to-date and tailored for churches. Having a professional support option is also helpful for complex questions.

Cons

• In-house accounting naturally restricts knowledge: Your job is to run a church. It’s hard to also keep up with the latest accounting news, regulations, and updates. Shortcomings in training or failing to notice the latest compliance requirements can lead to significant issues.
• In-house accounting is time-consuming: No matter how good your team is or how effective your church accounting software might be, it doesn’t change the fact that you need to put the time in. If you do your own accounting, plan on investing significant time in getting everything done.

There are positives and negatives that come with in-house accounting. Often, the difference boils down to things like the financial competencies of your team or how willing you are to tackle the stress of money management. 

The other option is to consider outsourcing your accounting. This comes with its own positive and negative considerations. Let’s look at them next.

Outsourcing Church Accounting

Outsourcing accounting is an activity that goes beyond bookkeeping. It passes off key responsibilities, such as tax considerations (which churches still need to consider), payroll management, financial planning, and compliance.

Once again, every church is different, and there is no one-size-fits-all answer for the outsourcing vs in-house accounting debate. Instead, let’s consider some of the pros and cons that outsourcing church accounting offers.

Pros

• Outsourcing church accounting ensures accuracy and transparency: Having a professional help you with your church finances brings a greater sense of accuracy and third-party transparency to a ministry’s money management. In addition, a professional is more likely to catch things like wasteful spending or non-profit tax deductions.
• Outsourcing reduces stress: Church leaders are already busy juggling a myriad of spiritual, emotional, and business responsibilities. Passing off something as overwhelming as accounting can reduce stress levels and free ministers and their teams to focus on what matters most: running their churches.

Cons

• Outsourcing church accounting comes with a cost: Delegating accounting may save time, effort, and resources. However, make no mistake that outsourcing is an expense. You should always prayerfully consider the cost and compare it to the savings before committing to a more comprehensive third-party accounting solution.
• Finding a good faith-based accountant isn’t easy: Most accountants think in business terms and are conditioned to work with for-profit finance. If you’re going to go the outsourcing route, you want to work with a professional who understands non-profit accounting and church priorities, in particular.

Things to Keep in Mind When Considering In-House and Outsourced Accounting

If you’re unsure whether in-house or outsourced accounting is the better option for your church, here are a few questions to help you make the right choice:

• How big is your church? A small church often only requires quality accounting software and a willing volunteer, whereas midsize and larger churches can benefit from things like firm-issued financials and dedicated third-party accountants.
• What is your team’s current accounting acumen? If you have a trained CPA on staff or a volunteer who is an accountant for their day job, software may be enough. If your team has limited knowledge, you may want to consider outside support.
• What is your ministry’s accounting track record? Has your church handled accounting well in the past? Could you benefit from a professional set of eyes going over your books on a regular basis?
• What budget are you working with? Again, it’s always wise to prayerfully weigh the costs and savings of in-house versus outsourced accounting and compare them to both your financial and time-based resources.

Use these questions to clarify how you should approach your church’s accounting.

Handling Your Accounting as a Church

Churches should never treat their finances lightly. Instead, take the time to evaluate your ministry’s size, staff, and accounting needs to decide whether in-house or outsourced accounting is the right choice for you.

In either case, Chaney & Associates can help. We are constantly updating our faith-based software to take advantage of the latest technology and stay compliant. This makes it efficient and easy for churches to keep their accounting in-house.

For those who feel the need to pass off their financial responsibilities to a trusted partner, our team of Christian CPAs can help. They consistently provide hands-on support for any church that needs it. Contact us, and together we can explore the best options for your church’s finances.