QuickBooks for Churches: Your Free Financial Management Guide

Worker at a church using QuickBooks for churches

Churches need a reliable accounting system. With 66.58 percent of the market share, QuickBooks is among the most popular accounting software tools, but is it right for churches? 

QuickBooks for churches can be effective if you use a suitable version and set it up correctly. This article will explain all you need to know about QuickBooks for church needs, ensuring it’s optimized for your organization.  

  

Table of Contents  

 

  

Selecting the Right QuickBooks Version for Your Church 

Church admin trying to figure out which QuickBooks for churches to use

Choosing the correct QuickBooks version will give you a higher success rate. Here are some factors to consider.  

QuickBooks Online vs. QuickBooks Desktop 

QuickBooks for nonprofits is available online and on desktop. Let’s consider the pros and cons of each: 

  • Accessibility: The QuickBooks online system can be accessed by anyone from anywhere, provided they have the passcode information. QuickBooks Desktop for churches is typically restricted to one user. Desktop may not be as convenient, but it gives you more control over your data and may be preferred for security purposes.  
  • Features: QuickBooks Online for churches offers various AI tools that can be used to provide insights, generate emails and predict activities. Desktop provides more advanced inventory management, sales orders and highly customized reports. The online version may be intuitive and offer more church needs, but mistakes can occur without human oversight.  
  • Integration: 83 percent of organizations view integration as one of their biggest priorities. So, how do QuickBooks’ online and desktop systems measure up?  Because the desktop works locally and independently, it does not integrate well with other programs. QuickBooks Online offers more integration functionality.  
  • Cost: QuickBooks Online is more affordable than the desktop version.  

Nonprofit Editions and Discounts 

One primary complaint you may hear about QuickBooks is that it’s not ideal for churches. However, QuickBooks Premier Nonprofit Edition may be more suitable. It offers many typical QuickBooks features like invoicing and nonprofit bookkeeping solutions. However, it’s also set up for fund accounting, a commonly used method by church nonprofits. It also helps you organize the information you need for your Form 990 and comply with tax regulations.  

The church accounting software program is available in desktop and online versions. You can choose from: 

  • QuickBooks Online Plus (5 users) 
  • QuickBooks Online Advanced (25 users) 
  • QuickBooks Premier Desktop (1 user) 
  • QuickBooks Premier Desktop (3 users) 
  • QuickBooks Enterprise Nonprofit Desktop (30 users) 

Prices vary, but you can get a QuickBooks nonprofit discount when you order through TechSoup, an organization that provides technology for nonprofits, charities and libraries.  

 

 

How to Set Up QuickBooks for Church Accounting 

Once you decide QuickBooks for churches is the right system for your organization, you need to begin setting it up on your computer. Here's what’s involved.  

Setting Up a Church-Specific Chart of Accounts 

The first step involves physically setting up the account. To do this, click the Gear icon and select ‘Chart of Accounts’ under the company section. You may also click the Lists menu from the menu bar and click Chart of Accounts from the dropdown.  

Once inside, you can select 'New’ on the upper right-hand side of the screen to create a new account. You can name the account, the account type and add other details.  

But which accounts should you create? Churches typically have five main account types as follows: 

  • Assets 
  • Liabilities 
  • Net assets 
  • Revenue 
  • Expenses 

These can be further broken down into subcategories. For example, you may create additional accounts under expenses such as rent and utilities.  

You must also assign unique account numbers to each account. Typical account numbers are as follows: 

  • 1000-1999 for Assets 
  • 2000-2999 for Liabilities 
  • 3000-3999 for Equity/Net Assets 
  • 4000-4999 for Revenue 
  • 5000-5999 for Expenses 

Numbers are further assigned based on subcategories. For example, an interest expense may be 5000—a rent expense maybe 5010 and so on.  

This video will provide more insight into the QuickBooks chart of accounts.  

 

Configuring Classes and Tags for Fund Accounting 

Tags are customizable labels that allow you to track your money. While you can’t tag journal entries and transfers, you can tag transactions like invoices, expenses, bills, customers and items. You can add as many tags as you would like to a transaction, but you can only choose one tag per group.  

To create a tag group, you must: 

  1. Go to Settings and select Tags 
  2. Select New and then Tag Group 
  3. Name the Group and select a color from the dropdown menu 
  4. Hit Save 

If you are working on an invoice, you can assign a tag as follows: 

  1. Select Add 
  2. Select one of the groups and add the tag or create a new tag to add 

You can also get insights from your tags.  

  1. Go to Settings and select Tags 
  2. Find the group you want to run the report 
  3. Select Run Report in the Action column 

Classes also aid with finance tracking. They are ideal for grouping income and expenses for various needs. They can also track specific items. Here's how to turn on class tracking: 

  1. Go to Settings 
  2. Go to Account and Settings 
  3. Navigate to Account, then Categories 
  4. Select Edit 
  5. Turn on Track Classes and Save 

To classify a fund, you must: 

  1. Go to Settings  
  2. Go to All Lists 
  3. Navigate to Classes, then New 
  4. Enter the fund name and click Save 

When entering fund transactions, you can assign a class to transactions by selecting the appropriate income or expense line field.  

These two videos provide more information on using tags and classes on QuickBooks: 

 

 

Integrating Donor Management Systems 

Churches may also consider integrating QuickBooks with their donor management system. Doing so:  

  • Syncs donor information to keep data up to date 
  • Centralizes donor information for convenient oversight 
  • Reduces errors that may occur when information is transferred manually 
  • Automates recurring transactions like invoices and payment reminders 
  • Makes it easy to run reports 
  • Ensures compliance 

 

 

How Can Churches Benefit from Using QuickBooks Online? 

QuickBooks for Churches offers several benefits, including robust features, scalability, simplification and customization. Here’s how it can help your organization.  

What Features Does QuickBooks Offer for Managing church Finances? 

  • Donation Tracking: Donor tracking software ensures all donations are reported and accounted for, maintaining transparency. It also monitors financial health, aiding with church budget management.  
  • Fund Accounting: Fund accounting makes it easy for churches to track and report how they use their money, ensuring accountability to donors. With just 32 percent of Americans saying they trust churches, reporting metrics can go a long way.  
  • Reporting: Reporting allows churches to share financial information with donors and other stakeholders. It also gives them an overview of their financial health.  

Is QuickBooks Suitable for Small and Large Religious Organizations? 

Yes, QuickBooks offers optimal scalability, making it suitable for religious organizations of all sizes. You can start with a small QuickBooks product like QuickBooks Premier and transfer to a more extensive system like QuickBooks Enterprise Nonprofit as your organization grows. You can also customize your system with various add-ons.  

How Does QuickBooks Simplify Church Bookkeeping and Financial Reporting? 

QuickBooks simplifies church bookkeeping services by automating processes and generating essential reports. Its tags, accounts and classes allow you to track every transaction. The system's real-time reports help you better understand your organization’s financial well-being.  

How Does QuickBooks Cater to Church Specific Accounting Needs? 

QuickBooks offers many features that cater to specific church needs. Users can enter funds in various accounts, such as tithes, offerings and restricted funds. The customized charts of accounts, transaction tagging and donor tracking further support church needs.  

 

 

Can QuickBooks Handle Both Donations and Regular Income Tracking? 

QuickBooks for churches is versatile in providing donations and regular income tracking. Here’s how the system works: 

Recording Tithes, Offerings and Contributions 

Churches typically set up separate accounts for tithes and offerings tracking. They can record these donations using the following step-by-step process.  

  1. Navigate to Sales on your left sidebar 
  2. Select Create Sales Receipt 
  3. Go to the Customer field and choose a donor from your customer list or add a new one 
  4. Select the Donation income account from your Chart of Accounts (e.g., Tithes, offerings or donations) 
  5. Add the donation amount 
  6. Click Save and Close 

Tracking Restricted and Unrestricted Funds 

Churches must also keep track of restricted and unrestricted funds. Restricted funds are designated for a particular purpose, such as building or a specific program. Unrestricted funds can be used more flexibly.  

Here are some nonprofit accounting best practices for tracking restricted and unrestricted funds: 

  1. Establish accounts in your Chart of Accounts to distinguish between restricted and unrestricted funds.  
  2. Use classes to track overall restricted and non-restricted annual activity.  
  3. Use separate accounts for grant tracking.  

 

 

What Are the Advantages of Using QuickBooks Online (QBO) for Church Accounting? 

QuickBooks Online offers many advantages for church organizations, including the following:  

Accessibility and Collaboration 

As an online system, QBO can be used by anyone at any time, provided they have permission. This feature makes it ideal for collaboration. Team members can work separately or together on various accounting projects, boosting efficiency.  

Streamlined Integration with Donor Management Systems 

QuickBooks integration for churches is another advantage. The cloud-based program can easily integrate with donor systems, ensuring a streamlined approach to data management. It centralizes information, reduces errors and automates systems.  

 

 

Best Practices and Common Pitfalls for Churches Using QuickBooks 

QuickBooks offers various benefits for churches, but best practices must be implemented to avoid common pitfalls. Here are some to consider.  

Implementing Internal Controls 

Internal controls are the processes churches and other organizations use to ensure their accounting system is accurate and compliant. Examples include: 

  • Transaction and Activity Reviews: To ensure accuracy and compliance, activity should be monitored through reconciles and reports. This system ensures mistakes are caught early before leading to more significant issues.  
  • Access Controls: Systems should only be accessible to necessary personnel.  
  • Task Division: Multiple people should be involved in the accounting and decision-making process to ensure no individual has a complete say in financial outcomes.  

Unfortunately, a Keller-Owens report reveals that 62 percent of churches stated that their accounting and finance staff could not identify the absence of needed controls, much less implement internal controls. This lack of awareness could be why fraud is so prevalent in church organizations. Internal controls are necessary for transparency and organizational purposes.  

Developing and Monitoring Budgets 

QuickBooks offers various tools, such as reports that reveal an organization's financial health and templates that can be customized to help the church reach its economic goals. These tools should be utilized to ensure churches spend their money wisely.  

Avoiding Common Mistakes 

Here are some common church accounting mistakes and how to avoid them.  

  • Data Entry Errors: QuickBooks online may be automated, but data entry errors can still occur. These are typically identified and corrected through reconciliation.  
  • Failing to Use Fund Accounting: Fund accounting is necessary for church financial systems. Without it, systems will be disorganized, breeding a sense of mistrust. If your organization isn’t using church fund accounting, consider an update.  
  • Income Revenue Confusion: Sometimes, amounts may be recorded correctly but in the wrong account. Regular reconciliations can also catch and correct these mistakes.  

 

 

Is QuickBooks Cost Effective for Nonprofits and Faith-Based Organizations?  

Churches often operate on a limited budget. They must consider if QuickBooks is an economical option for their church’s needs. Here are some things to consider. 

What Pricing Options are Available for Churches Using QuickBooks? 

The QuickBooks pricing plan is as follows: 

  • QuickBooks Online Plus (5 users, 1-year subscription): $99 per month 
  • QuickBooks Online Advanced: (25 users, 1-year subscription: $235 per month 
  • QuickBooks Enterprise Nonprofit (Desktop, up to 30 users): $150 per month 

Does QuickBooks Offer Any Discounts or Free Trials for Religious Organizations? 

You can find lower prices through Tech Soup as follows:  

  • QuickBooks Online Plus (5 users, 1-year subscription): $75 per month 
  • QuickBooks Online Advanced: (25 users, 1-year subscription: $160 per month 
  • QuickBooks Enterprise Nonprofit (Desktop, up to 30 users): $130 per month 

QuickBooks also offers a 50-percent discount for six months and a 30-day free trial to nonprofits and churches. Buffer provides a 50-percent discount on upgrades for nonprofits and churches.  

 

 

How Does QuickBooks Handle Donor Management and Tracking Donations? 

QuickBooks offers practical ways to handle donor management and track donations. Here are some to consider.  

Can QuickBooks Manage Both Online and Offline Donations? 

QuickBooks can manage both online and offline donations. The church financial software can integrate with donor management systems to automatically record online contributions. Offline donations can be entered manually and assigned to the appropriate account, whether a tithe, offering or another type of donation.  

How Does QuickBooks Help with Generating Donor Reports and Tax Receipts? 

QuickBooks can quickly generate donor reports. Simply set the type of donation you’d like to track and the desired timeline and hit enter. The system will create a report to be shared with donors and stakeholders for full church financial transparency.  

The system can also create tax receipts for donors. Use the Donor Receipt feature to customize the desired format and message. QuickBooks will send them out automatically based on the information it has in its system.  

You can also download receipts and send them by email. The system will generate a copy you can keep for your records.  

 

 

What Payroll Features Does QuickBooks Offer for Churches? 

QuickBooks also supports church finances by offering a simple church payroll processing system. Here's how it works.  

How Can QuickBooks Streamline Payroll Processing for Church Staff? 

QuickBooks offers several features that support the church’s payroll processing. They include: 

  • Clergy Housing Management: QuickBooks provides a specific church accounting system for clergy housing allowances that may be treated as cash payments or in-kind benefits. It also calculates relevant taxes.  
  • Time Tracking Integration: The software includes a time tracking tool that records workers’ hours, ensuring optimal accuracy.  
  • Multiple Pay Types: QuickBooks can calculate payments for various pay types, including stipends, salaries and per diems.  
  • Automated Tax Calculations: The system will automatically calculate state and federal payroll taxes, ensuring compliance.  
  • Direct Deposit: Direct deposit increases employee satisfaction by preventing paycheck delays, a very real issue for 76 percent of respondents surveyed in a Getting Paid America survey. QuickBooks' direct deposit system can deposit money directly into an employee’s bank account, avoiding potential dissatisfaction.  
  • Reporting and Analysis: Church financial reporting can measure aspects of pay, including tax deductions and overall expenses, so churches can better understand their spending activity.  
  • Compliance Management: QuickBooks can automatically generate tax forms to help churches stay compliant.  

Does QuickBooks Handle Clergy Specific Payroll Requirements?  

QuickBooks helps handle clergy-specific payroll requirements by providing tools for paying clergy. It allows users to exempt clergy from payroll taxes. To do this, you must: 

  1. Select Payroll, then Employees 
  2. Select the clergy from the Employee List and select Edit Employee 
  3. What are an (Employee’s) Withholdings? Click Edit 
  4. Select Social Security, Medicare, FUTA or State SUI boxes as required in the Tax Exemptions Sections.  
  5. Press Save and Done 

 

 

Where Can Churches Learn How to Set up and Learn QuickBooks? 

QuickBooks is fairly intuitive, but it requires a learning curve. Thankfully, various resources will help you set up and learn QuickBooks. Here are a few to consider.  

How to Set up QuickBooks for Churches 

QuickBooks setup for churches may be the software's most complicated part. This video provides a clear explanation that ensures a successful result.  

 

If you found the video helpful, you may want to explore the host’s complete playlist, which offers other helpful QuickBooks guidance. Check it out at the link below: 

 

Getting Help from Volunteers 

You may also solicit help from volunteers with QuickBooks training. Congregation and community members may be willing to assist in the setup process and teach your staff the basics.  

Online Forums 

Several online forums address QuickBooks issues. QuickBooks has a support community where members ask and answer questions. They can help steer you in the right direction.  

 

 

What are the Key Differences Between QuickBooks for Churches and Church Management Software? 

If you research faith-based financial management software options, you will notice that many have financial capabilities. So, are they similar to QuickBooks? While they have some similarities, they are not the same. Here are some differences to be aware of.  

  • ACS Technologies: ACS Technologies gives QuickBooks a run for its money because it offers various religious organization accounting functionalities but claims to be more suited to church needs. In addition to accounting, it provides features like engagement help, modern giving tools, community analytics, mission trip planning and general church management.  
  • Planning Center: Planning Center does not provide an accounting platform. Instead, it helps with event and volunteer management and offers online giving tools.  
  • Powerchurch: Powerchurch’s Plus package includes an accounting platform comprising a general ledger, bill paying, income management support and payroll. It also offers check-in for child security and attendance and mailroom for bulk mailings and data conversion.  
  • Church Windows: Church Windows offers a fund accounting system and payroll capabilities to keep your church compliant and organized. It also helps you manage your church calendar.  
  • Concordia: Concordia offers various products and many provide accounting features. Church 360 and Church Ledger assist with financial management. Other programs help with membership management and website creation.  

Although many of these church management software programs offer accounting capabilities, having one central administrative software system for finances may be best. QuickBooks could be the ideal system.  

Regardless of your choice, you can’t go wrong working with Vanco. Vanco streamlines online giving and record-keeping with QuickBooks and other church management systems to support efficient management.  

 

 

Final Thoughts

There are good reasons to choose QuickBooks for churches, including its ubiquity in financial accounting and bookkeeping software. This makes it easier for many churches to learn it, especially if someone within the church is familiar with the program. However, it wasn’t built specifically for churches and lacks the features congregations need to grow. For this reason, churches should at least consider church management software before committing to QuickBooks for their church.  

Here are a few your church should explore:  

 

 

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