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Communication & AccountabilityCommunication & Accountability
In The Eyes of God, and also of Man
Church Communication and Church Communication and Church AccountabilityChurch Accountability
• Communication• Not How Much but HOW?
• Creative• Inspiring• Challenging
• To higher Levels• Celebratory
• Consistent• Ministry Related
• Accountability• Accuracy & Truthfulness• Disclosure of all important data• Tell it like it is!
• Fiduciary Responsibility• Trust, responsibility• Actual or Perceived
Church Communication and Church Communication and Church AccountabilityChurch Accountability
This is a Manual of Procedures This is a Manual of Procedures for Communication and for Communication and
Accountability Accountability Also covering Church Accounting, Church Payroll Taxes, Expense
Allowances and Ministerial Compensation
Church AccountingChurch Accounting
• Receiving
• Counting Tithes and Offerings
• Depositing
• Disbursing
• Recording
• Auditing
Managing Your Churches MoneyManaging Your Churches Money
• God’s Money—Not the Church’s• Fiduciary Responsibility
• Policies and Procedures are Mandatory!!• Givers Perceptions• Public Perceptions• IRS Record Keeping• Errors and Omissions---THEFT
Money Management ControlsMoney Management Controls
• Budgets—See Separate Booklets• Policy Manuals—Written • Committees vs Individuals—Dual
Custody• Rotation of Duties, Vacations,
Separation, Training Ushers• Report Reconciliation's • Overseeing or Audit Committee
Money Management Components Money Management Components
• Receiving Procedures• Written In a Manual• Train Usher,
Counting Teams• Dual Custody• Check Cashing- NO!• Designated Giving-
Be Cautious• Security
• Counting Committee• See Separate
Booklet• Written Manual• Envelope Verification• Error Verification• Counting Report, Pg
17• Control Totals• Security
Money Management ComponentsMoney Management Components
• Depositing Procedures• Written Manual• Separation of Duties• Security• Bank Procedures• Florida Baptist Credit
Union
• Disbursement Procedures• Written Manual• Authorization• Documentation• Controls• Reconciliation• Security
• Petty Cash
Money Management ComponentsMoney Management Components
• Recording Church Finances• Written Manual• Accounting System
• Manual• Computerized
• Budget Controls• Audit Trails and
Procedures
• Reporting Church Finances--Individuals• Church Financial
Secretary Booklet• End of Year Giving
Reports• If Errors Present please
notify ???
• IRS• Reconciliation
Money Management ComponentsMoney Management Components
• Church Reports—Congregational • Financial Statements
• Income Statement• Balance Sheets• Designated Fund
Analysis
• Disbursements• Receipts• Special Reports
• Audits• External
• Expensive• Helps Develop
Procedures
• Internal• Audit Committee—
See Booklet• Co-op With Sister
Church?
Deductible Gift
Nondeductible Gift
Church Members
Pastor & Wife
• The Designated Gift
Other ConsiderationsOther Considerations
• Unrelated Business Income
• IRS 501c3
• Sunday School Classes with Separate Funds?
• Cash Money Management Accounts
• Political Action Committees?
• Real Estate Taxes?
Resource Material - The ChurchResource Material - The Church
• Managing The Churches Money
• Vital Signs
• Florida Baptist Convention Catalog
• Church Ministry Budgeting
• Solving The Church Budget Puzzle
• Communication & Accountability
Resource Materials- The ChurchResource Materials- The Church
• Financial Records For Churches
• Accounting Procedures
• Church Stewardship Ministry Team
• Values of a Financial Audit and/or Internal Auditing for the Small Church
• Building for The Future
External ResourcesExternal Resources
• Church Tax and Law Report• Call 800-222-1840 for a Sample Copy.• Every Church and Assoc should subscribe
• Christian Ministry Resources—Part of CTLR
• General Business Books and Resources
The Church is a huge
target for the criminal!
Church Payroll TaxesChurch Payroll Taxes
• Requirements
• Procedures
• Common Errors
EMPLOYER RESPONSIBILITIESEMPLOYER RESPONSIBILITIES
Obtain Form W-4(Submit Copy to State)
Obtain Form I-9File New Hire Report in Florida Withhold Income TaxesWithhold FICA and Medicare Taxes Issue Form W-2 by January 31
Kinds of Employee CompensationKinds of Employee Compensation
Current Compensation
Taxable Fringe Benefits
Nontaxable Fringe Benefits
Deferred Compensation
20 Factory Employee Test20 Factory Employee Test• Instructions• Training • Integration• Personal Service• Hiring, Supervising, and Paying
Assistants• Continuing Relationship• Set Hours• Full-time Work• Work on Premises• Set Work Order• Reports • Pay by the Hour, Week, or
Month
• Business and Travel Expenses• Tools and Materials• Investment• Profit or Loss• Work for More Than One Company at
a Time• Serving the Public• Right to Fire• Right to Quit
CONTROL
Top Ten MistakesTop Ten Mistakes1. Improperly classifying employees
as self-employed (independent contractors)
2. Failing to send a Form W-2 to each employee, minister and/or a Form 1099-Misc to certain nonemployees
3. Failing to include taxable fringe benefits (such as nonaccountable expense reimbursements, social security supplements, and “special occasion" gifts) in wages on Forms W-2
4. Including the minister’s housing allowance in wages on Form W-2
5. Failing to offer church employees available nontaxable fringe benefits
6. Failing to provide church employees with an accountable expense reimbursement plan
7. Funding an accountable reimbursement plan from employees compensation
8. Providing contribution receipts to members who donate their services to the church
9. Providing contribution receipts for donations designated to other individuals without proper organizational control
10. Failure by churches that operate, supervise, or control a private school to timely file an annual Certificate of Racial Nondiscrimination (Form 5578)
Expense AllowancesExpense Allowances
• Accountable Reimbursement Plans
• Tax Implications
• How To Do it Right
ADVANTAGES OF AN ACCOUNTABLE ADVANTAGES OF AN ACCOUNTABLE REIMBURSEMENT PLANREIMBURSEMENT PLAN
Avoids including the reimbursement in the taxable income of the employee
Avoids the possibility that the employee will be unable to deduct expenses because of the standard deduction
Avoids the reduction for Schedule A miscellaneous expenses caused by the 2% of AGI floor
Avoids the expense reduction caused by the Deason expense allocation rule
Avoids the statutory 50% reduction for meal and entertainment expenses
DISADVANTAGES OF AN ACCOUNTABLE DISADVANTAGES OF AN ACCOUNTABLE REIMBURSEMENT PLANREIMBURSEMENT PLAN
Employees must keep detailed expense records
The reimbursement plan cannot be considered as a part of an employee’s compensation package
The budgeted amount is not payable unless the expense amount is incurred and substantiated to the church
The church designated administrator of the plan must have full authority to deny reimbursement for any claimed (but unsubstantiated) expense
ACCOUNTABLE REIMBURSEMENT PLAN ACCOUNTABLE REIMBURSEMENT PLAN REQUIREMENTSREQUIREMENTS
Written Plan—see page 32 in Managing Church Money Booklet
Limited to Deductible Business Expenses Substantiate to Employer Within 60 Days the Following Items:
– Date Expense Incurred– Place Expense Incurred– Amount of Expense (may substitute standard
allowances and per diems)– Business Purpose of Expense
Return to Employer any Excess Advance
Within 120 Days
Ministerial CompensationMinisterial Compensation Current Compensation
Taxable Fringe Benefits
Nontaxable Fringe Benefits
Deferred Compensation
“Gifts”
THE CREDENTIAL HOOP• Licensed,• Commissioned, or• Ordained
THE PERFORMANCE HOOP• Ministration of Sacerdotal Functions• Conduct of Religious Worship• Administration of Religious Organizations• Teaching at Theological Seminaries
Ordained, Licensed MinistersOrdained, Licensed Ministers
• Are ALWAYS treated as Self-Employed for Social Security purposes
• Church salary is NEVER subject to income tax withholding
• Are MOST LIKELY, employees for Federal withholding of income taxes
Special Tax ConsiderationsSpecial Tax Considerations
Housing Allowance Exclusion - Sec 107 Self-Employed Status for Social Security - Sec
1402(c) Possible Exemption from Social Security Coverage -
Sec 1402(e) Exemption from Mandatory Income Tax Withholding -
Sec 3401(a)(9) Eligibility for Voluntary Income Tax Withholding -
Reg.. 1.3402(p)-1 Potential “Double Deduction” of Mortgage Interest and
Real Estate Taxes and as Housing Expenses for Housing Allowance - Sec 265(a)(6)
Minister’s Tax FormsMinister’s Tax Forms
• Schedule SE for Social Security Taxes
• Schedule A, not C for “business” expenses
• W-2 for Salary and not a 1099
• Estimated Tax payment forms 1040 ES, unless you have a voluntary withholding arrangement with the church
Gold Medal ResourcesGold Medal Resources
• Dr. Clarence Hackett, Director
• Bill Montgomery, Assistant Director
• FBC Stewardship Dept.• 1-800-226-8584 ext 3025
• Association Office and D.O.M
• Florida Baptist Convention Area Stewardship Specialist
My Stewardship MinistryMy Stewardship Ministry
• Christian Money Management Seminars• Church Accounting Consulting• Stewardship Sermons and Revivals
• Web page
• Biblicalstewardship.com
• [email protected]• Building for The Future Consultant