When you are starting a church from scratch, you’ve got to be able to develop all the teams necessary to function. And, on top of that, you’re starting every team from the ground up.

One particular area where church plants and even small churches get into trouble is in the area of church finances. This is an area that I feel that we as a church are constantly trying to improve and make better. There are all kinds of problems churches can get themselves into when they don’t have proper financial procedures. They can get in trouble with the IRS, put someone in a position where it is very tempting to take money, or make it way too difficult or cumbersome to make purchases and deal with needed items.

I definitely don’t have all the answers, nor am I a lawyer or accountant. If you need expert advice, you’ll need to talk to those who are license in this field. However, here are several things that we have learned in the process of developing our own financial systems.

Financial Principles of a Healthy Financial Church Process

First, you have to develop your financial process with both of these principles. If you focus too far on either one of these, you’ll have issues.

Ease of Use, Efficiency, and Speed

As churches grow, it becomes really easy for the organization to drift into complexity. For example, take a look at government tax code. Every year around this time, you can usually find me pulling out my hair trying to do my taxes. As if taxes aren’t hard enough already, clergy taxes are even more ridiculous. Don’t be like the government! Make sure your financial system is not too complicated that it requires a ridiculously large amount of people to function. It needs to be streamlined and efficient. If you have bills you need to pay or purchases that you need to take care of, you want to be able to deal with those immediately. This is good from a stewardship perspective and from a missional one. What does it look like when the church can’t pay its bills on time?

Accountability and Security

The easiest, quickest, most efficient ways of dealing with finances is having one guy do everything, whether it’s the pastor or a treasurer. The problem is it has no accountability, and is terribly dangerous for a church. First of all, a pastor should never have that kind of authority even if he’s a great guy. Also, you’re putting the finance guy in a position to where he may be tempted. Let’s say this guy is the treasurer, and his wife had major health issues putting his family in serious debt. Because he is the only one that touches the finances, no one would know if he were to take a thousand dollars here or there.

Or, what if your finance guy dies tomorrow? Then, no one knows anything about your financial process. The church is hurt because they never multiplied leadership on the financial team. There should never be just one guy. A good financial structure has checks and balances protecting the church and those volunteering. When there is accountability, someone on the outside can’t accuse someone of wrongdoing.

So, what does a good financial structure look like? How do you structure your finances as a church plant or as a small church? Well, it has to be scaled based on the size and time of the plant.

0-15 People

The first is at 0-15 people. You may have a core team helping you launch or it may just be the planter and his family. At this small a number, it’s really difficult to find people that can provide accountability to your process. You have to think outside the box a little bit.

Enlist the help of a partnering church to do accounting for you.

An established church probably already has the right financial procedures put in place. They are paying leases or mortgages, utilities, payroll, ministry expenses, etc. If a partnering church is willing to come alongside of you by offering to handle your contributions, checks, payroll, and taxes, it provides relief to the planter and allows the church plant to wait until they have the right people in place.

You should still be cautious in making sure the partnering church is the right fit. You’re going to want to find a church that truly does have the right financial procedures in place and will provide accountability to the finances but will not “interfere” in the vision of the plant. What I mean by this is let’s say the partnering church does not like music that has guitars, bass, and drums but the church plant does. And, the church want to purchase music equipment. The partnering church should not be able to veto the purchase of music equipment because it does not like the music style.

However, not all planters will be able to find a partnering church that can do this. If they can’t, then they’ll need to set up accounting for themselves.

Setting up their own account.

  • Federal EIN#. Before you can set up your own account, you’ll need to set up your free Federal EIN#. You’ll need to go onto IRS.gov and set it up.
  • Incorporate. If it were me, I would set up a non-profit corporation for tax purposes and protection of your members and get your EIN# through that classification. A corporation is a tax structure that leaves assets in the hands of the entity of the corporation. Also, it protects the members from lawsuits. Let’s say someone sues the church. If you are not a corporation, all the members are liable to be sued.
    To incorporate, you need to have Articles of Incorporation that define your non-profit way of functioning, your members, and your board of directors or board of trustees. Some churches will be structured with elders, some with trustees, and some with a board of directors. However you structure it, make sure your language is the same across the board. Also, your Articles of Incorporation don’t need to have all of the information of how you function. You can delineate all of the ways you function in your bylaws.
  • Have a board of directors or trustees. Your board will be able to speak on behalf of the corporation to the government. If your church were to be sued, the board would be the representatives to speak to lawyers, be present in court, etc. The board also is to look over contracts and can sign legal documents on behalf of the church. Make sure that these people are not related and that they are trustworthy guys. It’s a pretty big responsibility. Since you are just starting out, those people may not be around. You can have your board be people that are in different parts of the country, and use Skype or Google Hangout for your board meetings.
  • Have minutes to set up a bank account from your board. Your board needs to have a meeting where they record in the minutes that the decision has been made to establish a bank account. The bank you are opening your account with may want board minutes, your Articles of Incorporation, Federal EIN#, and possibly your bylaws. Make sure you have all those available.
    If it’s just you, make sure you have others on your team (friends, mentors, business people, etc) who can provide financial accountability, be able to do withholding for taxes, good bookkeeping, etc. Also, as soon as possible, make sure you have those around you locally who can sign and write checks. So, it’s not you only as the planter having to do everything.

At Least 10-15 People

Once you hit the point where you have 10-15 people, you can start adding proper checks and balances to your financial procedures. There are two main areas you’ll need to work on: income and expenses.


For your income, you need a way of receiving funds. Typically, this is your weekly offering, checks from contributors, and online giving. We take all of our checks that come in the mail and put them into our weekly offering. We have a team of counters that will count the money, send the deposit numbers and contributor information to our contributions secretary, and then one of the counters will deposit the money. The deposit amount needs to match the numbers that the counting team sends to the contributions secretary providing another check of accountability. Since we are a church plant with a rented facility, we have to deposit the money that day. Banks are closed on Sundays, but many of them have night deposits where you can put the money.

When it comes to online giving, we use Paypal. They take a small percentage of every gift which is annoying but it’s worth it for those who prefer to give online. The good thing about online giving is that all the contribution information is all online and easy to track for tax information.


For expenses, you’ll need to consider how you’re going to pay bills, payroll, reimbursements, or credit card policies. Some bills may be able to be done through a bill pay. Others might need to be paid through a physical check. Payroll will also have to be tackled and is often a confusing thing especially for those who are pastors.

Physical Checks

If you’re writing physical checks, it’s good to have one person sign the checks and one person to print the checks. Those people should not be related in anyway. So, it would not be a good idea for a husband and wife team, daughter/mother team, or any other combination of family members. When two different unrelated people are printing and signing checks, it provides accountability between the two. If it’s a reimbursement, get the purchaser to turn in receipts and have a purchase order filled out. A purchase order is a summary of expenses and helps the treasurer keep good books later.

Good bookkeeping

Speaking of a treasurer, It’s good to have someone who’s keeping the bookkeeping of the church. Good bookkeeping does lots of things for a church.

  • It gives a realistic picture of the finances.
  • Helps a church be better stewards of its resources.
  • Helps a church track its progress towards financial sustainability and independence.
  • Keeps a church accountable.

This can be a really tricky area for churches. First of all, all paid employees need to fill out an I9 form which proves that they are US residents and a W4 which helps with withholding. Churches will need to register a withholding number with the state in which it resides. Non-clergy are paid like other employees at any other business.

Pastors, however, are under weird tax situations. If one is ordained as a pastor, he is allowed a housing allowance (unless he has some type of parsonage). Usually, pastors in a church plant do not have a parsonage, so they can take advantage of this tax benefit. A housing allowance is a figure that has been run by the church that splits up a pastor’s salary into two categories: salary and housing allowance. This does not increase a pastor’s salary. It just helps him as he is doing his taxes at the end of the year with less taxable income.

Secondly, pastors either opt out of social security (for religious reasons, if they have them) or they will pay self-employment tax. This means that social security is entirely their own burden. Much like an entrepreneur who starts his own business. For my payroll, I have opted to withhold more income from each paycheck to go to the government.


There are many other topics that could be discussed when it comes to this topic. Just make sure you are doing your due diligence and don’t do anything stupid. Sometimes it’s easier just to skip the legal stuff, but it will eventually get you in trouble. Possibly with the IRS or worse someone stealing money or something else unethical. Keep your finances above board as best as possible, and seek help if you don’t know the answers.

Again, I’m not an expert on this topic. Seek legal help. Talk to other churches or denominational employees or accountants.