How to Build A Post-Pandemic Church Budget

annual church budget planning

Building Your Annual Church Budget in a Post-Pandemic World

Before we get too far, I completely understand that the pandemic is officially not over.  I realize that our world is still in a state of confusion and no one really seems to know what’s going on or what will happen next. It unfortunately seems that we’re at a point where we’ve never been more divided as a country. Regardless of your stance on the current issues, I’m sure we can all agree that things are a little bit chaotic right now.

You’re probably experiencing that chaos first hand as you try to continue to lead your local church and meet the needs of people in your congregation and community in these unprecedented times.

If you’re like most pastors, you may feel like you’re hanging on by just a thin thread, but rest assured, your efforts are for a far greater purpose than we see right now.

It's Time to Build Your Annual Church Budget

As we head into a new year (can you believe it?!), it’s time that we discuss your church’s budget for the upcoming calendar year.

In 2021, the finances and financial accounts of many churches were unpredictable to say the least. Your church might have experienced this. And because of this unpredictability, you might be thinking that you have no idea how to budget for 2022 based off the current year.

Here are some considerations to help you start planning for your 2022 church budget.

Assess the Current State of Your Church Budget

In our Church Budget Blueprint Course, one of the first steps we discuss for planning your budget is that you need to know where you are. If you’re looking for directions on your phone, it will always ask you to choose a starting location. It’s virtually impossible to give directions if you don’t know the starting point.

The same is true for budgeting. Because your budget is a plan, it is really hard to chart a course if you don’t know where you’re starting from.

How To Review Your CURRENT Church Budget

Begin by taking a look at this year’s financial reports. While the church finances may have been all over the place, you should be able to get some information about the current financial status of your church.

What do your financial numbers tell you? Has church giving increased, decreased or stayed roughly the same versus last year?

There are a lot of churches that look vastly different than they did in February of 2020.  After months of virtual church services, many congregations are seeing fewer attendees than they did before everything started. At the same time, there are many churches that are seeing new people that they didn’t have prior to the pandemic. By being forced to do ministry differently, many churches are seeing people that may not have otherwise stepped foot inside a church and that is a good thing.

In order to know where to go from here, though, you’ll need to get honest about your current situation.

What questions do you need to ask?

What does your attendance currently look like? Are you seeing the same number of regular attenders each week? Are you seeing the same number of visitors? If you are still offering virtual services, how many people tune into these services regularly? 

What does church giving look like? Do you know your giving per unit and giving per capita?  These two metrics will help assess the health of your church giving. 

Along with church giving, what is your average weekly and monthly amount?  How do those compare to previous years?  

Without a good understanding of these numbers, it will be difficult to accurately plan for the future.  

To be honest, the last 6-9 months are probably a good indicator for your new reality moving forward.  While uncertainty still exists, we must realize that many people have established a new normal for themselves, and decided how they will live and what level of socialization they are comfortable with, at least for the foreseeable future. The people showing up on Sunday mornings and those participating in giving right now are probably the ones you can count on moving forward.

How to Draft a New Church Budget

Now that you know your numbers, and have some understanding of where you are, we can begin to formulate a plan to move forward into 2022.

As you develop your budget, take the numbers you found from the past 6-9 months and use those as a baseline for projected giving trend moving forward. Then take a look at your spending and expenses over that same time period. Is your spending in check or are you spending more than you are bringing in? Do you need to make some adjustments?

Finally, think through what you want for your church in the year ahead. What vision do you have for your congregation? Does your projected spending and budget allocations help move you towards that vision?

Be prepared to drastically change your budget if necessary. Don’t allow yourself to get so tied in how things were done in the past that you neglect an opportunity to pivot. One thing pastors and church leaders have learned over the past few months is how lean some ministries can be. We’ve also had the opportunity to get clear and prioritize what really matters. Perhaps there are some areas of ministry that you don’t need to fund or prioritize moving forward.

Once you’ve thought through these important questions, formulate a church budget plan that will guide you and your church in 2022.

Can you adjust your budget Mid-year?

The great news is that your church budget isn’t set in stone. It is a plan, not a legally binding document. The plan you put in place now can be adjusted as you move forward.  While it’s not something you want to adjust haphazardly or randomly, you should do a quarterly and semi-annual review of your church budget to determine if the plan you put in place is matching up with your current reality.

What if you need help with your church budget?

If church financial planning or developing your church budget is causing you stress, don’t hesitate to ask for help and guidance!
One thing that became evident during the pandemic is that pastors need pastors. Let me suggest two opportunities for you as we head full speed into the new year.

First, if you know you need help, schedule a free discovery call with us. We will talk with you about church financial support options for your church and help you decide what is best for your church. Getting financial help is way more affordable than you think!

Second, consider joining our FB group for pastors we call Oasis. Be connected with other pastors who know what you’re experiencing and are open to real discussions about the joys and hassles of being a pastor. You can be real with us without fear of losing your “pastor card.” 

Regardless of your next steps, be sure to take the time now to plan for 2022.  How you plan now will determine the trajectory of ministry going into the new year. One thing is certain, time will continue moving forward. It’s up to you to determine what you do with what you have been entrusted with. The old adage is still true, people don’t plan to fail, they fail to plan. While plans are never a guarantee of success, and you may need to make some pivots along the way, you will never get to where you want to go without a plan in place.

Here’s to building a great church budget plan and seeing your church thrive in 2022!

Optimize Your Budget for Growth [Webinar Replay]

church financial management

Take a few minutes and watch the video below to see a replay of our webinar, Optimize Your Church Budget for Growth.

In this 35 minute presentation we discuss what you need to know as a pastor or church leader to optimize your church’s budget for ministry growth.

After you’ve had a chance to watch the replay, head on over to SimplifyChurch.com/church-budget-training/ to get immedate access to our Church Budget Builder Course.

In the course we’ll walk you step by step through everything you’ll need to build a budget for your church that will help grow your ministry.

Your budget is just a tool or a plan to help you best steward the resources God has entrusted to your church.  Make sure you’re doing the best job you can with the resources by planning effectively and this course will help you do just that.

Quickbooks Backup

Use the video below to see instructions on how to send us a backup copy of your Quickbooks Desktop file.

Here are the steps.

Open your Company Quickbooks file on your local computer.

Click on File > Create Copy

Choose Local copy and select a location to save the file.

Once complete, the file will be saved in the location you setup for it to save. Your Welcome Team contact will send you an invitation to a folder where you can upload that file to us.

We’ll take care of things from there and let you know if we have any questions.

Thanks for choosing to be a Church Partner with SimplifyChurch.com. We’re excited to partner with you to take care of the bookkeeping and accounting for church.

Three Simple Steps to Survive the 2021 Church Giving Slump

church bookkeeping service

A 2021 Church Giving Slump??

I’m calling it. I predict that churches in the summer of 2021 will see a giving slump that surpasses many previous year’s slumps. 

Traditionally, churches see a dip in giving during the summer months. We have discussed summer giving slumps before, but this summer has the makings to be much different. 

Why? 

Well, we’re looking at a summer where many people, for the first time in over a year, feel comfortable traveling outside their local community.  

With a global pandemic and the resulting lockdowns and travel restrictions put in place, vacations and traveling were out of the question for many people. In fact, air travel in 2020 was down 60% compared with 2019 numbers.  

With precautions starting to relax in the last weeks and months, domestic travel, at least, has become more feasible and desirable. More people feel comfortable traveling and seeing extended family members. Many are now seeing opportunities to make up for lost time and take those vacations they had previously been unable to schedule. 

In other words, now that people can travel again, you can bet they are going to do just that.

So what does that mean for churches?  

More than likely, we’re going to see giving decrease as people use some of that discretionary income or their vacation savings to now take that vacation they had been putting off. More people have dealt with anxiety, stress and burnout in the last year and they are looking for a chance to get away and just relax and unwind. 

The good news is that a potential giving slump doesn’t have to blindside your church or leave you struggling to pay the bills.  

As a pastor, here are three simple steps you can take to prepare your ministry to survive the upcoming slump.  

1. Don’t hide from the church giving slump; talk about the importance of tithing and giving to your local church 

If you’re struggling to figure out how to talk about it, you can check out this article and this one. Many churches that have giving issues or struggle with revenue, sometimes have a problem because they don’t make generosity part of their DNA.  Don’t make talking about money taboo in your church.   

Talk about it, all the time. And when you think you’ve said it enough, talk more. 

Giving is a spiritual discipline much like prayer, bible study, discipleship and worship.  People that take issue with pastors talking about giving, more than likely haven’t developed this spiritual discipline or fail to understand why giving matters.   

Heading into this summer, be bold to talk about giving.  Proclaim with boldness the value of being faithful to those things that God has called us to and make people understand that the next step in their relationship with Jesus is following the things He has commanded. 

Preach boldly and unapologetically about giving. You’re called to shepherd people; this is part of their spiritual growth. 

If you are looking for additional resources for how to talk about giving or struggling to figure out how to make generosity a part of your church’s DNA, we’ve created a free guide to walk you through the process. You can access it here

2. Manage the church giving slump by looking at expenses and managing cash flow  

Practically speaking, one thing you can do to combat the giving slump is to better manage your cash flow.  

There is a common business adage that says if you don’t know your numbers, you don’t know your business. 

The same is true for your church. If you don’t know your numbers, you don’t know the health of your church. 

Now, I know what you’re thinking. “But I’m the pastor. I just shepherd people and let someone else manage the money. Church finances are not my responsibility.” 

You’re partially right. Should you be responsible for paying the bills and tracking income for the church? Probably not.  

BUT… 

If you are the leader of the church, you absolutely should understand where your church stands financially.  Finances are a very real part of the health of your church. And the truth is your church could be headed for very real financial trouble if you don’t take steps to correct the problem. And how do you know if your church has financial issues? You have to know your numbers. Additionally, if you don’t know the financial health of your church, it’s much more difficult to make wise financial decisions and lead and grow the church. 

At a minimum, you need to know what your average monthly giving amount is.  Along with that, there are several other metrics you as pastor need to know. We discuss them in this post here. By knowing those numbers, you can better lead the church and know the financial health of your organization. 

When you know your numbers, you’ll be able to identify trends and have an idea of areas where spending is required, and perhaps things that can be turned off or delayed until cash is in a better situation. 

A practical step here is to look at your monthly expenses. Are there any discretionary expenses or subscriptions that maybe can be turned off or cancelled all together to save some money?  This will help with cash flow during an income slump. 

Still feeling stuck with exactly what you need know about church finances as the pastor? Download our free guide where we walk you through the five financial metrics every pastor needs to know. Don’t worry, you don’t have to be a numbers person to understand. We’re all about S-I-M-P-L-E. We walk you through exactly which metrics you as pastor need to be aware of, why these numbers matter and how you can get easily find and review these numbers so that you can more effectively lead and grow your church. If the thought of finances and budgeting makes you cringe a little inside, this FREE guide will give you greater clarity and confidence in your ability to steward the financial resources of your church. 

3. Minimize the church giving slump by utilizing online giving  

Okay, this is probably obvious, but if your church does not offer an online giving option, you are preventing some people from being able to give to your church. Online giving is an opportunity for your congregation to participate in the act of worship through giving. 

This may sound a little harsh, but a resounding percentage of people (especially the younger generation) prefer to make electronic donations. Yes, some people still carry cash or checks with them, but more and more people do not. Let’s be honest, some don’t even own a checkbook! 

There was a time when an argument could be made against giving electronically for the reasons of potentially encouraging debt, or the other arguments that could be made.  However, our economies have shifted, and more money is transferring electronically now than ever.   

If you are not providing an electronic giving option, besides the fact that you are preventing some people from being able to give, you’re missing out the full income potential of your church. It’s true. You could be losing out on money every month. Numerous studies have shown that adding a digital giving option can increase donations between 20-35%! 

We recommend SimplifyGive, our online giving solution created with small and growing churches in mind. SimplifyGive is focused on keeping costs down, so that more money from each gift comes to the church for ministry. At the same time, it offers you easy-to-access valuable church giving metrics, so that you can better lead and grow your church.  

SURVIVING THE 2021 CHURCH GIVING SLUMP…MADE SIMPLE 

This summer of 2021 is an exciting time for many people in the United States. After over a year of staying home, there is a strong desire to travel and to engage in activities that were postponed or unavailable for a while. But the flip side of this excitement is that engagement with and giving to church might not be at the forefront of people’s minds. Churches can and should prepare for a potential decline in giving.   

But if you’re prepared for and aware of this potential, your church will be able to endure the season and come out on the other end equipped to finish the ministry year strong. 

If you’d like to know more about how you can better manage your church finances or have a team of church finance experts available to you to help navigate the ups and downs of church finances (at a price that’s affordable for small and growing churches), schedule a discovery call with Simplify Church. We’d be happy to show you how we serve local churches across the country, enabling them to better focus on ministry and reach more people for Christ.  

ChurchShield Payroll Update Webinar – Replay

SimplifyChurch.com Affiliate Program

Payroll Webinar Replay

Take a few minutes to review the replay of our webinar detailing the latest news from our payroll partner, ChurchShield.  They are now offering three service options to help better customize to the needs of your church.

Your options for service will be: 
Full Service – similar to the service your receiving now

Self-Service with Review – your church will process the payroll, but our team and the software are available to review and help as necessary.

Self-Service – your church has full control and responsibility for the payroll processing.  Our team will help with the setup and training, but the ongoing payroll processing will be up to the church.

Whichever option you chose, we’ll be here in an ongoing basis to help and consult your church to make sure you’re successful in this process.

2021 ChurchShield Payroll Update

Take a look at the short video we put together to share an update from our partners at ChurchShield and some recent updates they have in regards to their pricing.  The video should explain the update, how this will affect your church and the options available to you through the process.

Also, Join us Wednesday March 31, 2021 at 11am CST for a webinar where we’ll discuss the update as well and provide a time for Q&A.  Kristin Oeschle from ChurchShield will be joining us as well to give some insight and answer any questions you may have.

Below is the link to register for that webinar. 

If you have immediate questions please don’t hesitate to reach out to your Account Manager or Josh.

 

Thanks for continuing to be a valued partner as we serve the Lord together.

2020 W-2’s Are Available for Download

image of 2020 church payroll w-2s ready for download

your organization’s 2020 W2s have been uploaded to our DNet Portal. The W2s are posted both to the administrator login as well as to the employees’ individual logins. Here is where you can find the W2s in DNet:

https://d21.darwinet.com/550D2/

For Employees:

After logging in, in the left hand menu, click on Payroll -> Payroll Info -> W-2 /1095

This screenshot is from a test system, so no W2 has loaded, but your employees will see a line item listed for 2020 with an Adobe PDF icon that they can click on to view, download or print their own W2.

For Administrators:

Administrative users can access each employee’s W2 by browsing to Employees -> List. Then, choose an employee, and click on Summary ->W2/1095-C
*Tip: Inactive employees can be viewed in the Employee list by clicking the “Show Inactive” checkbox at the top of the employee list grid

Again, this is test data, but when you click on W2/105-C it will open the same screen that the employee sees above, where you can click on the Adobe PDF icon to view, download or print the W2.

You will need to print and distribute the W2s for any inactive employees or employees who do not have access to the DNet employee portal by February 1.

If you’re having issues accessing your W-2 or need help with this process, you can reach out to our support team at support[a]simplifychurch.com. Be sure to include your church name in the message when you send.

2021 Church Bookkeeping Pricing Locked In!

We’re happy to announce that we’ve decided to lock in pricing for all of our church bookkeeping partners for 2021.

With all the craziness that 2020 brought to us and the added pressure it put on churches we have decided to not do any price increases for our church bookkeeping partners. We are grateful for your partnership in ministry and want to do our part to help you succeed.

Additionally, if you’re church has experienced a significant loss of regular income, please let your Account Manager know and we’ll discuss ways that we may be able to help out reduce some costs.

We’re looking forward to what the new year has to bring and how we can better partner to reach your community with the Gospel.

Should You Pay Your New Church Staff Member as an Employee or as a 1099 Independent Contractor?

Church Staff 1099

You’re ready to bring on a new church staff member. Only the question you really need to know the answer to is how you are going to pay them. Should you classify them as an employee (who receives a traditional W2) or as an independent contractor (who receives a 1099)? 

Employee Vs. Independent Contractor: What’s the Difference and Does It Matter? 

One of the most common questions we get asked is whether to classify someone as a 1099 Independent Contractor. Usually when a church contacts us and uses the word “stipend” in a conversation about compensation, we know that we’re going to have a discussion about Independent Contractors vs. Employees.  

First let’s define the terms.  

An employee is someone who works directly for an employer and receives a W2 each year. Being an employee may also entitle the individual to other benefits like health care coverage, FMLA and unemployment benefits. The employer is responsible for withholding and filing taxes on behalf of the employee. 

An independent contractor, in the eyes of the government, is self-employed. Self-employed individuals are not eligible for things like FMLA, ADA or unemployment. The contractor is responsible for all their own taxes; therefore, nothing is withheld from their paycheck. An employer who utilizes the skills of an independent contractor, just pays the contractor and provides him or her with a 1099 each year.  

As you can see, paying someone as a contractor is appealing to employers because the employer is not responsible for withholdings, insurance, etc.  

Can I Just Pay My Church Staff as Independent Contractors? 

The IRS is a bit vague about the specific distinctions between the two categories. They give churches and nonprofits a lot of leeway in determining organizational structure; however, the IRS does provide some guidelines to help make that determination.  

Making the right determination is important because there are penalties for misclassifying an employee. The penalties vary on a case-by-case basis from monetary fines to even criminal punishment.  

The full list of the IRS criteria on whether or not someone should receive a 1099 can be found here.  This can be a little difficult to decipher if you’re not a CPA or an attorney, but here are some guidelines to help you determine how to classify your next hire.  

There are three phrases you need to keep in mind to help you make a wise determination: 

  • Time Control 
  • Tools and Resources 
  • Expected Longevity of Relationship 

Let’s break these down. 

Do You Exercise TIME CONTROL Over the Person? 

If the person who’s getting compensated from your ministry is expected to put in a specific number of hours or work at certain times, that means you’re exhibiting time control over that person. You’re telling them when to do the job or how long it should take. This also comes into play if you give the individual a specific number of hours they are to work for a given time period. 

If you have time control over the person, more than likely they should be classified as an employee for your organization. 

We find a lot of churches want to classify musicians as 1099, mostly for payroll simplicity. One fact to consider specifically is that you probably tell the musicians that they need to be at the church on Sunday mornings. This is an example of exhibiting time control. We’ll return to this specific example in a moment.  

Do You Give Them the TOOLS & RESOURCES to Do Their Job? 

If the person working for your ministry is using your tools and resources to complete their task, more than likely they’ll need to be classified as an employee. This could be someone using a church computer for bookkeeping, someone designing and printing church bulletins for Sunday morning or your marketing, social media or video people using a church computer to get things posted. If you are paying this person and they are using your equipment, they would most likely be considered an employee and not an independent contractor. 

Another instance would be your cleaning crew using the church’s vacuums, mops, brooms, etc.  If they are using the church’s equipment to complete the task, they need to be classified as an employee. 

Or consider church musicians. If you are paying your church musicians and they are using the church’s sound system (equipment) or playing the church’s piano or drumset (equipment), they might need to be classified as an employee of the church. 

Is There a LONG-TERM EXPECTATION of Relationship? 

We find that some churches want to pay their pastors as 1099 Independent Contractors.  Many do this because they misinterpret the self-employed dual status of pastors.  

According to the IRS, pastors are considered self-employed, but only for SECA (Medicare and Social Security), not their employment status. Yes, we know this is confusing.  

The point here, however, is that if there is an expectation of a long-term relationship between the individual and the organization, a person should most likely be classified as an employee. 

But a Church Musician, Really? 

Back to our example of how to classify church musicians. This is one of those areas that even the IRS isn’t very clear about in their determination. If a musician plays for several different organizations and they aren’t “required” to be at your church, they would most likely be considered an independent contractor. In any case, the situation needs to be analyzed carefully and it’s best to document whatever decision you make. The documentation won’t change the IRS decision if your church is ever audited, but you will at least have a basis to share why the specific decision was made. 

If you are confused about how to handle any particular situation, we recommend getting some paid legal advice.  This is simply a short overview for informational purposes only and it definitely doesn’t encompass all situations.

At the end of the day, if you question whether or not a person should be classified as an employee or independent contractor, it is best to err on the side of paying someone as an employee. The penalties for misclassification of a person far outweigh any savings you may gain by trying to make someone a contractor. 

Does Hiring a Person Have to Be Complicated? 

Nope. If you’re ready to eliminate the confusion and guesswork that comes with managing payroll for your church, we’re here to help! We’ll make sure that all your withholdings are set up correctly, we’ll file your paperwork and ensure that the pastor’s compensation is handled correctly. Save yourself valuable time and a lot of headache by partnering with us, instead of trying to navigate things on your own. Give us a call or apply today to get started!  

Are Dual Signatures Required for my Church?

church banking

Are Dual Signatures Required for my Church?

This is a question we run into quite often.

If not as a question, we have churches all the time telling us that they have dual signatures required on their checks.

While I understand that dual signatures may provide the appearance of security, I’d contend that it does very little to protect your church’s money.

I’ve been around several organizations myself and even served as treasurer of a few.  In those, we required dual signatures on the checks and at the surface, it seemed fine.  The problem was, dual signatures often caused more issues than they solved.

Now, I’m not trying to do away or say that you don’t need to have dual signatures on your checks.  I’m not even saying that it’s a completely bad idea.  However I could contend that with modern digital banking, online bill-pay and e-commerce, the days of requiring dual signatures are dwindling.

For most churches, dual signatures are setup only because that’s the way its presumably always been done.  Nothing requires dual signatures inherently just because it’s a church.  That is usually a requirement that gets put in the church’s Bi-Laws and that is usually only because “everyone else does it”.

Requiring dual signatures on checks can be a hinderance to your ministry.

Dual Signatures Can Be Problematic. Here’s Why:

1. I have never seen a dual signor say no

Usually, I see dual signatures as more of a formality to give the appearance of security.  In most cases, when a check requires dual signatures, the second signor barely gives a look even to the amount of the check they are signing.

2. Banks often overlook signatures

Most banks are going through checks so quickly that catching a check that doesn’t have dual signatures is often missed.  I’ve seen several checks clear the bank even when dual signatures were required.

3. Dual Signatures creates unnecessary bottlenecks

Often, when dual signatures are required, waiting for the second person to sign can slow things down for no reason.

Again, my intent