A Church Balance Sheet is using to assess the financial health of the church. It can be obtained from many sources, including a church’s church records, which are usually the church website, from other churches and the IRS. Churches often post it online for all the world to see, although it may be posted on a church website and not published.
The church balance sheet is an analysis of the church’s finances, made to help determine what kinds of options a church has for reducing the amount of money that is owed to the government. An example would be to get tax-exempt status for the church. When getting 501(c) (3) status, a church must provide financial statements. These documents detail how much of the funds donated to the church go to operational expenses, how much goes to building maintenance and renovation, and what types of charitable contributions are made.
The church balance sheet samples used by the IRS vary greatly in purpose. Some have been written in a way to make them harder to understand, while others are written in a way that could easily be misunderstood. This makes it extremely important to double check the sample documents when using them. They can help churches better understand how they will be taxed and help them to consider more options when getting tax-exempt status.
There are three main sections to the church balance sheet. The first section will list financial information that will help the IRS to determine how well the church is doing financially. This section may include information such as when the last audit was, how many years the church has been operating, how much the church is currently paying in tithes and offerings, and how much of the money donated each year goes towards its operations. Other items that will be included in this section of the church balance sheet are the amount of assets, amount of liabilities, total revenue, and total expenses. If this information is incorrect, or if the church cannot supply enough accurate information, a church could be subject to punitive penalties, fines, and even lawsuits.
The second section of the church balance sheet is called the income statement. This section details how much money the church receives from tithing, and the proportion of that money that is used to support the mission of the church. Some of the items that may be listed in this section are where the money came from, the sources of the income, the amount of income, and how much is available.
The third section of the church balance sheet is called the net income statement. This section details how much money the church can make from selling church properties, assets, stocks, and other investments. Assets, stock, and investments are all considered part of the assets section.
The IRS publication used to create the church balance sheet sample that churches use to make their financial statements is called Financial Statements for Non-Profit Organizations (FS-300). This document is used as a template to write financial statements. In fact, there are some church balances sheet samples that do not use the FS-300 as a base, but rather use the IRS publication FS-500. Both of these documents are just guides for tax preparation and/or church balance sheet writing.
Using the church balance sheet sample allows a church to see just how much money they are bringing in each year, as well as how much money they are spending on operational expenses. It can help a church to determine how to cut back the expenses in order to achieve their tax exempt status.