This guide provides detailed, step-by-step instructions for setting up and managing your church's finances using QuickBooks. It is designed to directly answer the most common questions church bookkeepers have, from initial setup to generating board-ready reports.
QuickBooks is often recommended for churches because it is user-friendly and widely understood. This makes it easier to find bookkeepers or volunteers who are already familiar with the software, compared to specialized church-only programs.
A correct initial setup is the most critical step to prevent future problems. This section answers the key questions about getting started correctly.
How Do I Set Up QuickBooks for a Church?
Select the Right Industry Type: During the initial company setup process, you must select "Non-profit Organization" as your industry type. This is a critical first step because it customizes some terminology and features within QuickBooks for church use.
Acquire the Right QuickBooks Version: If your church is a registered 501(c)(3) organization, you can often acquire QuickBooks Online Plus at a significant discount through some programs. The Plus version is required because it includes two features that are essential for church accounting: Class tracking (for fund accounting) and Budgeting.
How Do I Set Up a Proper Chart of Accounts for a Church?
Your Chart of Accounts (CoA) is the complete list of all your financial categories. Think of it as the filing cabinet for all your financial information. A well-organized CoA is the key to clear and useful reports.
Organize Your Income Accounts:
Do not create a separate income account for every single type of offering (e.g., Easter Offering, Special Speaker Offering, etc.). This makes your financial statements long, cluttered, and difficult to read.
Instead, create just a few broad income accounts. For most churches, these are enough:
Individual Contributions
Program Service Fees (e.g., for youth camp or classes)
Grants
To track the details, you must use the "Products and Services" list. This is found under the Gear icon. Here, you will create an item for each specific source of funds, like "Building Fund Offering," "Mission Trip Donations," or "Tithes & Offerings." Each of these items is then linked to one of your broad income accounts. This gives you the best of both worlds: clean reports and detailed tracking.
Organize Your Expense Accounts:
For churches, the most effective way to organize expenses is to match them to your ministries or committees.
First, create main "parent" expense accounts like: "Worship Ministry," "Youth Ministry," "Building & Grounds," and "Administration."
Then, under each of these main accounts, create specific "sub-accounts" for the different types of expenses. For example, under the "Youth Ministry" parent account, you could have sub-accounts for "Supplies," "Events," and "Curriculum." This structure allows you to see exactly how much each ministry is spending.
Set Up Asset and Liability Accounts:
You will also need to create accounts for your church's assets and liabilities. This includes creating a "Bank" type account for every checking and savings account you have. It also includes "Fixed Asset" accounts for major items like buildings and equipment, and "Credit Card" or "Loan Payable" accounts for any debts.
How SaasAnt Solves Setup Problems
The Challenge: Manually typing a new, detailed Chart of Accounts and a long list of Products and Services into QuickBooks is very slow and it is easy to make mistakes.
The SaasAnt Solution: With SaasAnt Transactions, you can import your entire Chart of Accounts and your complete Products and Services list from a single Excel or CSV file. This allows you to set up a perfect, detailed structure in minutes, not hours.
This section provides direct, step-by-step workflows for the most common and challenging aspects of day-to-day church bookkeeping.
How Do I Track Restricted Funds in QuickBooks?
This is one of the most important jobs for a church bookkeeper.
Understand the Terms:
A Restricted Fund is money that was donated for one specific purpose and legally can only be used for that purpose (e.g., money given specifically for a new building).
An Unrestricted Fund is money from general tithes and offerings that can be used for any of the church's ministry operations.
The Best Practice: Use "Classes"
The correct and most powerful way to track restricted funds in QuickBooks is by using the "Class" feature.
Step 1: Activate Class Tracking. Go to your QuickBooks settings (Gear Icon > Account and Settings > Advanced > Categories) and turn on "Track classes."
Step 2: Create Your Classes. Create a separate Class for each restricted fund (e.g., "Building Fund," "Benevolence Fund") and for each main ministry or campus (e.g., "Youth Ministry," "Main Campus").
Step 3: Use Classes on Every Transaction. This is the most important part. When you enter any transaction—whether it's a donation coming in or an expense going out—you must assign it to the correct Class. This "tags" the money so you can track it.
Organize Your Bank Accounts:
When you set up your bank accounts in QuickBooks, name them clearly to reflect their purpose, such as "Main Checking - Unrestricted" or "Savings - Restricted Building Fund". This simple step helps prevent you from accidentally spending restricted money from the wrong account.
What is the Correct Way to Enter Donations (Tithes, Offerings, Pledges)?
Set Up Your Members: Go to the Sales > Customers section and add your members. (Don't worry that QuickBooks calls them "customers.") For any anonymous cash or offerings collected in a plate, create one single, generic customer named "Sunday Offering" or "Plate Offering".
Follow this Workflow for Donations:
For a gift from a specific person: Use a "Sales Receipt". On the Sales Receipt form, you will select the "Customer" (the person who donated) and in the "Product/Service" field, you will select the specific fund they are giving to (e.g., "Tithes & Offerings," "Building Fund").
For a pledge: Use an "Invoice". This creates a record that the money is promised but not yet received. When the donor pays part of their pledge, you use the "Receive Payments" function and apply it to their open invoice.
To match your bank statement: After you have entered all the individual Sales Receipts for the week, go to + New > Bank Deposit. Here, you will see a list of all the payments you've recorded. Check the box next to all the payments that were part of a single deposit into your bank, and save. This creates one deposit record in QuickBooks that will perfectly match the deposit total on your bank statement, making reconciliation easy.
How Do I Handle Expenses and Bills?
Set Up Your Vendors: First, go to Expenses > Vendors and add the people or companies you pay.
Follow this Workflow for Expenses:
If you receive a bill you will pay later: Use + New > Bill. This records the expense immediately and also shows that you owe money (this is called "accounts payable").
When you are ready to pay that bill: Go to the bill and use the "Pay Bill" function.
If you are paying for something immediately (with a church debit card or writing a check on the spot): Use the + New > Expense or + New > Check function.
How SaasAnt Solves Daily Entry Problems
The Challenge: Manually creating hundreds of Sales Receipts for your weekly donations is the single most time-consuming task in church bookkeeping.
The SaasAnt Solution: With SaasAnt Transactions, you can import a single file from your online giving platform or a spreadsheet containing all of your weekly donations. SaasAnt will automatically create hundreds of individual Sales Receipts in QuickBooks in just a few minutes, each one correctly assigned to the right donor, fund (Item), and Class.
The Expense Solution: You can also import transactions from a credit card statement or a list of expenses from an Excel file. This allows you to enter dozens or hundreds of expenses at once, with the correct ministry (Class) and expense account already assigned to each line item.
Your work is not complete until you can provide clear, accurate reports to your leadership. This section explains how to create the specific reports a church needs.
How Do I Create Proper Nonprofit Financial Statements?
Rename the Reports: For a more professional look that is appropriate for a church, you should rename QuickBooks' standard reports.
Run the "Profit and Loss" report. Click Customize, then Header/Footer, and change the "Report Title" to "Statement of Activities."
Run the "Balance Sheet" report. Customize it and change the title to "Statement of Financial Position."
After customizing, click "Save customization" so you can run your renamed report every time.
How Do I Get Reports for Each Ministry or Fund?
The "Profit & Loss by Class" Report: This will become your most-used and most valuable report. When you run the "Profit & Loss by Class" report, QuickBooks will show you a separate column of all the income and all the expenses for every single Class you have created. This directly answers questions like, "How much did we spend on the Youth Ministry this year?" or "What is the current balance of the Building Fund?"
How Do I Create a Budget vs. Actual Report?
Create Your Budget: Go to the "Budgeting" tool in QuickBooks (under the Gear Icon). It is critical that you create a monthly budget, not just an annual one. Church giving often changes with the seasons (for example, giving is often lower in the summer months), and a monthly budget helps you manage your cash flow realistically.
Run and Customize the Report:
Run the "Budget vs. Actual" report.
The default report is often messy. You must use the "Customize" button to make it useful.
Filter by Class: This is the most powerful feature. You can filter the report to show a budget vs. actual for just one ministry (e.g., show me the budget for just the Worship Committee).
Collapse Rows and Change Columns: For board meetings, you can "Collapse" the report to hide small details and only show the main parent accounts. You can also remove the monthly columns and just show the "Total" for the year to date.
Save Your Customizations: Always save your customized budget reports so you can run the exact same perfect report for your board every single month with just one click.
How SaasAnt Solves Reporting and Budgeting Problems
The Challenge: Entering a detailed, monthly budget into QuickBooks' tool, cell by cell, is tedious and difficult. Also, if you discover that hundreds of past transactions were put in the wrong Class, fixing them one by one to clean up your reports is almost impossible.
The SaasAnt Solution: With SaasAnt Transactions, you can build your entire annual, monthly budget in the simplicity of Excel and then import it directly into QuickBooks. If your reports are wrong, you can use SaasAnt to export hundreds of transactions, fix the categories in Excel, and then use the "Modify" function to update them all at once inside QuickBooks.
The solution to effective church bookkeeping in QuickBooks involves two key parts:
Following the correct, detailed procedures for setup, fund tracking, and reporting as outlined in this guide.
Using an automation tool to execute these procedures efficiently and without manual error.
By using this guide, you gain the knowledge. By using SaasAnt Transactions, you gain the time. This combination allows you to produce accurate financial information for your church leadership while reducing your administrative workload by hours every week.
To automate the import, modification, and deletion of your transactions in QuickBooks, start a free trial of SaasAnt Transactions today.