Financial Issues and Priesthood

Being a deacon or priest with the church requires some financial responsibilities. These are easy if you give it some thought. Basically, it comes down to a checking account for the ministry and also some basic record keeping. In the process you will be providing tax documentation capabilities to those who donate money or goods toward your ministry.First, decide on the name of your ministry.

Then apply to the federal government for an Employer Identification Number (EIN). This can be done online or by filling out a Form SS-4 and mailing or faxing it. The reason to get the EIN is for banking purposes. Once you have the EIN, then you set up a ministry checking account. Don’t just go to the bank closest to home—do some research for the best deal, and remember that you will need money to deposit when you open the account.

Remember that whatever donations you receive must be in the name of your ministry, never in your name. And, of course, the money will be deposited into the ministry’s checking account. If not, you must declare the income as wages on your personal income taxes.

The next step is to set up some record-keeping. This is easy, too. You need two forms to easily function. One is for tracking donations made by each individual and the other is the income/expense form. These forms are for tracking for a tax year. I can easily provide you with samples of each when you are setting up your records. Consider doing this task on computer, to make it easy to print out monthly reports or provide a tax donation form for the donor’s own tax reporting. This work is simple and does not take that much time from week to week. One note: be sure to check your state’s requirement of how much money your ministry can have in an account before you have to declare income taxes to the state. It is usually somewhere around $20,000.

One thing to think about is that every four years the clergy gather for Synod. Why not have your ministry pick up the bill? That is easy enough. You calculate roughly how much it is going to cost you for travel, food, and housing. Then personally donate on a regular basis to your ministry over the next four years. When Synod time comes, the church pays for you. You are saving the money over time and get a bonus you did not realize—a tax donation at the end of each year!

When you need new vestments, cost out the vestments and put that money into the ministry. The church pays for them, and you get the tax donation at the end of the year.

All of the needs of the ministry should be paid from your new ministry checking account. If you ask a donor to give some money so the church can hold an event, like a dinner or conference, put the money in the ministry checking account and pay the bill from the ministry account. Your donor gets a tax donation deduction at the end of the year. Remember that the federal government has a limit on how much can be donated by one person at a time. It is up to you to keep up with that information, so there is never any question concerning donations made or received.

For in-kind donations, such as furniture or office equipment, you will give the donor a letter stating what they gave and what it was worth. It must be on your ministry’s letterhead and be signed by you. The donor uses your letter as documentation on their tax reporting.

Financial record-keeping is easy in the long run. One simple form to complete and send the federal government, and a checking account—and no, you do not have to have any employees—and you are able to legally accept donations for your ministry.