Church Accounting

[S T]

I know that there are several of you that work with Churches and Exempt Org - I have acquired this "new" client to me - which is a Church and Exempt - however also has a an adjacent property that they own that is a "partial" rental (Church occupies approx 60^ of Bldg Sq Ftg and then 40% is rented to a Local Credit Union for Offices)

I and the Pastor and Church Secretary are working very diligently in "cleaning up" an accounting mess from prior.

An Accounting Nightmare right now, the Church has it's own Income and Expense and then a separate Accounting for the Rental Portion - two files of Accounting and making journals, and transfers back and forth, along with a separate Checking Account.

Short and Sweet question - In the Church Accounting Income/Expense labeled as "Other Income/Expenses" would it be okay to list the "Rental" Income and the Associated portion of the Mortgage Payment that has been allocated ? Or

Should there be a separate Income/Expense Accounting - One for the Church and one for the Property Rental? Does a Separate Bank Account need to be in place to deposit the Rents??

Yes, I do know the Church is exempt from filing the Form 990 and I do know that I have to file the 990T form for the Rental Portion

We are just trying to simplify Accounting and meet the Requirements. - Any words of wisdom would be greatly appreciated.

Thanks

Sandy

[Koss]

Bookkeeping

S T wrote:

In the Church Accounting Income/Expense labeled as "Other Income/Expenses" would it be okay to list the "Rental" Income and the Associated portion of the Mortgage Payment that has been allocated ? Or

Should there be a separate Income/Expense Accounting - One for the Church and one for the Property Rental?

I'm not sure I really understand the question. Are you talking about setting up a completely separate company in QuickBooks?

I don't think that's necessary, but it may not be a terrible idea.

The problem is that not all "other income" is UBIT. So there may be some "other income" that is not rental income, and that will cause confusion, unless you very carefully set up multiple accounts within "other income."

Does a Separate Bank Account need to be in place to deposit the Rents??

My answer is almost the same. Federal tax law certainly does not require a separate bank account. Maybe some arcane state law does, but that's unlikely.

It kind of loops back to the QuickBooks question. If the bookkeeper can properly manage QB, or any other system they may use, to have an internal subaccount for the rental property, then there's no need for a separate bank account.

But if they are likely to have difficulty keeping two separate sets of books internally, because of personality, education, or organizational issues, then a separate bank account may be the best way to insure that the rental income and expenses are properly tracked.

One way would be to simply pretend that there are literally two separate bank accounts, and set up the bookkeeping that way. If it's done right, at any given time, when you add the two balances together, it will be equal to the balance in the real account.

BMK

[S T]

Thanks Burton,
You did understand my "poorly" written questions.

On this Church Account, we only have some Rental Income with the Associated Mort Interest (Debt) allocated. No other UBIT - Only Other Income is interest from some Bank Accounts and a separate Bank Account for the Rental Income is costing them approx $20 per month in fees, due to minimum balances, etc.

So I do believe I can isolate for the Reports to reflect correctly, and it will give the Church Secretary a much easier Task - than transferring money around and making a multitude of journal entries between QB files and giving the Board Members a "multitude" of reports that seem to be creating some great confusion.

Sandy