14. financepicoct

What is necessary to ensure that the church legal and accounting documents are current and up-to-date? I don’t want to get involved in possible litigation and be vulnerable by not having all the church records in order.

Maintaining the proper records is not difficult. Our recommendation is as follows:

  1. Be sure your corporation is current and in good standing. We find that many churches filed the incorporation papers but did not file the annual reports required by the Secretary of State. If you don’t file the necessary reports, your corporation is no longer in good standing.
  2. Make sure the by-laws are current according to regulations. A church should review its by-laws at least every three years. There have been many changes in these areas, so a complete review should be done every three years.
  3. Have all the policies/resolutions in place. At present there are 13 policies that are needed for a church to maintain its current status. Many of these affect the staff of the church while others provide necessary protection to the church concerning legal matters.
  4. If anyone on staff receives compensation using a percentage method, or if the total compensation exceeds $115,000 per year, a Compensation Agreement must be in place. The court has ruled a Compensation Agreement is required for the compensation to be paid
  5. Ensure that all financial records are current: bank is reconciled monthly, payroll reports are up-to-date, financial statements (balance sheet and profit & loss statement) are prepared and printed. If necessary, work closely with the accountant so he can provide all advice and information needed.
  6. Have all business meeting minutes of board meetings and membership meetings prepared, signed and properly filed in a permanent and safe location.
  7. Have a periodic review of the church’s insurance policies to make sure that all coverages are as needed. Situations change so the insurance policy should be reviewed to ensure the church is fully covered in all areas of property and liability.
  8. Be sure that all annual reports are completed such as the annual W-2 forms, annual payroll reports, and Form 1099.
  9. Contact the insurance carrier to be certain the church is covered under the workers’ compensation requirements. Only Texas does not require workers’ compensation insurance.
  10. All documents are complete and ready for the annual business meeting which should be conducted either 60 days prior to or 60 days after the church’s year end.

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