5 Bookkeeping Mistakes Churches Should Avoid (And How to Fix Them)

Strong financial practices are a key part of a thriving church. Most church leadership would agree with this statement, but where do mistakes happen?  From our experience as church bookkeepers, we’re here to help you avoid some of the most common mistakes we’ve encountered.

1. Payroll Errors: Small Oversights, Big Consequences

MISTAKE: Incorrect payroll remittance and deductions
Payroll calculations and remittances are critical for every organization—churches included. Many churches don’t realize how important it is to submit payroll deductions to the Canada Revenue Agency (CRA) by the 15th of every month. Late or missed remittances can lead to penalties, interest charges, or even a payroll audit (which is just as fun as it sounds). Another common issue is miscalculating the clergy housing allowance, which affects not only the church’s records but also the pastor’s paycheque.

HOW TO FIX IT:
We recommend setting up a payroll software such as Wagepoint, Payworks, Dayforce, or another Canadian provider. (Note: While ADP is a strong platform, it’s often overkill for smaller churches.) These tools calculate payroll, direct-deposit paycheques to employees, and best of all—automatically remit the correct amounts to CRA each month.

If you’re deducting a clergy allowance, reference our previous newsletter article for calculation guidance. That article also includes steps to configure your payroll software properly.

2. T3010 Filing: It’s Mandatory, Not Optional

MISTAKE: Missing the T3010 Registered Charity Information Return deadline
The T3010 is the annual information return that every registered charity in Canada must file—including churches. It’s essentially the church’s version of a personal tax return, giving the CRA information on your church’s operations. Failure to file this on time can result in loss of charitable status and the inability to issue tax receipts. And once charity status is lost, it’s very difficult to get it back.

HOW TO FIX ITt:
Late filings are often caused by disorganized or incomplete books. Without up-to-date bookkeeping, generating the required reports becomes difficult. If your church keeps its books current each month, filing the T3010 becomes much more straight forward.

The return must be filed within six months of your fiscal year-end. For example, if your year ends December 31, the deadline is June 30. Even if this task is outsourced, set a reminder in May or June to confirm that it has actually been submitted. We’ve seen churches assume their accountant or bookkeeper handled it—only to learn it wasn’t filed.

3. Delaying a Transition from an Under Qualified Bookkeeper

MISTAKE: Allowing financial management to remain in the hands of someone who may not have the skills or time required
It’s common for churches to rely on volunteer or a church bookkeeper that has been there ‘just forever’.  You know they aren’t doing a good job, but this person just happens to be related to half your board so moving them out is… complicated.   

HOW TO FIX IT:
Resolve to stop avoiding the situation.  This is something that will not get easier with time.  An option is to acknowledge the volunteer’s contribution but explain the need to bring in a professional—ideally a cloud bookkeeping expert with proven church experience.  This is definitely difficult, but by avoiding it, churches can end up in a crisis; late T3010 filing, an audit, denial of a needed bank loan, incorrect tax receipts, an employee payroll calculated wrong, your stress levels etc. It is never worth avoiding in the long run.  Note – this is one of the reasons pastors will engage us, so they never have to worry about such sensitive internal issues again!

4. Planning Without Accurate Financial Data or a Budget

MISTAKE: Making financial decisions without a reliable picture of church finances
Some churches operate reactively—decisions are made based on what’s in the bank, not what’s in the plan. This can result in overspending, under-resourcing, or missed opportunities.

HOW TO FIX IT:
Develop a clear annual budget using past year’s financials and realistic forecast about the future. If you have a Dec 31 year end, then usually this process begins in October so the new year can begin with a plan in place.  Once the year begins, every month review actual results against your budget. Even a 15-minute monthly review can help you and your team stay on track and make informed decisions. When books are accurate and up to date, decision-making becomes clearer, faster, and less stressful.

5. Lack of Internal Controls

MISTAKE: Not implementing checks and balances in your financial processes
Not having enough checks and balances in place to protect your church’s finances.  Help your people avoid unintentional errors, or even the temptation of stealing.  

HOW TO FIX IT:
This issue is so important, we created a newsletter about it!  A good starting point: separate financial duties. No one person should be responsible for the entire financial process. Other key practices include regular reconciliations, proper documentation, and review of financial reports by someone other than the preparer. These steps help ensure both integrity and accuracy in your church bookkeeping.

Conclusion:

Avoiding these common bookkeeping errors can help your church operate with greater integrity, clarity, and peace of mind. Whether your books need a tune-up or a full overhaul, strong systems—and the right support—can make all the difference.

At Bookkeeping Solutions, we specialize in cloud bookkeeping for churches across Ontario and Canada. Our approach is simple, smart, and tailored to the unique needs of churches If you’re ready to strengthen your financial systems, we’d love to help.