While many industries have their own accounting nuances, churches utilize entirely different principles and practices. As a result, their financial needs are far more complex than many other similarly sized organizations.
Churches and businesses view revenue generation differently, use revenue differently, and report revenue differently. Churches need money to operate; however, unlike businesses, their primary goal is not to generate revenue. Instead, they collect money to pay for operational expenses, fund campaigns, and support their ministries. Furthermore, a church does not have shareholders, so any excess income is not paid out – it is reinvested to advance its mission. This is reported on a “statement of activities” instead of an income statement like a traditional business.
Accounting is a necessary evil for most business owners – they understand that optimal cash flow requires accurate accounting, but they are often unsure of their own abilities when it comes to keeping their books. Even business owners that outsource their bookkeeping and accounting functions still need to understand accounting principles and practices to oversee the work that is being done on their behalf.
During an audit, financial inaccuracies are typically uncovered that have broader business implications. Whether these inaccuracies are the result of fraud, mistakes, or ignorance, they can have deleterious effects. Internal audits may unearth problems that negatively affect financial statements and financing attempts, while federal tax audits can identify issues that result in costly fines and penalties.
Understanding which inaccuracies auditors find most often provides a foundation for self-imposed accountability. Focusing on areas where problems typically exist equips business owners with the information needed to improve financial accuracy and make smarter business decisions.
Furthermore, exercising extra caution around common problem areas protects the integrity of financial reporting, ensuring that the business’s financial position will be accurately represented to potential investors, existing shareholders, and state and federal authorities.
How many vacations should business owners take?
If you have to ask, you are not taking enough.
Americans are taking fewer (and shorter) vacations overall and this trend is magnified at the top of organizations. Business owners are less likely to take much needed vacation time than lower level staff, especially at small businesses and startups. In fact, only half of small business owners plan to take a vacation in the next year and of those, 26% will just take a few days off.
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