3 Church Finance Practices That Could Get You in Trouble (Without Even Knowing It)

Let’s be honest. Most pastors didn’t go into ministry for the spreadsheets.

We’re called to preach the gospel, disciple people, and care for the flock, not to become compliance experts or internal auditors. But here’s the reality. When it comes to church finances, what you don’t know can hurt you. Not just your church, but you personally.

These aren’t criminal schemes or massive scandals. These are everyday practices. Things churches do all the time, often with good intentions, that could quietly create legal, financial, or tax exposure.

And most of the time, nobody even realizes it.

If you’re a pastor or board member, here are three common practices to watch for. Fixing them is usually simple. Ignoring them could lead to problems you don’t want.

1. Using a Church Credit Card Without Proper Oversight

Here’s the setup. The church has a credit card. The pastor or staff make purchases. Everyone trusts each other. Receipts may or may not be turned in. And nobody thinks twice about it.

Until someone does.

The IRS, an insurance audit, a new board member, or even a disgruntled former staffer can shine a light on poor documentation. And if the church can’t show clear accountability, the IRS may view those purchases as taxable income to the person using the card.

That means unexpected W-2 corrections. It also means potential penalties, back taxes, and a whole lot of headaches.

Best practice:

• Require receipts for every charge

• Have someone other than the cardholder, like the treasurer or board secretary, review and approve each statement

• Use a written credit card policy to make expectations clear

If your system relies on "trust me," it’s time for a better system.

2. Reimbursing Expenses Without an Accountable Plan

This one is sneaky. A pastor pays for a conference, a book, or even mileage out of pocket. The church wants to be generous, so they cut a check to reimburse them.

No problem, right?

It depends.

If the church doesn’t have a written accountable reimbursement plan, and if those reimbursements aren’t submitted properly with receipts, mileage logs, and timeliness, the IRS can view those reimbursements as taxable income.

You read that right. The pastor thinks they’re being reimbursed. The IRS thinks they’re getting a bonus.

The fix is simple:

• Adopt a written accountable plan. I can help you with a sample if you need one

• Submit receipts or logs within 60 days of the expense

• Reimburse only expenses that are ministry-related and properly documented

A good plan protects both the pastor and the church.

3. Giving “Love Offerings” to Staff Without Reporting Them

This one happens all the time and almost always with good intentions.

Maybe the board wants to bless the pastor with a special thank you check for Pastor Appreciation Month. Or a staff member had a new baby, and the church takes up a collection to help.

The heart behind it is beautiful. But if the check comes from the church’s bank account and it’s given to a staff member, it’s reportable income.

Even if it was a gift. Even if it was a surprise. Even if everyone called it a “love offering.”

Here’s the line. If the church controls the funds, decides who receives the gift, and writes the check, it’s income. The only true gift in the IRS’s eyes is something given person to person, not routed through the church.

To stay above reproach:

• Report all staff bonuses, love offerings, and appreciation checks as income

• Don’t promise or promote personal gifts through the church. For example, “Give through the offering and we’ll bless Pastor John”

• When in doubt, treat it like income. It’s the safer route

You can honor your team without accidentally creating a tax problem.

Final Thought

You don’t need to be afraid of finances. But you do need to be wise.

As churches grow, so do the risks. A few simple policies and some basic awareness can protect your team, your reputation, and your calling.

And if you’re reading this thinking, “Uh oh… we’ve definitely done one of these…” don’t panic. You’re not alone, and it’s rarely too late to fix things.

Need help reviewing your systems? That’s part of what I do. But even if you’re not ready for that, just taking the time to read this post already puts you ahead of the game.

You’ve got this. Let’s lead with integrity, both in the pulpit and in the books.