PSA L&P - Setup: How to set up and use shared expenses when part of a cluster

How to set up and administer shared expenses when part of a cluster

The following set up and procedures apply to the Ledger & Payable Module as well as to the Payroll Module.

If you are part of a cluster of churches that share expenses and you are the parish that pays the expenses, the following instructions will outline how to set up your books and how to process these payments so you know what you are owed and what has been paid by each cluster-church. Briefly, you must:

  • Ledger & Payables: Set up accounts receivable accounts (A/R) for each cluster-church to track the payments you make on behalf of each as well as the reimbursements.
  • Ledger & Payables: Set up each vendor who gets paid on behalf of the cluster of churches with distribution accounts that include the expense account for your obligation and also the A/R accounts for each cluster-church.
  •  Payroll: Set up distribution accounts to distribute payroll benefit expenses shared among the cluster-churches as well as the general payroll distribution for the salary.
  • Reimbursement - send bill: Use the Account Audit Report for each A/R account (one for each cluster-church) as the 'bill' for each church.
  • Reimbursement - record payment: When each cluster-church pays the 'bill,' create a journal entry or a deposit that records the debit to the checking account and the credit to the A/R account for that church.

    Ledger & Payables → Accounts
  1. First, add an "accounts receivable" account for each sister parish. A receivable is an asset account that shows how much money is owed to you by another party. Here is an example:

    Ledger & Payables → Vendors
  2. Set up each vendor with a distribution that includes your expense account (to account for your church's obligation) and that also includes each cluster-church's A/R account for each of their obligations.  To learn how to set up a vendor distribution, see the following article, How to set up a vendor for account distributions. Here is an example:
      • The part of the electricity bill that you owe will come out of your cash account and be expensed to electricity.
      • The part of the electricity bill that each cluster-church owes will come out of your cash account and be debited to each church's A/R account until they pay you back; when you receive payment, this part of the entry will be reversed.
    Ledger & Payables → Reports
  3. At month-end (or at the agreed-upon time) send each cluster-church a 'bill.' One option is to print the Account Audit report for each church's A/R account. This will include any transactions that have been debited and credited to each A/R account including payroll which is detailed in the next section.

    Ledger & Payables → Journal Entries (or Deposits)
  4. When you receive the payment from each cluster-church, either create a deposit or create a journal entry to record the deposit and to decrease the A/R for that church. Here is an example of a journal entry.
  5. The Account Inquiry Report may be helpful to see the year-at-a-glance for each cluster-church.


Performing Cost Share in Payroll

  1. To ensure that each church pays its own portion of the benefit expenses, set up the gross pay account for each as follows: See this video  Account Distribution (Video) or this article Account Distributions for more information on setting up account distributions.
    • Set up the gross pay account for your portion of the employee's salary using normal distribution liability and expense accounts. This will track the portion of the benefits for which your church is responsible.
    • Then, set up the gross pay account for each cluster-church's portion of the employee's benefit expenses using the A/R account in the distribution of the Benefits Expense fields. Note, the gross pay account and the benefit expense accounts are the same account numbers. All of the other accounts will likely be the same. This will track the portion of the benefits that each sister church owes.
  2. Next, in the employee record, add a distribution to the gross pay salary account used to pay the employee. This will track the portion of the salary that each sister church owes. For additional information on setting up distributions, see the article, How to add multi-account distribution for pay data.
    • In the example below, line one lists the expense account and the percentage of the salary for which your church is responsible.
    • In the next lines, each church's AR account is used to set apart the (percentage) portion of the salary that each cluster-church owes.
  3. Repeat step 1 and step 2, bullet 2, for each gross pay account that needs to be distributed.
  4. Once you have run payroll for the time period agreed to with the cluster churches, and you have recorded all of the bills in the Ledger & Payables module, you may create the 'bill' as shown in #3 in the Ledger & Payables section above.
  5. As you receive payment from each cluster church, you may record it as a deposit or as a journal entry as shown in #4 in the Ledger & Payables section above.




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