Episodes
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Welcome to The Church Finance & Minister Tax Podcast! Are you ready to safeguard your church's financial health? Join us as we uncover common pitfalls and share tips for financial compliance. From avoiding the commingling of funds to reporting taxable income, get ready to empower your church with the knowledge it needs. Stay tuned for valuable insights coming up in our final part of the 3-part series on Navigating the IRS.
Episode Quote"You are successful when you do what you need to do today."— Craig Groeschel, "Think Ahead"
Episode HighlightsCommon Pitfalls in Church Financial ComplianceCommingling Personal and Church Finances
Issue: Using church funds for personal expenses and reimbursing later blurs financial lines.Consequences: Lack of transparency, serious tax implications.Solution: Maintain separate personal and church accounts, revoke credit card privileges if misused, and ensure expenses are properly handled and reported.Failure to Report Taxable Income
Issue: Ministers failing to report housing allowances and other taxable income accurately.Consequences: Penalties and legal repercussions from the IRS.Solution: Understand housing allowances are subject to Self-Employment Contributions Act (SECA) taxes, and consider voluntary Federal withholding by the church to aid compliance.Importance of Professional Guidance
Issue: Unique complexities in church finances require specialized knowledge.Solution: Seek professionals with expertise in nonprofit and church finances. Research and choose the right financial advisor, attend relevant training, and continuously educate church leaders on financial laws and best practices.Special AnnouncementNew Course: Intro to Church FinancesDetails: A comprehensive beginners course to help church leaders understand financial management and compliance.Join the Waitlist: Be the first to know when it launches by signing up at www.introtochurchfinances.com.SummaryMaintaining financial compliance in church operations requires consistency, transparency, and a commitment to understanding and fulfilling the legal and tax obligations for the church. By avoiding common pitfalls such as commingling funds and failing to report taxable income, and seeking professional guidance, church leaders can safeguard their organization's financial integrity, allowing staff to focus on their spiritual missions without the stress of financial mismanagement.
Thank you for joining us for the final episode of our Navigating the IRS series. Stay tuned for more episodes on how to empower your church with sound financial practices.
This podcast is brought to you by Hallmark Tax Solutions, LLC, specializing in church financial compliance and minister tax services. Learn more at Hallmark Tax Solutions, LLC.
xo,MichelleNext Steps:Grab Your Freebies:Six Steps to Doing Business God's Way biz owners
A QuickStart Guide to Church Finances everybodyLooking for a group of like-minded people that want to keep Jesus at the center of everything they do?
Join the BEST Facebook group for church finances at Church Bookkeeping and Clergy Tax Facebook Group
Need an extra hand with an immediate situation? Schedule a Consultation:Schedule Consultation
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In today's episode I share about a recent consultation session I had and what I shared about not allowing others to walk over you even when you work at a church!
Listen in and hear the passion :-)
xo,MichelleNext Steps:Grab Your Freebies:Six Steps to Doing Business God's Way biz owners
A QuickStart Guide to Church Finances everybodyLooking for a group of like-minded people that want to keep Jesus at the center of everything they do?
Join the BEST FaceBook group for church finances at Church Bookkeeping and Clergy Tax Facebook Group
Need an extra hand with an immediate situation? Schedule a Consultation:Schedule Consultation
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Missing episodes?
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Are you a church leader feeling overwhelmed by financial compliance? Stay tuned for part 2 of our series on Navigating the IRS maze: Tips for Church Financial Compliance. From maintaining accurate records to staying up-to-date with IRS filings, we've got you covered. Get ready to streamline your financial processes and gain peace of mind. I’m so happy to have you join me today!
As promised.... here is the IRS blurb you need to include in your contribution statements (or something similar)
Statement that goods or services, if any, that the organization provided in return for the contribution consisted entirely of intangible religious benefits, if that was the case.xo,MichelleNext Steps:Grab Your Freebies:Six Steps to Doing Business God's Way biz owners
A QuickStart Guide to Church Finances everybodyLooking for a group of like-minded people that want to keep Jesus at the center of everything they do?
Join the BEST FaceBook group for church finances at Church Bookkeeping and Clergy Tax Facebook Group
Need an extra hand with an immediate situation? Schedule a Consultation:Schedule Consultation
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Feeling lost in a maze of IRS regulations? Don't worry, you're not alone. Many church leaders and finance managers find themselves overwhelmed by the intricate web of rules and requirements. But fear not, because today, we're here to shed some light on the path to financial compliance. Today’s episode will kick off our 3 part series on Navigating the IRS Maze: Tips for Church Financial Compliance. I’m so happy to have you join me today!
xo
MichelleNext Steps:Grab Your Freebies:Six Steps to Doing Business God's Way biz owners
A QuickStart Guide to Church Finances everybodyLooking for a group of like-minded people that want to keep Jesus at the center of everything they do?
Join the BEST FaceBook group for church finances at Church Bookkeeping and Clergy Tax Facebook Group
Need an extra hand with an immediate situation? Schedule a Consultation:Schedule Consultation
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I'm thrilled to share that the Bookkeeping with a Purpose podcast is evolving to better support our church office crew and is rebranding to a new name “The Church & Minister Tax Podcast”. Same location, all the back episodes, just a new name and expanded focus. Alongside finance and tax tips, we're diving into admin tricks and organization hacks to make your life easier. With over three decades of office experience under my belt, I'm here to offer the best advice on running your office smoothly and ethically.
xo
Michelle R Brown, EA
Join our FREE FaceBook Community
Intro To Church Finances course waitlist
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NOTE: The Department of Labor (DOL) and the Internal Revenue Service (IRS) use different criteria for determining whether a worker is an employee or independent contractor, and the criteria serve different purposes.
The DOLs criteria are primarily used for determining eligibility for wage and hourly protections under the Fair Labor Standards Act (FLSA), ( which we covered in Ep 57) while the IRS’s 20-factor control test is used for tax purposes.
On January 9th, 2024, the DOL unveiled its final rule, which fundamentally alters how businesses/organizations (incl. churches) determine whether a worker is an employee or an independent contractor. Effective March 11th, 2024, this rule replaces the 2021 independent contractor rule issued under former President Donald Trump, introducing a six-factor test to evaluate worker classification.
But what exactly are these six factors, and how do they impact churches and workers alike? We break it down in this episode.
xo,MichelleNext Steps:Grab Your Freebies:Six Steps to Doing Business God's Way biz owners
A QuickStart Guide to Church Finances everybodyLooking for a group of like-minded people that want to keep Jesus at the center of everything they do?
Join the BEST FaceBook group for church finances at Church Bookkeeping and Clergy Tax Facebook Group
If you’re a church staff member or volunteer looking to serve your local church with excellence, check out my membership group The Bookkeepers Inner Circle @ www.bookkeepersInnerCircle.com
Need an extra hand with an immediate situation? Schedule a Consultation:Schedule Consultation
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Segment 1: Tax Realities
Ministers Pay Taxes: Dispelling myths.Legal Truth: Courts reject tax exemption claims.Cautionary Note: Risks of tax evasion.Segment 2: Ministerial Taxes 101
Tax Status: Ministers are self-employed.Who's Qualified: Active licensed, ordained, or commissioned ministers.Tax Responsibilities: Pay taxes through withholding or estimated payments.Segment 3: Compliance & Penalties
Filing Rules: Ministers must file if earning over $400.Accuracy Matters: Penalties for wrong tax reporting.Get Help: Advising professional tax assistance.Segment 4: Church Payroll Taxes
Get FEIN: Federal Employer Identification Number is essential.How to Get FEIN: Fill Form SS-4.EFTPS Registration: Needed for tax payments.Segment 5: Payroll Tax Basics
Federal Income TaxMedicare TaxSocial Security TaxUnemployment Taxes for Churches.xo,MichelleNext Steps:Grab Your Freebies:Six Steps to Doing Business God's Way biz owners
A QuickStart Guide to Church Finances everybodyLooking for a group of like-minded people that want to keep Jesus at the center of everything they do?
Join the BEST FaceBook group for church finances at Church Bookkeeping and Clergy Tax Facebook Group
If you’re a church staff member or volunteer looking to serve your local church with excellence, check out my membership group The Bookkeepers Inner Circle @ www.bookkeepersInnerCircle.com
Need an extra hand with an immediate situation? Schedule a Consultation:Schedule Consultation
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Tax season is upon us, and with it comes the need for proper documentation. Improper donation receipts can cause headaches for both donors and organizations. In this episode, we'll dive into the essential elements of a donation acknowledgment letter to ensure compliance with IRS standards.
Main Content:
Understanding IRS Requirements:Explaining IRS guidelines for donors, including the need for timely written communication and recordkeeping.Highlighting the responsibility of donors to obtain proper documentation for charitable contributions.Church's Responsibilities:Outlining the essential components of a donation acknowledgement letter, as specified by the IRS.Emphasizing the importance of timely and accurate acknowledgement for contributions of $250 or more.Crafting the Letter:Providing a step-by-step guide for structuring a donation acknowledgement letter.Discussing the format, content, and personalization techniques to enhance donor engagement.Conclusion: As we wrap up, remember the significance of accurate recordkeeping and timely acknowledgement in fostering trust and compliance. By following these guidelines, you can ensure that your organization meets IRS standards and cultivates strong relationships with donors.
See links below that were referenced in this episode.
IRS Publication 1771
IRS Publication 526
xo,MichelleNext Steps:Grab Your Freebies:Six Steps to Doing Business God's Way biz owners
A QuickStart Guide to Church Finances everybodyLooking for a group of like-minded people that want to keep Jesus at the center of everything they do?
Join the BEST FaceBook group for church finances at Church Bookkeeping and Clergy Tax Facebook Group
If you’re a church staff member or volunteer looking to serve your local church with excellence, check out my membership group The Bookkeepers Inner Circle @ www.bookkeepersInnerCircle.com
Need an extra hand with an immediate situation? Schedule a Consultation:Schedule Consultation
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Introduction:
Welcome to episode 57 of the Bookkeeping with a Purpose podcast!Exploring the complexities of federal regulations, particularly regarding church employees and overtime rules.I stumbled upon something fascinating recently, and you know me, I can’t keep cool discoveries to myself. So, buckle up for a journey into the world of church finance regulations!Federal regulations often lack clarity, especially when it comes to topics like church employees and overtime rules.Sparked by a question about a past episode I recorded on church employees and overtime rules, recent research uncovered new insights, prompting a deeper dive into the subject. Spoiler alert: it’s not as straightforward as it seems.Segment 1: Quote of the Day
Drawing inspiration from Greek philosopher Aristotle: “We are what we repeatedly do. Excellence then, is not an act, but a habit.”Segment 2: Understanding Fact Sheet #14A
Exploring Fact Sheet #14A from the Wage & Hour Division of the US Department of Labor.Highlighting protections offered by the Fair Labor Standards Act (FLSA), including minimum wage, overtime regulations, record-keeping requirements, and child labor standards.Segment 3: Coverage Criteria
Diving into two key ways employees are covered under the FLSA.Enterprise Coverage: Employees of businesses generating at least $500,000 in annual sales revenue, with exceptions for non-profit organizations unless engaged in qualifying commercial activities.Individual Coverage: Employees engaged in interstate commerce or closely-related processes essential to such production.Segment 4: Application to Church Employees
Demonstrating how church employees may fall under FLSA protections, particularly through involvement in interstate commerce-related activities.Debunking common misconceptions and emphasizing compliance with overtime regulations, minimum wage rules, record-keeping requirements, and child labor standards.Segment 5: Volunteer Guidelines
Clarifying volunteer regulations outlined in Fact Sheet #14A:Restrictions on volunteering in commercial activities.Prohibitions against displacing paid employees with volunteers.Limitations on paid employees volunteering for similar services performed in their job roles.Episode Support Links
Fact Sheet #14A: Non-Profit Organizations and the Fair Labor Standards Act (FLSA)
xo,MichelleNext Steps:Grab Your Freebies:6 Step Process to Doing Business God's Way biz ownersFREE QuickStart Guide to Church Finances everybodyLooking for a group of like-minded people that want to keep Jesus at the center of everything they do?
Join the BEST FaceBook group for church finances at Church Bookkeeping & Clergy Tax FaceBook Group
If you’re a church staff member or volunteer looking to serve your local church with excellence, check out my membership group The Bookkeepers Inner Circle @ Bookkeepers Inner Circle
Need an extra hand with an immediate situation? Schedule a Consultation:Consultation
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In Episode 42 I talked to you about 3 steps to help you create a sound budget. In today's episode I want to help you take the next step in the budgeting process - ensuring that every program you created a budget line item for is carried out with excellence so that you can actually stay within that budget! Listen in to see how you can continue to honor God in the budget process.
xo,MichelleNext Steps:Grab Your Freebies:https://churchfinances.ck.page/6steps biz owners
https://churchfinances.ck.page/guide everybodyLooking for a group of like-minded people that want to keep Jesus at the center of everything they do?
Join the BEST FaceBook group for church finances at https://www.facebook.com/groups/churchbookkeepingandclergytax
Need an extra hand with an immediate situation? Schedule a Consultation:https://churchfinances.org/consult
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Direct from the IRS website:
A minister's housing allowance (sometimes called a parsonage allowance or a rental allowance) is excludable from gross income for income tax purposes but not for self-employment tax purposes.
If you receive as part of your salary (for services as a minister) an amount officially designated (in advance of payment) as a housing allowance, and the amount isn’t more than reasonable pay for your services, you can exclude from gross income the lesser of the following amounts:
the amount officially designated (in advance of payment) as a housing allowance;the amount actually used to provide or rent a home; orthe fair market rental value of the home (including furnishings, utilities, garage, etc.).The payments officially designated as a housing allowance must be used in the year received.
Include any amount of the allowance that you can't exclude as wages on line 1a of Form 1040, U.S. Individual Income Tax Return or Form 1040-SR, U.S. Tax Return for Seniors. Enter “Excess allowance” and the amount on the dotted line next to line 1a.
If your congregation furnishes housing in kind as pay for your services as a minister instead of a housing allowance, you may exclude the fair market rental value of the housing from income, but you must include the fair market rental value of the housing in net earnings from self-employment for self-employment tax purposes.
For more information on a minister’s housing allowance, refer to Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers.
For information on earnings for clergy and reporting of self-employment tax, refer to Tax Topic 417, Earnings for Clergy.
xo,MichelleNext Steps:Grab Your Freebies:https://churchfinances.ck.page/6steps biz owners
https://churchfinances.ck.page/guide everybodyLooking for a group of like-minded people that want to keep Jesus at the center of everything they do?
Join the BEST FaceBook group for church finances at https://www.facebook.com/groups/churchbookkeepingandclergytax
If you’re a church staff member or volunteer looking to serve your local church with excellence, check out my membership group The Bookkeepers Inner Circle @ www.bookkeepersInnerCircle.com
Need an extra hand with an immediate situation? Schedule a Consultation:https://churchfinances.org/consult
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1099-NEC or 1099-Misc?
Knowing which form to use can be confusing.
In today's episode I go over
1. who should receive a Form 1099
2. which Form 1099 do you send
3. special circumstances that determine which form to use
4. e-filing requirements
5. filing deadlines
I hope this helps!
xo,MichelleNext Steps:Grab Your Freebies:https://churchfinances.ck.page/6steps biz owners
https://churchfinances.ck.page/guide everybodyLooking for a group of like-minded people that want to keep Jesus at the center of everything they do?
Join the BEST FaceBook group for church finances at https://www.facebook.com/groups/churchbookkeepingandclergytax
If you’re a church staff member or volunteer looking to serve your local church with excellence, check out my membership group The Bookkeepers Inner Circle @ www.bookkeepersInnerCircle.com
Need an extra hand with an immediate situation? Schedule a Consultation:https://churchfinances.org/consult
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In today's episode we go over how to properly fill out your Ministers W-2, the new mileage rate for 2024 and 1099 filing requirements and deadlines.xo,MichelleNext Steps:Grab Your Freebies:
https://churchfinances.ck.page/6steps biz owners
https://churchfinances.ck.page/guide everybodyLooking for a group of like-minded people that want to keep Jesus at the center of everything they do?
Join the BEST FaceBook group for church finances at https://www.facebook.com/groups/churchbookkeepingandclergytax
If you’re a church staff member or volunteer looking to serve your local church with excellence, check out my membership group The Bookkeepers Inner Circle @ www.bookkeepersInnerCircle.com
Need an extra hand with an immediate situation? Schedule a Consultation:https://churchfinances.org/consult
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The IRS has announced the tax opening date for 2024.
In today's episode I share a list of documents you need to start gathering together to help make the tax prep process smoother for you and your tax preparer.
This week's Courageous Obedience Moment is to look for God and how His character is revealed in Scripture instead of reading the Bible with the intent of looking for what the Word has to say to you. Look for God!
xo,MichelleNext Steps:Grab Your Freebies:https://churchfinances.ck.page/6steps biz owners
https://churchfinances.ck.page/guide everybodyLooking for a group of like-minded people that want to keep Jesus at the center of everything they do?
Join the BEST FaceBook group for church finances at https://www.facebook.com/groups/churchbookkeepingandclergytax
If you’re a church staff member or volunteer looking to serve your local church with excellence, check out my membership group The Bookkeepers Inner Circle @ www.bookkeepersInnerCircle.com
Need an extra helping hand with an immediate situation? Schedule a Consultation:https://churchfinances.org/consult
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IRS blurb for your annual contribution statements
" Pursuant to Internal Revenue Code requirements for substantiation of charitable deductions, no goods or services were provided in return for the Tax Deductible contributions"
For QuickBooks Desktop:
" Unless otherwise noted, the only good or services provided are intangible religious benefits"
Records that should be retained for 5 years:
Offering Envelopes (unless you put a disclaimer advising members to request any necessary changes within a specified time period on the annual statement)Annual contribution statementsWritten acknowledgment of charitable contributionsWritten verification of participation in short-term mission projects approved by the churchSubstantiation of business related expenses that are a part of an Accountable Reimbursement PlanMinister job descriptions and Housing designationsCopies of IRS forms (ex. 941, W-2's, 990-T, W-4's, 1099's)Records to keep until Jesus comes back :-)
Any and all legal documents for the church (incl. Articles of Incorporation, Constitution & Bylaws, Tax exemption records)Church Policies, Job descriptions, Compensation Package data, Accountable Reimbursement Plans & Safety Net Housing Allowance docs if you have oneCorrespondence from the taxing authorities incl. IRS, State and local authorities (incl. Form 1023 application, SS-4 EIN number, Form 8274)Courageous Obedience Moment:
From Calm Your Anxiety by Robert J. Morgan
"Equipping yourself with Scriptures will help your mind be trained to move from panic to peace, from worry to worship, and from anxiety to confident trust. Identify three scriptures that will help you make these movements. Recite them each day until you've memorized them."
Be blessed my friend.
xo,MichelleNext Steps:Grab Your Freebies:https://churchfinances.ck.page/6steps biz owners
https://churchfinances.ck.page/guide everybodyLooking for a group of like-minded people that want to keep Jesus at the center of everything they do?
You can join the BEST FaceBook group for churches at https://www.facebook.com/groups/churchbookkeepingandclergytax
If you’re a church staff member or volunteer looking to serve your local church with excellence, check out my membership group The Bookkeepers Inner Circle @ www.bookkeepersInnerCircle.com
Schedule a Consultation:https://churchfinances.org/consult
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With the end of year upon us, let's take the time to review what worked well this year, and what didn't. Then take steps to make next year even better!
Here are some links to resources that can help increase your knowledge in church finances.
www.thechurchnetwork.com
www.churchlawandtax.com
www.bookkeepersinnercircle.com
xo,MichelleNext Steps:Grab Your Freebies:https://churchfinances.ck.page/6steps biz owners
https://churchfinances.ck.page/guide everybodyEnd of year special -- ONLY $10/month! Special pricing ends 12.31.23
Looking for a group of like-minded people that want to keep Jesus at the center of everything they do?
If you’re a church staff member or volunteer looking to serve your local church with excellence, check out my membership group The Bookkeepers Inner Circle @ www.bookkeepersInnerCircle.com
Schedule a Consultation:https://churchfinances.org/consult
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Communication. You hear it mentioned when you're in a relationship. But communication is also vital to your business success. Today I talk about 3 areas of communication that you need to pay attention to in order to experience the success you desire in your service to the local church.
I open with a story about a remarkable lady who works in her church office and has some unique challenges.
I hope this episode blesses you.
xo,MichelleNext Steps:Grab Your Freebies:https://churchfinances.ck.page/6steps biz owners
https://churchfinances.ck.page/guide everybody -
Intuit is always changing things, and not always for the best. Many small and medium size churches still use QB Desktop and it has been my software of choice for the last 27 years. Intuit made the announcement this week that they will no longer make the Desktop version available to new customers effective July 31, 2024. As QB Pro Advisors and bookkeeping professionals, we knew it was coming, we just didn't know when. Current subscribers CAN still keep your desktop subscription, you just have to pay an annual fee. The days of purchasing the software and it being a "one and done" are gone. xo,MichelleNext Steps:Grab Your Freebies:
https://churchfinances.ck.page/6steps biz owners
https://churchfinances.ck.page/guide everybodyLooking for a group of like-minded people that want to keep Jesus at the center of everything they do?
If you’re a looking to serve your local church with excellence, check out my membership group The Bookkeepers Inner Circle @ www.bookkeepersInnerCircle.com
Schedule a Consultation:https://churchfinances.org/consult
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Dual tax status = EE for income tax purposes, but considered SE for FICA tax purposesMinister should make ETP throughout the year to help pay for the SE taxes that will be due on their income to avoid underpayment penalties if they owe over $1,000 tax liabilityEE vs IC IRS link Publication 1779 downloadHA is exempt from Federal Income Tax, but IS subject to SECA and has limitations on the amount that can be designatedBusiness expenses must be allocated between taxable and nontaxable income (calculated on the 3 Clergy worksheets on the ministers tax return)Special rules apply to retired ministers who receive any of their retirement benefits as HA Form 4361 explanation (filed within first 2 years of earning minister earnings of $400 or more) - NON revocableDue to TCJA until 2025 the Misc. Itemized deduction subject to 2% AGI limitation is not allowed. However, if the minister has unreimbursed job expenses, he can subtract them from SE earnings on Worksheet 3 of the Clergy Worksheets in the minister's 1040 tax returnGifts given to active ministers may actually be compensation for services rendered and therefore included as taxable income.
I hope this information is helpful to you.
xo,MichelleNext Steps:Grab Your Freebies:https://churchfinances.ck.page/6steps biz owners
https://churchfinances.ck.page/guide everybodyLooking for a group of like-minded people that want to keep Jesus at the center of everything they do?
If you’re a business owner looking for help serving your clients with excellence, check out my Mastermind program The Bookkeepers Next Level @ www.bookkeepersNextLevel.com
If you’re a church staff member or volunteer looking to serve your local church with excellence, check out my membership group The Bookkeepers Inner Circle @ www.bookkeepersInnerCircle.com
Schedule a Consultation:https://churchfinances.org/consult
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Regardless of what's going on in your life or your business, there is ALWAYS something to be thankful for.
In today's episode, I go over some items that we should all be thankful for this year.
Thanks for taking a listen and I hope you have a very Happy Thanksgiving!
xo,MichelleNext Steps:Grab Your Freebies:https://churchfinances.ck.page/6steps biz owners
https://churchfinances.ck.page/guide everybodySchedule a Consultation:https://churchfinances.org/consult
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