© 2006 by Nick B. Nicholaou, all rights reserved President, Ministry Business Services, Inc. Submitted to Leadership Handbooks of Practical Theology
Calculating a tithe for employees is easy because they receive a paycheck. Doing so for business owners is more difficult because there are so many organization models, income sources, and accounting system standards. The result has been that business owners are left to themselves to identify their own methods for calculating a tithe. I hope this attempt at identifying factors for business owners to consider is the beginning of a discussion that helps many to do what our Lord challenged us to in Malachi 3:10-12:
Bring the whole tithe into the storehouse, that there may be food in my house. Test me in this,” says the LORD Almighty, “and see if I will not throw open the floodgates of heaven and pour out so much blessing that you will not have room enough for it. I will prevent pests from devouring your crops, and the vines in your fields will not cast their fruit,” says the LORD Almighty. “Then all the nations will call you blessed, for yours will be a delightful land,” says the LORD Almighty. (NIV)
Over-Arching Considerations
As business owners, we wrestled through these issues and found ourselves having to work through a number of challenges.
- If the IRS limits how much a business can write off of its contributions (10% of net profit for corporations, 50% of adjusted gross income for unincorporated businesses), should that be our guideline? While this definitely impacts us, we asked ourselves what we would do if we lived in a country that offered no tax incentives at all. The answer we came to was that we would honor God with our tithe regardless of any tax considerations. Working through that one issue framed how we approached everything else.
- Should we tithe before or after taxes are paid? It seems clear in the Scriptures that we are to tithe based on pre-tax amounts. Leviticus 27:30-33a says: ‘A tithe of everything from the land, whether grain from the soil or fruit from the trees, belongs to the LORD; it is holy to the LORD. If a man redeems any of his tithe, he must add a fifth of the value to it. The entire tithe of the herd and flock — every tenth animal that passes under the shepherd’s rod— will be holy to the LORD. He must not pick out the good from the bad or make any substitution.'” (NIV)
This was told to those in an agricultural economy, and there are adjustments we need to make as we apply the principal in today’s economy. But what it does not say is to tithe what’s left from all that your fields produce each year after you’ve paid your taxes.
- How obligated should we feel to tithe? 2 Corinthians 9:6-8 says: Remember this: Whoever sows sparingly will also reap sparingly, and whoever sows generously will also reap generously. Each man should give what he has decided in his heart to give, not reluctantly or under compulsion, for God loves a cheerful giver. And God is able to make all grace abound to you, so that in all things at all times, having all that you need, you will abound in every good work. (NIV) Rather than seeing our tithe as a bill to pay, we approach it cheerfully as a privilege. In fact, giving to our church is my favorite part of worship because it is my tangible offering to our loving and gracious Lord.
Calculating a Business’ Tithe
Many business owners want their business to be a “tithing business”. The best “first fruits” model (calculating based on gross earnings) is to have the business tithe 10% of its book net income before taxes. This calculation should include all forms of income.
Considerations:
- Sole-Proprietorship. Sole proprietors might think they should use their Schedule C net profit / loss (line #31) as their tithing basis. However, the amount on this line can be reduced by some tax incentives in a way that it is no longer “first fruits”.
- Partnership. A majority of partners must agree on being a tithing business. If they don’t, individual partners should base their business tithe on their K1’s total of lines 1-11 in Part III.
- S-Corporation. A majority of shareholders must agree on being a tithing business. If they don’t, individual shareholders should base their business tithe on their K1’s total of lines 1-10 in Part III.
- C-Corporations. A majority of shareholders must agree on being a tithing business.
- Accrual Basis Accounting. Accrual basis accounting refers to when income and expenses are booked. Since this method recognizes both income and expenses when they’re incurred, the tithe should still be based on the book net income.
Calculating a Business Owner’s Personal Tithe
A business owner should personally tithe 10% of his/her income from all sources before taxes. This includes all types of income received from the business (paychecks, rents, interest, leases, etc) and other sources. Excluded from this calculation are any investments that have changed value— up or down— but have not yet been realized.
Business owners are cautioned from approaching the tithe like a tax. U.S. tax regulations allow many expenses that are really personal expenses to be paid by the business. When considering the spirit and intent of God’s challenge to tithe, however, these expenses must be backed out to arrive at an appropriate “first fruits” amount.
The goal is not to live by a strict rule, but rather to live a life reflecting the generosity we received from our Lord. He challenges us to tithe and live generously towards his works. These guidelines will help in working through the issues, establishing a starting point, and living the generous lives we intend.
Hello, this is a great article. I have really been struggling with this. My wife and I have been liberal with our tithing and offering, but as we have moved forward with the business, we have had difficulty understanding what the Bible says about tithing Book net verses the book gross.
When we were employed we always tithed the gross. Now that we have the business and are adding 1099 employees we are having trouble determining The best way to tithe according to Scripture.
Do you have any Scriptural guidance that states that we should tithe from the book net verses book gross. It does not make logistical sense to me to tithe from the book gross especially with employees, however I am seeking the best scriptural guidance rather than my logistical opinion.
Are there any examples of scriptural support and/or personal elaboration you can provide that suggest tithing from the book net vs book gross is best first fruit practice
Hi Choya,
Your question is a good one. The lack of specific scriptural guidance on the topic of business tithing, I think, is the reason most stay away from the topic of how to calculate a business tithe. But those of us with businesses want guidance! That’s why I wrote the article.
We understand from scripture that a personal tithe is based on gross income. For those on a wage or salary, that’s easy to calculate. Businesses are different.
I think it’s best to think through an exaggerated example to make the case for a business tithing based on what you’re calling ‘book net’.
Think of a house builder. The business may sell the finished house for $1,000,000; should the business tithe on that amount (tithing $100,000)? Chances are the book net is less than $50,000. Tithing $100,000 would mean a net loss of $50,000! There is significant cost to the builder: land, materials, labor, selling fees, and more. Even if the owners of the business include their salaries (for which they should personally tithe based on their personal gross) in calculating the net book income, the business still could not sustain such a tithe calculation, and would soon close its doors. The same would be true for manufacturers of durable goods (cars, planes, microwave ovens, refrigerators, etc).
Knowing that the Lord wants us to be good stewards, or managers, it doesn’t make sense that he, a loving God, would require so much.
Thus, I think there’s good logical reasoning for a business to calculate its tithe based on book net vs gross.
I hope that helps!
Nick
This is precisely what I was thinking. My business doesn’t even add 10% margin most times because of the industry. If I tithe 10% of all the money coming in I would not even be able to complete the work I am supposed to do and because Im in financial services Im really a custodian of that money its nit counted as income. Messing with that would get my license revoked and if the government feels its really bad well then Id just end up in prison for misuse of funds.
But I am committed to tithing so will tithe off of the nett which is at my discretion to use.
Do you tithe at the end of the financial year or every month. Once month we were in loss due to Covid and one not, so idk if I should wait for our first operating year to be over and tithe then
The frequency is up to you and the Lord, Naomi. Some like monthly; I prefer quarterly.
Good evening,
Thank you for presenting this topic.
I’m a private chauffeur. Do I pay tithes from my entire income, or do I subtract petrol and maintained of my vehicle first?
Thanks, Benjamin, for your inquiry. The answer to your question is included in the post and its comments,
Nick
When we first started our business, we gave 10% of the gross income. Eventually that became unsustainable, considering our product mark up is around 50%. So, we eventually started giving our tithe based on a 50% gross calculation because that was around where our mark up for our product was. That worked for a couple years, but a lot has changed in our business. We are growing, have a higher overhead, employees, very large shipping and packaging costs, so as the business grows those cost do as well. So that number is not sustainable any longer. What we have decided to do is take a biweekly personal draw and pay tithe on that, then at the end of the years whatever the difference is between profit and our draw, we will adjust our tithe to make it based on our net income before taxes
That works, Steve!
This is a great conversation, certainly helpful. I appreciate your perspective, your contribution to education on this matter, and your reply
Thank you, Choya!I’m still thinking through a response to your question in my mind and hope to post it soon.
How can one pay tithe on the school business?
If the school is private (vs public), the calculations are the same as for any other business.
Hello, thanks for the guidance you are giving on these matters. Was struggling with the issue of tithe as I want to honour the Lord with the business.
Mine is a sole proprietorship. The method of charging is that I charge the client the money that I actually spend for things like printing charge, postage, cost of communication, transport etc. Do I give tithe on these disbursements. Does the answer change if the client pays me a disbursement that I will have to pay, say, a government office for the service e.g. filing cost?
Secondly, I charge fees for services provided and value added tax (V.A.T) on the fees. Do I give tithe on both the fees and V.A.T or the fees only?
As pertains costs like rent and labour, these are paid for by myself from the fees/income. Do I give tithe prior to paying these bills or after paying bills?
Hi Magdaline,
Tithing for business is on net profits, so you would not tithe on costs, but only on your total fees as they exceed your total costs.
Blessings!
Nick
I freelance on the side and most of my customers pay me via Paypal. Should I tithe on the amount that I collect from the client before or after Paypal’s fees?
Hi Joe!
Paypal’s fees are part of your cost of doing business, so they would not be included in your tithe calculation.
Blessings!
Nick
IF THE COST OF BUYING A LAND AND BUILDING A HOUSE IS $1,000,000 AND THE PROPERTY WAS SOLD FOR $1,500,000 HOW MUCH IS THE TITHE?.
If the business’ total business-related expenses was $1,000,000, and the sale was $1,500,000, that would mean a net profit of $500,000. The business would tithe based on that net profit. The percentage of the tithe is determined by the business; Scripture states 10%, but that can be considered a minimum. If the tithe is 10%, that would be $50,000.
Our company began business in 2014 with some investments but we have not broken even as at 2018 calendar year. We have been making sales, paying salaries and other operational costs but have not yet recovered the initial investments made. Now do we tithe based on our profit (income-expenses) per calendar year or do we wait till the business breaks even before we begin to tithe?
Hi Michael!
The investment liabilities are not part of the tithe calculation. Payments to them would be, however, like principal or interest. So the tithe is based solely on your revenue less non-personal expenses.
Blessings!
Nick
You do a job for 9000. And your material is 4000 labor is 2500 . Do pay tithe on the 9000 or .or the 2500 left to your income
Hi Chuck!
Your business tithe would be based on the net income, or $2500. If the labor was income to you personally, you would personally tithe on the $2500 you were paid for doing the job.
Using a different example to make the math less confusing, if the business charged $10,000 for a project that had material costs of $4,000 and labor costs of $2,500, resulting in a net profit (assuming no other business expenses) of $3500, the business would tithe on $3500. If the labor cost was personal income to you, you would personally tithe based on the $2,500 of personal income.
They are treated as separate entities.
Hoping that helps,
Nick
After praying for an answer, you actually answered the same way I was thinking is the only way it should be done (being a good steward & tithing on the net).
GOD can’t be your business partner if he’s not receiving his portion of the ‘profit’.
Well said, Franklin!
I run a landscape maintenance business. Do I thithe off the gross or net of my business?
Business tithes are calculated on net income.
Hello
As a business owner, I pay myself salary to avoid dipping into the business funds anytime. So when should I tithe on. My salary, paid by the business or business profits
Hi Vivian!
My answer to Chuck (https://www.mbsinc.com/tithing-considerations-for-business-owners/#comment-1414) should answer your question. If not, please ask again,
Nick
Hello
Like Vivian, I pay myself a salary from my company except I do it to avoid additional taxes. Do I tithe on the company’s net income or my salary from the company? The answer to Chuck is slightly different.
Hi Ramone,
Your income is an expense to the company, so if the company tithes– assuming it is a separate legal entity like an LLC or corporation it would not tithe on your personal income. However, as an individual, you would tithe on your income personally in addition to the company tithing– if it is a separate legal entity.
I hope that helps,
Nick
Hello,
So this is something that I’ve been seeking out the last few years and can’t find a solution to. We farm/ranch and run basically a business model. The problem is we aren’t making money. We are having a net loss. The current Ag economy coupled with the weather has made things very difficult. Recently I sold a pen of cattle that had a gross income of 31k. But the net loss was 24k on that pen. That’s just one pen. Multiple pens have led to a lot more losses. I was just wondering if I’m suppose to tithe out of the 31k gross even though there wasn’t any profit?
Hi John,
Business tithes are based on net profit (assuming no inappropriate expenses have been added to the calculation to reduce the net profit – you can’t fool God!). A business with a loss in a period (month, quarter, year, etc) would not have a net profit to tithe on. I should probably mention that the calculation is not based on a single transaction, but on business activity in a period of time (again: month, quarter, year, etc).
Hoping that helps and that your business turns around,
Nick
I appreciate your feedback, Nick. Very helpful.
God do you good.
Glad to help!
Blessings!
Nick
Good day. Please I run the family’s business and I travel to get goods sometimes worth 600 dollars. I end up tithing based on all that I make. Please do I need to subtract the 600 dollars from the money made from the sales and then tithe based on what is left? e.g if I get goods worth 600 dollars and get 800 dollars. Can I tithe based on 200 dollars? Thank You
Hi Eve!
My answer to Chuck (https://www.mbsinc.com/tithing-considerations-for-business-owners/#comment-1414) should answer your question. If not, please ask again,
Nick
Hi Nick. Great conversation. Thank you for being available to write and respond about it to so many that are curious and serious about being better stewards (in both generosity and tithing). You may have already answered this, so feel free to flip a link to the answer.
What about Tax return income? I pay my tithe from the gross (as a casual employee of a large business as well as a casual government employee). So if I get 5k in my tax return, do I then pay 10%? I feel I need to as all income is from Him. But… I ask myself, do I?, as I’ve paid my tithe already from my gross income. It’s a question I’ve asked a couple of people who have generally said, ‘good question!’ But not actually able to answer it.
I also have a hobby business. I pay wholesale, sell retail. I tithe from the profits after my market stall rent. When I pay wholesale and forward onto members in my team, I don’t need to tithe. That is all correct?
I’m far from business minded or involved with keeping books. I have however started keeping an expense journal of incoming and outgoings of everything as I am seeking to be a better steward and want my ducks in a row so I’m honouring my Father in Heaven.
Thanks for your time.
L’rece
Hi L’rece!
Thank you for your encouragement!
Tax refunds are not taxable if the tithe was calculated before taxes. If the tithe was calculated after taxes, then the refund would be taxable.
Regarding the hobby business question, I wasn’t quite sure the issues being asked about “…forward onto members in my team”).
Hoping that helps,
Nick
Just adding my two cents to your question. I pay tithing on my gross income, so when I receive a refund of my withholdings, I do not pay tithing on that, however if I receive credits on my US tax return above my withholdings, I do tithe on the additional credits. For example, the child tax credit, or earned income credit is additional money that I have been blessed with, I pay tithing on that portion of the refund.
I have a service business with minimal overhead, so I am choosing to pay tithing on my gross income rather than net income. It has been my experience that as I am generous with the Lord in my tithes, he blesses me in ways that make the extra worth it. For example, I have been in a lull with getting new clients, but when I decided to pay tithing on the first payments that came in not taking any expenses into account, I got a couple of leads out of the blue that I would have never expected. I know He wants to bless us as we are obedient to the law of tithing.
Hi,
I have a sole proprietor cash basis business. Each month it is netting about $2000 dollars. Each month I draw $1000 out of the business as my income. Do I tithe on the $1000 or the $2000?
Thank you!
Hi Tricia!
In the situation you describe, the business would tithe on the remaining $1000 net profit. Also, you would personally tithe on the $1000 income draw. Separate checks from separate entities.
I hope that helps!
Nick
Thank you! After reading the article and your response to several similar questions, this is the one that makes the most sense when tithing on business & personal income (as the business owner).
You’re welcome, Kindra!
Hi Nick, thank you for all the advise.
I run a business, and do I tithe on the net income or Actual cash received. Business just started to turn around with God’s blessing but cash flow is still almost negative, stuck in receivables.
You’re welcome, Joan!
Thank you so much for providing guidance. God bless!!
You’re welcome, Patrick!
Hi Nick,
I just wanted to say thank you for this post and comments it is a relief for me to see the examples you used. My husband and I have different views as to gross vs net tithing in our business but with your post I believe it will help us much. I can see crearly how business tithing should work on net.
You’re welcome, Yoselyn!
My wife gave me $3,000 to purchase a truck for business, do I tithe on $3,000 if that’s the asking price for the truck?
Hi Michael,
Only businesses that are separate legal entities, like corporations or LLCs, would separately tithe on their business income. If the money was so you could buy a truck that you (not a separate business own) would own, then the answer is no. If the money was income (not a loan) to a legal business entity, then yes.
I hope that helps!
Nick
Hi. We are an ag business. We have a handle on the gross income minus routine expenses before tithe. But we are continually buying/making payments over several years on new equipment. The payments are money going out. But the value of the equipment actually increases our net worth. How should factor or not factor that in to our expenses when trying to calculate tithe? And same question about the depreciation our accountant adds each year on equipment to our tax return? Thanks!!
Hi Heather,
Tithes are based on income and expenses; the purchase of an asset would normally only impact the tithe calculation if fully expensed or, if purchased via a loan the payments would be considered. For assets whose value is depreciated over time, the depreciation could also be a tithe-impacting expense.
Nick
Hi Nick, I appreciate your heart for this ministry. I own a self-proprietorship. For years I have been tithing off what I pay myself (as opposed to tithing off business income). For instance, if I make $100k a year and pay myself $50k, I’d tithe off the $50k. However, I’ve always been confused when it comes to taxes. I pay personal estimated taxes based on my business. So though I’m tithing off $50k, my taxes are based off of $100k. I use my personal money to pay for those taxes, which causes me to have to pay myself more. How do I factor in taxes when it comes to my tithe?
Hi Chris,
It sounds like your business may not be a separate legal entity (C corporation or LLC). If that’s true, then all business income may be, technically, personal income whether it’s paid to you or not. Your tax professional may be able to give you advice on your options.
Nick
Hi Nick,
I have gone through your responses to the previous questions but please in a case where you sell products of $2300 for $3000 how much tithe should be paid.
There may be costs associated with running your business that are in addition to the raw cost of the items you sold. Those might include office expenses, personnel expenses, and so on. Other than tax expenses (they are after-tithe expenses), the tithe is calculated after looking at all of those and identifying your net profit.
I want to get into a small business, and a family members gave me the amount I need for the business. Q. Am I suppose to pay tithe on this amount before I start the business or am I suppose to put in the whole amount into the business and pay tithes from the profit I make.
If the amount given was a loan or investment, it is not tithed. If it was income, it is tithed less expenses incurred.You may want to calculate your tithe quarterly, semi-annually, or annually to allow for the greatest flexibility of allowing the funds to be used as they were intended.
Nick,
Thank you for your input on this subject. The Lord expects the law of tithing to be simple, but human-created business operations complicate many aspects of it. I am one of three co-owners in our S-Corp. We each take a wage, and then only enough dividends to cover tax obligations. The rest of the income remains in the business and is invested towards future operations. My tithing is based on the only income that comes to me via wages. If I were to ever be issued dividends as discretionary income, I would also pay a tithe upon that.
Even if I thought it proper to have the business pay tithes, I couldn’t get the money out to pay it without the other business partners agreeing to take equal dividends, and that could not happen without hindering the necessary cash-flow to operate and grow. My only remaining option would be to pay business tithing amounts from my wage, which would then leave me unable to meet personal financial obligations.
Also, what time frame do you designate for calculating tithes? I don’t know of any scriptural guidance for timing. With the ups and downs of business income, one could pay a monthly tithe and pay quite a bit more than if the tithe was calculated annually, or even bi-annually. Being a good steward of the Lord’s blessings includes caring for the money he entrusts to us to meet all obligations, and paying too much in tithing could actually work against His plan for us.
Hi Zachary,
I agree with your premise and heart on this. A few points may be helpful:
1. The decision of whether or not to tithe needs to be a corporate decision in a corporation or LLC with multiple owners. Your partners would need to agree to tithe– or at least a majority would.
2. S corps are a little more challenging because their profit/loss flows to the shareholders. You tithe on the income you receive, but what about the corporation’s income that you’ll have to report on your tax forms? It’s just a little muddy as you work through those challenges; I recommend engaging a CPA to help work through the issues on that.
3. If the corporation decides to be a tithing business, it could set the frequency. I think the best options for a business might be monthly, quarterly, semi-annually, or annually depending on how its business cycles tend to flow. My business calculates its tithe quarterly to even out the business cycles for higher accuracy.
I hope that helps.
Hi Nick,
Do we tithe on the economic stimulus payments?
If the money is a loan, then no. But if it is forgiven and becomes income, tithing at the time it is reclassified would be appropriate.
Hi there! I am a 1099 filer therefore I pay 7.65% employer responsibility and 7.65% employee responsibility (total of 15.3%) into Medicare and Social Security. I currently withhold 25% weekly for federal tax and 5% weekly for state tax and I pay them quarterly. I do not have any additional expenses to consider as I am in the private home care business. I want to tithe 10% of my gross income to my local church but as a 1099 filer I don’t know if that means it’s based on the actual dollar figure on my check or if I factor a portion of the Medicare / Social Security responsibilities. I would much rather not have to calculate an annual tithe at tax time but I want to make sure I’m giving a full 10% weekly instead. Thank you for your help as I feel I’ve been researching this for 2 hours and can’t find a definitive answer based on my exact scenario.
Hi Joni,
Thank you for wanting to honor the Lord in your life.
Tithes are calculated before tax considerations, which can be challenging, but helps us order our lives in God-honoring ways. But if you can’t afford starting at 10% of gross, start lower at a point you prayerfully set and intend to increase it over a reasonable time.
Hello,
Thanks for your time.
Let me know if this is correct, as I am basing it on your answer here: https://www.mbsinc.com/tithing-considerations-for-business-owners/#comment-3532
My business (all cash) did a gross profit of $10,000 in April. After deducting true business expenses (gas, ads, etc), it left me with a net profit of $8888.00. I took out $4000 to live on. You’re saying I would write a check for $488.80 from my business and then a 2nd check for $400 from my personal account?
If the answer is yes, could I just write 1 check for $888.80, as my biz account doesn’t even have checks?
Hi Brad,
If the $4000 is your personal income, then you personally tithe on that amount. If your income is an expense to the business, then it would tithe on the remaining $4888. If the business is a separate legal entity, it should pay its own tithe. If you and the business are legally and operationally one entity, then you could write a tithe check for the $8888 net income.
I hope that helps.
Hello you may have cleared this up for Brad (mentioned in an earlier post) but for me I am an LLC with 1099 contractors and I think I got what you are saying so this may be me just sound boarding. So here goes…I was only tithing off what I calculated for the week which included the personal and business. I just recently got an accountant who has helped me to create an owners expense so I can separate the two. My monthly changes for my business based on clientele. Therefore and example would be business net $9400 therefore I pay $940 and say owner expense is $3600 and I pay $360. Now what really plays with my mind is do I break each one down and pay it weekly or one lump sum monthly for either? So I am looking for confirmation on tithing correctly and then questioning whether I pay it weekly, monthly and/or based on the prior month. Sorry to confuse it more but I do thank you for writing this.
Hi Steph,
You can prayerfully set a tithe term that is best for your business. I think weekly is too short of a term for a business. Monthly is okay; we do our business tithe quarterly to even things out a bit. We pay our personal tithe monthly because it fluctuates too wildly if done weekly.
I hope that helps,
Nick
Hi Nick
Am I suppose to pay tithe on the money given to me by my parent for my upkeep?
Hi Richard,
If you’re living at home and asking about their cost to house you, the answer is no. If they’re actually giving you money to help you with your living expenses, then I would consider tithing on that. Disability and other similar incomes should also be calculated in the tithe. Honoring the Lord with an accurate tithe will bring you blessings– not always financial. But you cannot out-give the Lord.
I hope that helps.
Hi Nick,
Here is another “muddy” S-Corp question. I Tithe on my salary and distributions weekly (Single owner S-Corp). The company by the end of the year has a net profit. Can I just take that net profit (adding back in taxes paid) and base my Tithe on that number?
Since we have met all our obligations (employee, vendors etc) that would seem the easiest, but is it a correct way to determine what to base the Tithe on?
Hi Eric!
I posed your question to one of our favorite CPAs who focuses on Christian churches and ministries. Here is their response:
I hope that helps!
Sorry for the late response… That was very helpful…Thank you…
Now I’m looking to pay it out monthly. Our books are almost always close to what the K-1 reports so the last month is where we would apply any difference up or down based on the CPA’s adjustments. I guess Biblically you can say you harvest once a year, I just kind of like the idea of giving from what God has blessed us with every month with all the bills paid in full. Kind of a new harvest each month. Am I off base with that?
You’re not off base with that, Eric. It. depends on 1) God’s leading, and 2) your business cycles.
Blessings!
Nick
Hello, thank you for all the information. Should one tithe on the unemployment weekly payments is receiving from the government? Thank you.
Yes; it is income.
Thank you!
You’re welcome!
Hi Nick,
Should one tithe on grant and hardship stimulus package received from the government?
Hi Catherine!
If it is income, yes. If it is a loan to be repaid, no. If it is a loan and is later reclassified as income, yes.
I hope that helps!
Hi Nick,
Thanks for sharing your insight on this subject.
I have a home based Christian business that operates an outreach ministry. My question is wether I can pay my tithes generated from my income into my business instead paying them to a local church? Also, should I tithe on the profit I make from my business.
Good question, LaToya. Most interpret the command to tithe to mean to your church. Generally, funds donated to others would fall into the category of offerings, which are above and addition to the tithe.
The next question is whether your business is a 501 (c) (3) non-profit (that is an IRS status). If it is, you can donate to it, which may reduce your personal income tax liability.
The next question relates to the understanding of whether your business and you are separate legal entities. If so, you can each tithe independently. If not; i.e. if your business has the same tax ID as you, then it’s really just you tithing. You may need to connect with a CPA to get a good understanding of the issues tied to this.
I hope that helps!
Nick
Good day Nick
I have a take aways/small business based at my home. I want to know how do i give my tithe. I normally deduct my tithe every night when im closing my shop from the money i made for that particular day. However if i did tithe the money that a bought my products with, do i need to tithe from all the money i make that day or should i devide it in halve for i do not know what is my profit based on the diffrent things i sell and i dont have a spicific day that i go buy stock, whenever something is finish i need to go buy it.
Hi Jolene,
It would be better if you selected a longer term on which to base your calculation. I recommend monthly, or perhaps even quarterly.
Nick
Nick,
My LLC received a lump sum payment for 5 year lease. Does the LLC tithe on this payment in the first year, or over the 5 years? The taxes will all be paid in year one as income.
The simplest way to handle that, Dave, is to tithe in the same year it’s taxed.
Nick
Hi thank you for this.
The sort of business I run makes it really difficult for me to calculate my tithe. I was wondering if my tithe should be paid from what I pay myself monthly or if it has to be paid on the entire business profit.
If your business has the same tax ID as you, then you and the business are one tithe calculation. If it is a separate legal entity (LLC, corporation, etc), then you would tithe on your personal income from the business AND the business would tithe on its net income.
Hi Nick!
I’ve recently bought Bitcoin and use it to fund a separate investment (site) that earns a generous percentage within the site. But it requires you to withdraw earnings back into your Bitcoin wallet and then re-fund your site‘s wallet each day (using your Bitcoin wallet) until you reach the designated profit total, and you continuously repeat this process each day.
My question is, do I need to tithe after each withdrawal from the site’s wallet into my Bitcoin wallet (where the numbers are confusing and always fluctuating) or just wait until all the investment cycles are complete between the two wallets and ultimately release all earnings into my regular checking account with the bank?
I technically get “paid” each day cycle, but never empty the final earnings into my bank until after everything reaches the desired profit percentage, if that helps. My thing is I always want to be tithing “off the top” so was looking for some peace in this.
Thanks in advance!
Hi Andrew,
Normally, one tithes when they receive income, and calculate it on a cycle that may be monthly, for example. If you’re required to reinvest everything daily, you never fully receive the income because you have no control over it. In effect, you are manually doing what someone might have written an algorithm to do without having to receive and reinvest daily. At the time you actually receive, or benefit from the income, is when you would calculate your tithe.
Nick
Hi Nick,
Thank you for this article. I own a fairly new and very small service-based business as a sole proprietor. I gross about $1,000 per month on average and have about $200 in expenses. I have not been taking any kind of profit or salary as I’ve just been letting the money build in savings. Should I be tithing on the $800 even though I’m not taking it as personal income (I’m also an employee for a company so haven’t needed the income yet)?
That’s a decision I recommending turning into a prayer focus, and waiting on the Lord for his direction, Tina. Whether the business is to be a tithing business or not is something you want his leading on.
Hoping that helps,
Nick
That depends on how you you feel the Lord is leading, Tina. Many not-for-profit organizations tithe, but not all. You are definitely correct to tithe personally on the income you receive from the non-profit.
When calculating income on which to tithe, does a business owner wait to start tithing until after unrecovered (sunk) costs are recouped, such as initial remodeling? In other words, does the owner’s tithe calculation treat the recovery of first or later investments as expenses when calculating net income and therefore increasing tithes as net income increases?
Hi Richard,
That sounds like more of an accounting question… you may want to check with your CPA to determine of those costs will be capitalized and depreciated, or if they will be immediately realized. The tithe is calculated on net profit, so that question needs to be settled first.
Nick
If I just own 30% of the business, and my partners do not agree in paying tithes, how would our business pay tithes?
Hi Edwin,
That is one of the challenges with partners not in agreement with your faith. You can’t force a tithe on them through the business, so you’ll simply tithe based on the proceeds you receive from the business. And pray for your partners! Perhaps you’re in that partnership to be a godly witness to them!
Nick
Good day,
My heart has been so heavy… I feel dishonoring as if I am looking for ways to “pay” less…but I am not. I have a business where I pay vendors, subcontractors 50% of what I make. So, if they deliver 100 items at 1.00 each, at the end of the week I pay them outright 50.00 and my business receives the other 50.00. Out of that 50.00 I still need to pay expenses, etc. and then after those expenses, I may only realize 30.00 profit. I used to tithe off of every client check that came in to me no matter what before I did anything at all. If I received 10,000 from clients, I tithed 1,000, again, even before paying my vendors, which honestly cuts into my profit and can hurt. So, I have re-looked at this again. I have recently began NOT to “pay” off of what I pay my vendors and only “pay” off of what profit I received from that service. Again, $1.00 my client pays me. .50c to my vendor. .20c to my expenses. .30c the company made and so I tithe from the .30. Is that correct? My heart is so heavy. I know it is a prayer issue but I want so much to be honoring and not trying to find loopholes so to speak. He says to me, watch and see if I don’t pour out blessings upon me, so why should i be concerned at all? But I need to be to be in business next week. I cant be the only one that struggles with this. Any wisdom is very much appreciated.
God wants you to be in business next week too, Frank. Read through the article and the answers to the comments, and ask the Lord to guide you by doing that. He is faithful, and loves sincere faith.
Nick
Hi Nick,
I am 100% owner of a security guard company which is a C corporation. I have clients that pay me every month and I want tithe off of my business. How should I tithe? I have currently been tithing off everything that I get from my clients.
I think reading the article will cover that, Eric. Let me know if you have any specific questions,
Nick
I am curious to hear your thoughts on a few things.
1. In Canada, for personal donations, we get up to 44% of the money back in tax credits. Personally I have a conviction that I should not keep this money, but give it back in tithe again. The main reason why is because I think, “the purpose of the tithe is to truly give it away as a sacrifice. If I just get a lot of it back, is it really a tithe?” Using this logic to the extreme, let’s say the government gave back 90%. If I just kept that 90%, I would, in spirit, be paying barely any tithe. I’ve talked to various people that disagree with this, and say “if God has set it up to have the government bless us with money back, then that’s like a gift to us”, or “sometimes in the Bible people would bring tithes and offerings, but then partake in eating the sacrifices – so they are in a sense getting stuff back from it”. However, I still personally think it’s best to give the 44% back – to me that seems like a true tithe – getting nothing back financially in return for it. When you give it back year after year until it is all gone, it works out to be 78% of the original tithe that you are able to reinvest back into the kingdom of God – which I think is a fantastic way to give more. Do you have any thoughts on this?
2. If I get 44% back from personal donations, and I want to re-tithe that 44% money, personally I think it’s not good to tithe through the business. Admittedly I haven’t researched or figured this out very much yet, but my understanding is that if you donate through a company, it basically just acts like an expense so you only “save” whatever income tax you would have owed. So for Canada that would be 9% for federal and 2% for provincial tax. That 11% is nowhere near the benefit of the 44%. So I think it is being irresponsible to donate it through the company since you only get ¼ of it back, and therefore you’re losing ¾ of the money that you could be giving to God. However, if I do donate it personally, I need access to the money, so would have to pay a dividend to myself to do so. However, you generally said in your comments that business tithes should be made by the business. Why is that? Do you have any other thoughts?
3. Another question about tithing through the business is that this in a sense means it would be double tithed. i.e. let’s say you had $10,000 net profit and so you paid tithe through your business. Then the next year you decided to take that money ($9000) out of the business and pay it to yourself. You would then pay tithe on that too. So it’s like double tithe. That doesn’t make sense to me. Yes a corporation is seen as a separate entity/person, but in the spirit of things (especially with a corporation owned by one person), it truly is just one person. Do you agree that if tithing has been paid once within the business, that you shouldn’t pay tithing again once it is paid out to the owner as personal income?
Thanks and sorry for the lengthy questions!
Thank you for your questions, Devon. I have no depth in Canadian law; but will do my best….
Question 1.The tithe is based on income. While some types of income are straightforward, like paychecks and interest, other types are not. They are open to interpretation. For instance, should you tithe on the value of a gift received? Or the proceeds of a loan? The answer lies in whether the amount is considered income. In the case of a gift, maybe not! In the case of a loan, if the amount is carried as a liability, then the answer is definitely not.
Regarding your example, it depends on your conviction as to whether the amount is income.
The good news, of course, is that a 10% tithe is seen by many as a starting point. One can always tithe at a higher rate than 10% if they feel led to do so. So the worst case scenario is that you may simply be tithing at a rate higher than 10%, and that’s okay.
Question 2. If the business is a legal entity that is separate from the owner, then it is the business that tithes on business-related income, and the owner that tithes on personal income. But some of the answer to this question goes back to whether the amount received is considered income—and if so, for which entity.
Question 3. This question goes back to the issue of separate entities. The choice to transfer the income via a bonus, for example, is a choice. We face that with our businesses. It comes down again to whether the owner(s) of the business that is a separate entity believe the Lord has led them to run their business as a tithing entity.
I am not a prosperity gospel guy, but I do believe one cannot out-give God. The blessings of God may or may not be financial—in fact they are often intangibles. But erring on the side of over-giving (within good business operational guidelines, of course) is not a problem.
I hope that helps!
Nick
You should NEVER tithe “before taxes”. If your tax rate is 90% (like high earners in the early 1900’s) and you tithe 10% that leaves you 0%. The government can always take some or all of your money through taxes. Always tithe on the after tax amount.
Additionally like Dave Ramsey does never Tithe directly on your business income. Your business is not an individual. It doesn’t have a soul. It would be like telling a coin operated soda machine it has to tithe.
You tithe on the portion of salary and bonuses you pay yourself out of the business.
Thank you, Chris, for your perspective. We disagree, and that’s certainly okay.
I believe in tithing before calculating taxes for two reasons:
1. God is above any/every government, so he gets our first allegiance. We are citizens of heaven above being citizens of any state.
2. Income taxes are not as straightforward as your early 1900s example suggests. Total income is not taxed at the higher tax rate. Each amount of income is taxed at the published rate as one’s income increases through the brackets each year. So the first few thousand or more may not be taxed at all! In addition, taxable income for a business is total income less expenses and deductions; for individuals: income less deductions. Those deductions include contributions.
Regarding wether or not a business should tithe, doing so is an issue of conscience, and may not be for every believer. It’s not the machinery (like your soda machine) who tithes, but the business that owns the soda machine. If someone feels God is leading them to tithe at the business level, then doing so is a further expression of their faith in his provision of all their needs.
Blessings!
Nick
From Nigeria,
Am about to start a business and I had prayed and vowed to pay 20% tithe but along the line I had a thought that I may not be able to keep the vow, even though the business has not actually started in physical. I decided to readjust my prayer (vow) to 10% tithing on the business. What’s your thought on this?
But then it’s a business on contract basis (not done any yet though), so…
1. Should I tithe on the gross income before paying staff (not available yet), deduction of expenses and tax, or
2. Should I tithe after paying staff workers and deducting expenses?
3. Should I pay after all deductions which include tax.
I really want to start on a godly note honoring God with my business!
The Lord knows your heart, and he only wants you to do what he led you to do. If your vow was your thinking rather than his, no worries. If it was led specifically by him, then that’s something you need to talk with him about. If it was your thinking rather than his, simply ask him to forgive your impetuousness and move forward.
Regarding your other questions, I believe they are answered in the original post and its following questions and answers. Let me know if there’s something specific you’d like me to address that hasn’t yet been addressed here.
Blessing!
Nick
I’m not a “business person” but have landed in that position in our small company. I read through the comments but it’s a little over my head. Can you tell me: Our company has income but it’s not enough to cover our expenses yet. We’re relying on a private donor to stay afloat for the time being. Do we pay tithe? If so, based on what? Why or why not? Thanks.
Hi Rae,
A tithing company does not tithe on income, but net income. If the net income calculation produces a negative number, then there is no tithe. Two additional thoughts:
1. If the donor’s gift are considered income to the business rather than a loan or something similar, it should likely be included in the tithe calculation.
2. You may want to consider lengthening the tithing cycle if doing so would better represent your business activity. For instance, our company generates income weekly, but we have a quarterly invoicing cycle that has a dramatic impact on our income. So we calculate our tithe quarterly.
I hope that helps,
Nick
Thank so much I have learned a lot
You’re welcome!
I appreciate this platform it has really enlighten me , however my inquiry is how do you handle a situation where business has not yet started making profit? every month it is a loss.
Tithes are calculated on net profits, Filder. If there are no net profits, the calculation results in a not tithe yet.
What about the money you give to your own business to start it up? Does the business tithe on that?
Hi Sonya,
If the business considers the money you’re giving to it as income, then you may want to consider having the business tithe on it. If the money you’re giving to it is a loan or similar, then it would not be income to the business. You’re likely wise to track those funds accurately, however, because doing so could impact your personal taxes– only your CPA/tax preparer will know for certain.
Nick
How do you tithe on paper profits(unrealised profits) from investments. For example I purchase a stock for $100 and it goes up to $150 but I do not sell. Do I tithe $50 (150-100) on the paper profit?
Hi NK,
A CPA would tell you to only tithe on actual profits. Because you don’t know how much the value will go up or down in total until you actually sell your investments, it is only once you’ve sold them that you tithe on them. The concept is based on income realized.
I hope that helps!
Nick
I own an LLC in Texas taxed as an S-Corporation by the IRS. I do the following:
*Tithe 10% of net profits quarterly divided into multiple ministry-based organizations. All other expenses come afterward.
*I pay myself a salary every two weeks on a W2.
*I take out distributions as well when needed.
I do believe that I should tithe by revelation as Abraham did with Melchizedek. But this is an area that I would like to see what you say should be done.
Am I supposed to tithe from my distributions even though I already gave 10% of my company net profits, as the distribution is an expense after my company donations?
Same question applies to my salary I pay myself bi-weekly as well.
Thank you in advance for answering.
Hi Platt,
It sounds like your LLC– a separate legal entity from you personally– is a tithing entity. Your question seems to be whether you should tithe too, just as your organization does. Your question is a good one, and the answer depends on whether you want your LLC to be a tithing business as well as you being a tithing person. My opinion is that since the two are separate legal entities, they should approach the question of tithing separately. I address that in the original article and in my answers to some of the following questions.
I hope that helps!
Blessings,
Nick